What is Payout Rate and How It Works?

What is Payout Rate and How It Works?

Understanding the dynamics behind the games at an online casino and key concepts such as payout percentage and return to player (RTP), variance, and house edge can significantly affect your gameplay and winning potential.
This guide aims to simplify these concepts and provide you with a better understanding of how they operate.

What is Payout Percentage and RTP

The payout percentage, often referred to as the Return to Player (RTP), is a theoretical statistic that represents the long-term expected payback of a game as a percentage of the amount wagered. It's a significant factor to consider when choosing an online casino game, as it gives you an idea of how much you might expect to win back over time.

Here's How it Works

If a game has an RTP of 96%, for every €100 wagered, the player can expect to win back €96 in the long run. However, it's important to remember that RTP is a statistical average calculated over millions of game rounds, not every time you wager €100.

Calculating RTP is quite straightforward

RTP = (Total amount returned to players) / (Total amount bet by players) * 100%

The major pitfall to watch out for with RTP is thinking it guarantees you a certain return every time you play. This is not the case, as RTP works over a long period and countless spins. Short-term play can see you win or lose significantly more than the RTP.

What is Variance Explained

Variance, often referred to as volatility, is another crucial concept in online gambling. It defines the level of risk associated with a particular game and can impact how often you win and how much you can win.

  • Low Variance Games: These games provide more frequent, but usually smaller wins. They're perfect for players with a smaller bankroll or those who enjoy longer gameplay with less risk.
  • High Variance Games: High variance games offer less frequent wins, but the potential payouts are significantly larger. These games are typically preferred by players who are comfortable with larger risks and seek bigger payouts.

Understanding the variance of the games you play can help you manage your bankroll effectively and select games that align with your risk tolerance and playing style.

What is House Edge Explained

House Edge

Is a term used to describe the mathematical advantage that the casino has over the player in any given game. It's expressed as a percentage and signifies the average profit the casino is expected to make from a player's bet. For example, in a game with a house edge of 2%, the casino will, on average, profit €2 for every €100 wagered.

The house edge is inherent in all casino games and ensures that over the long run, the casino always makes a profit, regardless of the short-term outcome. Games with a lower house edge such as Blackjack or Baccarat provide a better chance of winning compared to games with a higher house edge like American Roulette or Keno.


Our findings show that understanding the payout rate, or RTP, variance, and house edge is crucial for more strategic and potentially rewarding online gambling. These elements highlight the long-term nature of casino profits, the balance between risk and reward, and the built-in advantage that all casinos possess. While the RTP provides an indication of potential returns, it doesn't guarantee immediate results and should not be viewed as such. Variance illustrates the risk level associated with a game and the frequency and size of potential winnings.

Finally, the house edge underscores the consistent profitability of the casino in the long term. Being aware of these aspects and incorporating them into gameplay makes the player not only more informed but also potentially more profitable.

John Gold