How is the Return to Player (RTP) of a slot calculated?

The payout rate of a slot (RTP or Return to Player) is a term that’s often used in reviews of online slots or articles about slots.

We even built a whole site about it ;-).

But why is this payout rate so important? What does it mean exactly, and how is the payout rate of a slot machine calculated?

When do we speak of a high or low payout rate for a slot, and are there differences in the payout rates between online and land-based slots?

CasinoWizard dove into the world of Return To Player, Hit Frequency, House Advantage, variance, and Random Number Generators and returned with all the answers.

What is the payout rate of a slot machine?

The payout rate is a percentage representation of the part of the bets that a slot pays out – on average – to the player. This payout rate is measured over hundreds of thousands or even millions of spins.

The higher the payout rate, the more a slot returns to the player.

A payout rate of 97.1% means that for every 100 euros, the slot pays a little over 97 euros back to the player.

CasinoWizard has compiled an excellent list of the top 10 best-paying slots.

Payout rate vs house advantage: what’s the difference?

The payout rate is the part of the bet that returns to the player. The house advantage is the part of the bet that stays with the house – the (online) casino.

Suppose an online slot has a payout rate (RTP) of 96%. The house edge for this slot would be 100%-96% = 4%.

In this example, online casinos keep an average of 4 euros for every 100 euros wagered.

Naturally, casinos love casino games with a higher house advantage: they earn more from them.

This is why online casinos such as Casumo have started offering slots at lower payback rates.

It also explains why the Money Wheel game is prominent on the casino floor and why Bingo (actually Keno) machines are always pushed so much at land-based casinos.

These games have a significant house advantage, which means the casino earns a lot from them.

how is the rtp calculated

How is the payout rate of a slot calculated?

Calculating the payout rate of a slot can’t be done by hand. Modern video slots make use of highly complicated mathematical models and algorithms. They must correctly process the advanced bonus features, bonus bets, and many different pay lines.

A game like Reactoonz by Play’n GO (see above) sports millions of different combinations.

It’s impossible to write these down or derive them from the reels.

An example with a hypothetical slot machine

To illustrate how the payout rate is calculated, we will do a (very) simplified mathematical exercise.

For example, we’ll take a reasonably simple, self-invented slot machine to show you how the payout rate works.

Let’s take a slot machine with three reels, one pay line, and a fixed bet of 1 euro per spin to keep things easy. Naturally, we’re going to give our slot machine a name.

Let’s go ahead and call our slot Big Bertha.

Number of possible combinations and corresponding payouts

Our hypothetical Big Bertha slot machine has a fixed number of possible combinations. These are virtual combinations that correspond to a visual representation on the screen.

In turn, this representation corresponds to a specific payout.

A random game could look as follows:

  • Spin 1 nets you nothing. You win 0x your stake.
  • Spin 2 nets you nothing, either. You win 0x your stake again.
  • Spin 3 earns you one cherry, which pays 2x your stake.
  • Spin 4 is great: 3 plums for a payout of 7.5x your stake.
  • Spin 5,6 and 7 net you 0x your stake.
  • And spin 8 is the big one! 3 BAR symbols net you 75x your stake.
  • Spin 9 nets you 0x your stake,
  • et cetera, et cetera.

A slot machine will not pay the jackpot on every spin. The slot machine will often not pay out anything, provide a small prize at times, and rarely pay out an enormous reward.

Your odds of winning a top jackpot are even smaller.

A list of outcomes

If you would put all possible outcomes and corresponding payments in a table, it would look as follows:

 Prizes (x the stake) Number of combinations Total payout
 0 600.000 0
 2 150.000 300.000
 7,50 10.000 75.000
 30 5.000 150.000
 75 250 18.750
 125 75 9.375
 500 25 12.500
 2.500 10 25.000
 10.000 2 20.000
 75.000 1 75.000
 Total 765.363 combinations 685.625

You’d have calculated the payout rate if you divided all possible payouts by the number of possible combinations.

In our example, there are a total number of 765,363 different combinations. These pay out a total of 685,625 euros.

The payout rate of our own hypothetical Big Bertha slot would then be 685,625/765,363 x 100% = 89.58%.

The house advantage for this online slot would come down to 100% – 89.58% = 10.42%.

