Every online casino game has an RTP (Return to Player). If your intention is to run an online casino operation, it is important that you learn about RTP and how it effects your business. Why? Simply put, it is the return to player percentage that ensures your iGaming business makes more money than you pay out to your players. Here, Casinnovate will provide you with the RTP facts to help you understand how your online gambling business brings in the money fair and square.
What is RTP and How Does It Work? – Answers to Common Questions
One of the easiest ways to define RTP is to provide answers to some of the most commonly asked questions that potential online gambling operators have. After all, it’s not only players who want to know the return percentage they can expect from a slot machine. You should know how much of an advantage (house edge) your business has over a player’s chances of winning and how much control you have over the RTP.
What is RTP in an online casino?
Return to player percentage is the expected percentage of wagers that a specific game (e.g. slots poker, blackjack, roulette, scratch cards, etc.) will return to a player over the long run. RTP percentages can be calculated via either a theoretical or simulated method. The method that is used typically depends on the type of game.
More often than not, RTP is expressed as a percentage. The higher the percentage, the more a player can expect to win over a longer period of time. For instance, if a slot has a theoretical RTP of 96%, this means that over time it will give back $96 for every $100 paid into it. That said, it is important to note that RTP serves as a theoretical statistical calculation and is only an average estimation. It does not guarantee a precise return.
In addition to a player’s expected return, the RTP also determines a game’s house edge. If a slot machine has an RTP of 96%, the house edge would be 4%. The house edge is a game’s RTP subtracted from 100%. It is this house edge that provides your casino with the mathematical advantage required for your business to make a profit over the long term. Even though players will seek out games that offer a high RTP (typically any game with an RTP percentage of 95% and above is considered to have good RTP), ultimately, in the long run, the house always wins. Otherwise, gambling businesses wouldn’t be profitable and wouldn’t exist.
How is RTP calculated?
The formula for RTP is relatively straightforward. It is calculated by dividing the win and turnover figures generated from a game. More simply put:
The Total Amount Returned to Players / The Total Amount Gambled by Players
For instance, if after one month of play a slots game with a 96% RTP has accrued $1,242,000 of turnover and paid out $1,185,000 in wins, the RTP for this game can be calculated as:
$1,185,000 ¸ $1,242,000 = .9541
This means the actual RTP percentage this game has achieved is 95.41%, which is lower than the designated 96% RTP.
Why isn’t the RTP calculation the same as the theoretical RTP? The reason is that the volatility of a slot game must also be taken into account because it effects the allowable tolerance above or below the theoretical return to players. This tolerance is wider when only a limited amount of play has been measured but will decrease as the volume of play increases. In other words, the longer a player plays the game, the actual RTP calculation should be closer to or equal to the game’s theoretical RTP.
Is RTP calculation the same for all casino games?
All legitimate online casino games have a theoretical RTP. That being said, the RTP can vary widely among different games, and this often creates confusion among players, particularly those who erroneously believe RTP is an indication of how often they can expect to win, especially when playing slot games.
Generally speaking, using online slots RTP and online blackjack RTP as examples, the average RTP of online slots is between 93% – 99%, while the average RTP for Blackjack is between 98% – 99.5%*. In blackjack, players can assume that they will win around half the bets they place. Though still a game of chance, players can apply skill and strategy to blackjack that cannot be applied to slots. A refined blackjack strategy could result in an exceptional 99%+ RTP rate, whereas in slots the RTP rate can depend on the bet amount.
Using NetEnt’s Mega Joker slot as an example, this 3-reel, 5-payline, high volatility progressive jackpot game – according to NetEnt’s official site – has a theoretical return of 99%, which is the highest in the industry for any slot game. That being said, the game’s actual RTP varies between 85.28% – 99%, depending on the size of the coin value a player uses. For instance, playing with the smallest coin value drops the RTP to 85.28% while playing with the maximum coin value increases the RTP to 99%.
The bottom line is that the more a player plays any game, the closer they should get to the theoretical RTP. If they play thousands of spins, they should be closer to the RTP rate by the end of these spins. The casino expects to pay out this figure overall, but not to every individual player. The RTP is worked out over thousands or millions of games. It is meant to be a guide to the overall return to all players, not to each individual player. Ultimately, no matter the game a player chooses to play, the RTP will always be slightly less than turnover.
*Note: The above online slots and online blackjack RTP is meant for information purposes only. As previously stated, each game has its own theoretical RTP that may or may not reflect the information provided above.
Who creates the theoretical RTP?
It is the game developer or supplier who determines the theoretical RTP of the games offered at online casinos. Most operators do not develop their own games in-house and instead obtain them through partnerships with third-party software developers and/or suppliers like those game providers Casinnovate reviews.
What this means for you as an operator is that, unless you’re developing your own games, the theoretical RTP for the games you offer players is predetermined by the supplier, such as NetEnt, Microgaming, Play’n GO, Yggdrasil Gaming, and so on. Moreover, the same developer can have different RTP percentages for each of its games.
