Risk vs. Reward Explained in Casino Game

When playing casino games, one of the most important concepts to understand is volatility, sometimes referred to as variance. Volatility describes how often a game pays out and the size of the payouts. Some games have high volatility – they pay out big prizes, but less often. Other games have low volatility – they pay out smaller amounts, but more regularly. Neither is necessarily “better” – high and low volatility games both have their merits. Understanding the volatility level of a game can help you set appropriate expectations and manage your bankroll.

What is Volatility in Casino Games?

Volatility refers to the risk-reward profile of a casino game. Mathematically, it can be defined as the standard deviation – or expected variation around the statistical average – of a game’s payouts. But in simpler terms, higher volatility games have bigger prizes, but you’ll need to wait longer between wins. Lower volatility games dish out smaller payouts more frequently.

Over an infinite number of spins or hands, high and low volatility games at LuckyWins Casino have the same expected return to player (RTP) percentage. But in the short term, you can expect very different results. Bigger individual payouts also mean longer dry spells without any wins. Whereas with lower variance slots, the smaller but more regular payouts result in a steadier rate of play.

Neither high nor low volatility games are inherently better or worse for players. Managing volatility and the resulting fluctuations in bankroll are key components of responsible gambling and avoiding tilt.

High Volatility Slots and Table Games

Higher variance casino games offer players the chance for bigger individual payouts, at the cost of longer waits on average between winning spins or hands. Some classic examples include:

Slots

• Jackpot slots – Games with progressive and pooled jackpots often have extremely high volatility. The grand prizes increase as more people play without a jackpot trigger, leading to potentially massive payouts.
• Video slots – Blockbuster movie or entertainment-themed video slots tend to have higher volatility. Features like free spin bonuses, cascading wins and cluster pays contribute to higher variance.

Table Games

• Blackjack – A card game with higher variance, especially when using optimal blackjack strategy to stand on stiff hands. One strong hand can result in big swings.
• Baccarat – Like blackjack, baccarat can produce big wins and losses due to its simple rules and reliance on short-term variance. Betting on bankers or players carries roughly even odds.
• Roulette – While individual roulette bets have fixed odds, betting large amounts on single numbers or sections of the wheel introduces high volatility.

High variance games require a higher bankroll and stronger emotional control to ride out dry spells between big payouts. But some players enjoy gambling for those thrilling opportunities at truly life-changing wins.

Low Volatility Slots and Table Games

Lower variance casino games provide more modest but more frequent payouts. Players sacrifice the chance at huge jackpot-type wins for a steadier rate of play and reduced risk of losing their entire bankroll quickly. Some of the most popular lower volatility games include:

Slots

• Classic slots – Old school physical reel slots with fixed jackpots tend to have lower variance. What you see is what you get with straightforward symbols and payout tables.
• Video slots – Not all video slots are high variance. Many have features and bonus rounds designed specifically to hit smaller wins more regularly.

Table Games

• Craps – One of the lowest variance table games. Making simple pass lines and odds bets gives frequent opportunities to win small amounts, reducing risk.
• Baccarat – The game’s reliance on chance means shorter dry spells between wins compared to blackjack’s higher variance odds.
• Poker – Playing casino poker rather than competing against others introduces lower volatility by removing the human skill factor. Simple poker machines produce frequent small payouts.

Lower volatility reduces risk but also caps a player’s maximum potential earnings per spin or hand. Some players prefer slower builds over riskier play and can better manage their bankroll with smaller but more predictable payouts.

Managing Volatility and Risk of Ruin

Ultimately, both low and high variance casino games are designed to be profitable for the house in the very long run. No matter which types of games you prefer, managing volatility is critical for responsible gambling. Monitoring your wins and losses, setting loss limits and controlling bet sizes can help mitigate variance risk.

Volatility directly impacts a player’s risk of ruin – the odds that they lose their entire bankroll. Higher potential payouts also mean higher potential losses. Even if a slot or table game has a high RTP percentage, an unlucky losing streak can quickly wipe out a bankroll before that theoretical profit is realized. By managing volatility swings, players give themselves more chances to still be in action when the percentages turn in their favor.

Here are some tips to manage volatility risk:

• Set a gambling budget and loss limit before playing
• Spread total budget over multiple low-variance bets rather than fewer high-variance bets
• Avoid doubling down after losses in an attempt to “get even”
• Take breaks after big losses or wins to clear your head
• Pay attention to terms like “variance” and “volatility” when picking games
• Use bankroll management practices and divide budget into playing sessions

Which Volatility Level is Best?

Deciding between high variance and low variance casino games largely comes down to personal preference. Aggressive players tend to favor the higher risk, higher reward potential of more volatile slots and table games. But more risk-averse gamblers prefer lower volatility options to minimize losing streaks, even if that caps how much they can win on a single spin or hand.

Most industry experts advise matching volatility level to your bankroll size. If you have a large budget to withstand potential losses, higher variance bets pose less risk and offer bigger reward opportunities. Low rollers should stick to less volatile games and safer strategies like minimizing bet sizes.

Either way, responsible gambling means always betting within your means, monitoring volatility swings on wins and losses and avoiding chasing losses. While big jackpot wins are thrilling, you can’t really predict or control short-term variance. Over the very long run, the result depends more on a game’s set RTP than volatility.