Volatility and Variance (and why I occasionally play slots)

A lot of experienced gamblers play craps because of the house’s relatively low edge over the players. By limiting their bets to Pass and Come or Don’t Pass and Don’t Come, then taking or laying Free Odds, these craps players cut the house edge to well below one percent.

So why do these savvy bettors often find their sessions less rewarding than playing slots or some of the higher-edge table games such as Roulette? The answer lies in the volatility of the game.

Volatility is the variable that causes those huge swings in bankroll. “Natural” winners and winning flat bets only pay 1 to 1 in craps. You bet five dollars – and if the wager wins you win five dollars. In order to win substantially more than a unit or two here and there you have to risk substantially more.

On the other hand, slots players and those who play the higher edge table games often experience wider swings due to payout schedules featuring returns ranging from a few dollars to gigantic jackpots – all for the same nominal bet. On a slot machine, you can luck out and hit “the big one” for a single wager. Just last week I sat down at a slot machine as the woman beside me dropped $1 in and win a $1800 jackpot. To score a comparable win at craps you’d have to parlay a $1 hard six to $10 – then to $100 – then hit it two more times.

For a big score in craps you have to get lucky – not just once – but on a long run of wagers that increase in size over the course of the streak. Betting $5 on Pass and taking 5X odds, then making two Come bets with odds for the same amount, can expose a player to a hit of $90 or slightly more, yet bring in no more than $55 on any one throw. A $1000 bankroll is marginally adequate for a long session with these bets. Picture, though, how hot a table would have to be for those $35 to $55 wins to offset the $90 losses and add up to $1800 in winnings our slot player locked up. Then you start to understand the volatility of the low-edge game.

Do I recommend playing slots? Not at all. Do I play them? Just about every time I go to the casino. It’s a cheap enough way to “rent” a chair when I want to take a break from craps. And who knows? I might even get a lightning strike.