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Best of Elliot Frome

Gaming Guru

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Is Payback Overrated?

28 April 2005

Is payback overrated? I don't mean 'payback' as in getting even with your neighbor for mowing his lawn at 6 a.m. on a Sunday. I mean payback as in the return on your 'investment' in a casino. The first rule of Expert Strategy is to know which games to play. Generally speaking, this means playing games with higher returns, or paybacks. Of course, these paybacks are the theoretical long term paybacks of the machine, and most anything can happen in a short session. Because of this, some folks out there have tried to make others believe that payback really isn't all that important, and that you can just as easily win at a poorer paying video poker machine with just a little luck. I don't think so.

To prove my point, I created two versions of a roulette wheel game on my computer. In the first one, the Player bets 'Even' each time, and if a '0' comes up, it is a push. The payback of this game is exactly 100%, as the Player will be paid even money each time a even number comes up. In the second scenario, I've used the traditional payouts, whereby the Player wins even money when a even number comes up, and loses half of his wager when the '0' comes up. The payback of this version is 98.65%. So, the difference is about 1.35% or a bit less than the difference between a full-pay jacks or better and an 8/5 jacks or better (where the difference is just over 2%).

So, we all know that over the 'long run', the first version of the game will return 1.35% more than the second version. What is the impact for a relatively short session? The results are STAGGERING! I simulated one million sessions of 1000 games each and recorded the results. For Video Poker, 1000 hands would be about 2 hours or playing for the average player. The results of the simulation are shown in the table below:

Result
Version 1 (100%) Version 2 (98.65%)
Lose > 100
0.06%
0.29%
Lose 81 - 100
0.46%
1.41%
Lose 61 - 80
2.13%
5.02%
Lose 41 - 60
7.00%
12.85%
Lose 21 - 40
15.87%
21.89%
Lost 1 - 20
23.80%
25.03%
Push
1.29%
1.14%
Win 1 - 20
23.89%
18.72%
Win 21 - 40
15.84%
9.51%
Win 41 - 60
7.03%
3.19%
Win 61 - 80
2.07%
0.79%
Win 81 - 100
0.47%
0.14%
Win > 100
0.08%
0.02%
Winning Sessions
49.39%
32.37%
Losing Sessions
49.32%
66.50%

I have to admit, that even I was surprised by the impact. With only a 1.35% difference in payback, the game changed from one where you had an equal chance of walking away a winner or a loser, to one where you were going to lose twice as many times as you win! When I first got the results, I went back to check the program and make sure there wasn't a mistake. But then, I began to think about it. On average, in 1000 'hands', the '0' will come up (on average) about 27 times. For each of these 27 times, the Player would lose half a unit or 13-14 units per session. This means that every session, that in the first version, wound up anywhere from a push to the Player winning 13 units would now likely become a loss. When looking at the detailed results (not shown above), it turns out that this accounted for about 17% of all sessions. Lo and behold, an additional 17% of our sessions were turned into losers in the second version of the game.

Of course, Video Poker is a bit different than our roulette game above. First of all, it has a much longer cycle than the roulette game. With only 37 different outcomes as compared to the millions in Video Poker, we cannot expect the results to be so clearly defined so quickly. Video Poker is also much more volatile than roulette, especially when we're just betting 'even' all the time. In a short session of 2-3 hours, hitting a four of a kind just once more than 'average' will almost guarantee a winning session. Hit a Royal in a short session and you can be SURE to walk away a big winner.

At the same time, some of the same concepts do apply. When you play 8/5 jacks or better video poker instead of a full-pay machine, you will get 1 less unit every time you hit a Flush or a Straight. On average, these hands will each occur about once in 90 hands. In a 1000 hand session, you'll hit these hands a total of about 22 times on average. This means you won't be receiving those additional 22 units. Playing max-play quarters, this would translate into 110 quarters or $27.50. This means that many of the sessions that you would play on a full-pay machine where you would walk away up $25 or less will now be LOSING sessions. A session on a full-pay machine in which you would win $50 is reduced to a $25 winning session. So, not only does playing lower paying machines decrease your chances of having a winning session, it also DECREASES the amount you will win in a winning session and INCREASES the amount you will lose in a losing session.

This example used only a 1.35% difference in payback. Imagine what you are doing to your bankroll when you sit down and play a 96% game when perfectly good 99.5% games can be found nearby!

Elliot Frome

Elliot Frome is a 2nd generation gaming author and analyst. His father, Lenny Frome was considered one of the premier authors of Video Poker books. Titles include, Expert Video Poker for Las Vegas and Winning Strategies for Video Poker, which includes the strategy tables for 61 of the country’s most popular versions of Video Poker. Check out Compu-Flyers website at www.vpheaven.com, or drop Elliot an e-mail at compuflyers@prodigy.net.

Elliot Frome Websites:

www.vpheaven.com

Books by Elliot Frome:

> More Books By Elliot Frome

Elliot Frome
Elliot Frome is a 2nd generation gaming author and analyst. His father, Lenny Frome was considered one of the premier authors of Video Poker books. Titles include, Expert Video Poker for Las Vegas and Winning Strategies for Video Poker, which includes the strategy tables for 61 of the country’s most popular versions of Video Poker. Check out Compu-Flyers website at www.vpheaven.com, or drop Elliot an e-mail at compuflyers@prodigy.net.

Elliot Frome Websites:

www.vpheaven.com

Books by Elliot Frome:

> More Books By Elliot Frome