The chances of winning the jackpot are infinitely small

The possibility of winning the grand prize of 75,000x your stake is 1, divided by the number of combinations. After all, only one combination will net you the grand prize out of all the possible combinations.

On average, if you played our hypothetical Big Bertha slot, you would win the jackpot once every 765,363 spins.

Payout rates for real online slots are calculated in the same way. Gargantuan tables with all possible combinations are printed, and the possible outcomes are attached to them.

That way, they can calculate the payout rate of a specific slot with a precision of 10 decimal places. Again, over the long run.

What is the Hit Frequency of a slot machine?

The Hit Frequency of a slot machine indicates how often the slot shows a winning combination.

To illustrate, we’ll talk about our Big Bertha slot machine again.

The chances that a spin on Big Bertha will NOT grant you a prize is 600,000/765,363 x 100 = 78.39%.

Conversely, you’ll win a prize on average on 21.6% of spins. In other words: out of every 10 spins, a little over 2.5 spins will be winning spins.

This is what would be called a medium to high hit frequency.

calculating the return to player percentage

What is the role of the Random Number Generator?

The Random Number Generator (RNG) is the heart of any online slot machine. The RNG allows for random and independent outcomes from all possible results. It randomly selects a unique number out of millions of possible numbers. This unique number is linked to a specific payout.

These are then converted to a virtual representation on your screen. In other words: the RNG first determines which payout you won, after which the online slot translates this into a visual representation by using an algorithm.

An example: the Random Number Generator lands on 850,345. This unique number corresponds to a payout of 45x the total stake. The slot machine then shows the corresponding payout on screen — for example, five cherries on the 5th pay line.

The Random Number Generator has no memory and cannot be influenced by external factors (the player or the online casino). Therefore, the Random Number Generator ensures that all games are run fairly. After all, it chooses blindly from all possible combinations without knowing if the player is winning or losing and without knowing the last prize.

In theory, the RNG may choose the jackpot in two consecutive spins. The chance is negligible, but it’s not zero.

Who checks if the indicated payout rate for a slot machine is correct?

External parties check slots to see if the indicated payout rates are correct. They do this using extensive testing methods, using different ways and angles.

The resulting reports are offered to the licensor, which has to approve them. Only then can the slot be offered in the online casino.

When do we consider the payout rate of an online slot machine ‘high’?

An average online slot machine pays out around 96 – 96.5%. We consider a payout rate’ high’ if over 97%. There are even slots that run up to 98% or 99%. Are you looking for a simple way to find these slots?

Then check out our online slots finder, where you can select the payout rate using the handy filter.

You’ll immediately know which slots to play and which you’re better off avoiding.

However, it is good to note that the payout rate is calculated over a comprehensive range of outcomes. Consequently, a small sample says nothing about your odds of winning in the short run.

lady playing slots in las vegas

Do online slots pay better than land-based slot machines?

Online and land-based slots are often compared, and one of the questions that always comes up is: “Do online slots pay better than land-based slot machines?”

The answer to this question, in short: is a definitive YES.

Slot machines in bars and gambling halls generally pay between 80% and 85%.

Slots at land-based casinos in London, Atlantic City, Macau, and Las Vegas pay out between 88% and 92%.

Online slots have the best payout rates, with default theoretical payback percentages that lie between 94% – 99%.

Online casinos have much lower costs than brick casinos. They have fewer staff members, lower rent, less security, and pay less in utilities. This advantage is returned to the client by the online casinos.

They do this through casino bonuses such as free spins, deposit welcome bonuses, and higher payout rates.

What is the variance of a slot?

The variance of a slot machine says something about the game’s volatility.

A high variance slot usually pays out less (a low hit frequency) but has many high prizes. In other words, you don’t win often, but it will be worthwhile if you win.

Popular high-variance slots are Gonzo’s Quest Megaways, Book of Dead, Tombstone RIP, and Dead or Alive 2.

These slots are especially popular with gamblers who like to play with higher risks in return for possible more significant rewards.

The famous Megaways slots, featuring extra multipliers and many ways to win, are often high-variance slots.

Popular Megaways slots include Primal Megaways, Extra Chilli Megaways, and Vikings Unleashed Megaways.

A low variance slot gives many small prizes and relatively many bonus features.

Well-known low-variance slots include Starburst, Goldilocks, and Blood Suckers.

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