The developer works out each game’s mechanics, which includes the payouts and win frequency, providing an overall RTP to the game. Usually, the only exception to the rule is a progressive jackpot, in which case the contribution may be noted separately from the rest of the game’s overall RTP.
Can casinos change the RTP?
Yes. Casino can opt to tweak the RTP if they so desire. This is obvious by the fact that two casinos can offer the same game and while the RTP on one site is the theoretical return stated by the game provider, on another it may be slightly less.
Why would a casino operator choose to change the RTP? There are two main reasons why:
- To make more money from the games – The lower the RTP, the higher the overall turnover.
- Change in tax laws – Higher tax laws enforced in certain jurisdictions means higher operating costs. One of the ways to meet these costs is to adjust the RTP rates of games from certain providers.
Tax laws aside, if you decide that you want to tweak the RTP at your casino to earn a higher profit, this could prove to be a mistake in the long run. Players will check the RTP of your games and if they notice that another casino offers the same game at a higher RTP, they will choose the competition over you.
Random Number Generators, Volatility, and Hit Frequency
In addition to the return to player, other factors play a role in the fairness and mechanics of payouts. These include the random number generator (RNG), volatility, and hit frequency.
What is RNG?
The RNG is mathematical software designed to generate a random set of numbers with no distinguishable patterns in generation or appearance. Every second, several billions of numbers are generated. The algorithm guarantees results that are truly random every single time, ensuring a fair game with each spin.
What is volatility?
Also known as variance, volatility, which is often confused with RTP and hit frequency, assess the risk associated with losing a bet. Volatility suggests how frequent or infrequent players can expect to win (hit frequency) as well as how big or small they can anticipate their payouts to be. This is why two slots with the same RTP can payout at different frequencies. For instance, a low volatility slot with 96% RTP will payout smaller amounts more frequently while a high volatility slot with 96% RTP will payout larger amounts less frequently.
What is hit frequency?
Hit frequency refers specifically to a player’s chances of winning a payout of any kind on a single spin. As previously stated, hit frequency is not the same as volatility, but it can be useful for a player when they are attempting to determine a game’s variance. For instance, a slot with a hit frequency of 30% to 40% indicates the slot pays out more often, indicating lower volatility.
The bottom line is that though RNG, RTP, volatility, and hit frequency are terms that are sometimes confused and used interchangeably, they have different meanings. To sum up, the differences in their meanings can be defined in simple terms as follows:
- RNG determines the outcome of a single spin
- RTP is the outcome of playing tens of millions of spins
- Volatility/variance is a measure of risk
- Hit frequency is the rate at which a slot machine will land on a winning combination
All that said, it’s important to note that neither RTP or volatility guarantees wins nor do they provide players with a precise indication of how likely they are to win or when a slot machine will hit. Additionally, the random number generator can also affect the rate at which a slot game pays out.
The RTP and volatility ensures that players will not know in advance when they will win or lose while the RNG ensures a player’s chance of winning remains exactly the same, every single time they play.
Ensuring RTP Fairness
It should be no secret to your players that your casino has a house edge and that the odds are always in favour of your business. That being said, it is equally important for your players to know that the operation you’re running is fair and that games are not rigged. As an operator running a legitimate business, it is your responsibility to ensure that your operation…
- Is licensed – Adheres to local gambling laws enforced by a respected regulator to ensure players a secure, safe, fair, and responsible online gambling experience.
- Offers games from reputable providers – Only opt for award-winning, trusted, and reputable online casino game suppliers like Microgaming, NetEnt, Play’n Go, Yggdrasil Gaming, IGT, Playtech, etc. who are known for delivering state-of-the-art gaming products that are tested for quality and fairness.
- Is certified fair by an independent testing agency– Your games should regularly be randomly audited by industry-respected and recognized, independent, third-party testing agencies. These organizations test to see if the RNG software you used is performing optimally and that the theoretical RTP rates posted for games is accurate. Examples of registered independent testing labs are: eCOGRA, iTechLabs, and Gaming Laboratories International.
- Swift with payouts – You can have the games with the highest RTP rates online but if you fail to payout winnings to your players in a timely manner, it won’t be long before they head to the competition.
- RTP displayed – Don’t make players hunt for RTP percentages. List the RTP rates for each game on your site in a place that is easy to find, or make sure that you inform players where this information can be found within the games they play.
Return to Player Explained – Conclusion
We hope that you now have a better understanding of RTP percentages, how they are calculated, and how they are linked to the long-term profits of online casino businesses. Ensuring that you offer a fair iGaming experience to your customers and choosing games from reputable providers is part and parcel to running a successful operation. Need help getting started with your online casino business? We recommend checking out our software provider reviews to find the perfect platform solution.
