cashback and expected value

[philderby]

I have a question, if a casino is offering 10% cashback to a player, if the rtp is lets say 94% rtp then does this mean the average payout is 104% and positive EV?

 

[dionysus]

why are you asking this twice? youve ALREADY asked this here: https://www.casinomeister.com/forums/threads/cashback-and-expected-value.59789/

 

[philderby]

my bad i clicked twice sorry :/

 

[dionysus]

lol, well, those are really slow fingers you've got - the threads are 2 and a half hours apart

 

[nisosbar]

I don't think that's correct - the percentages are measures of two different sets of data points.

The cashback of 10% is invariable, while the stated RTP % is an estimate over some x million spins, and typically a highly variable number from player to player. But even in theory, I don't think you can add the percentages and say, that's your RTP.

Cashback WILL generally lower the house's take, but I don't know how to calculate how much it impacts a slot's RTP%. It quite complicated, I think.

 

[HIGHIQ]

cashback is the worst u can have .. this is paid according your losses.. so u need to lose money to get soemthing... if i play i play to win not lose first to gain something...its absurd.. if it is high percentage i can say ok but 10% just sucks.. stay away from places with just 10% cashbackoffer..

 

[PoissonX]

Cash back doesn't necessarily have to be bad. Consider the following situation: a game has probability p (e.g. 90%) that you lose your bet of let's say €1 and probability 1-p (10%) that you win €9.5. In this case the expected win is p*0+(1-p)*9.5=€0.95 for a €1 bet, so the payout (RTP) is 95%. Now consider playing this game with a 10% cash back. The structure of the game is the same, but if you lose you get 10% of your money back. The expected win from the game will now be p*0.1+(1-p)*9.5=0.09+0.95=€1.04. So, suddenly the RTP=104% and the game is favorable for the player.

 

[Cleveland]

Cash back doesn't necessarily have to be bad. Consider the following situation: a game has probability p (e.g. 90%) that you lose your bet of let's say €1 and probability 1-p (10%) that you win €9.5. In this case the expected win is p*0+(1-p)*9.5=€0.95 for a €1 bet, so the payout (RTP) is 95%. Now consider playing this game with a 10% cash back. The structure of the game is the same, but if you lose you get 10% of your money back. The expected win from the game will now be p*0.1+(1-p)*9.5=0.09+0.95=€1.04. So, suddenly the RTP=104% and the game is favorable for the player.

My math is bad and even I know that's incorrect in terms of how cash back offers work. It's applied to the total loss of a session not a single bet. And single large bets on table games will garner one response from the casino.

 

[SirWegs]

cashback is the worst u can have .. this is paid according your losses.. so u need to lose money to get soemthing... if i play i play to win not lose first to gain something...its absurd.. if it is high percentage i can say ok but 10% just sucks.. stay away from places with just 10% cashbackoffer..

All casinos dont base the cash back on your losses, some casinos pay you cash back regardless if you win or lose. They base it on the bets. Both Nordicbet and Videoslots.com has these cash back offers. Its more similar to rakeback in poker.

 

[KasinoKing]

Cash back doesn't necessarily have to be bad. Consider the following situation: a game has probability p (e.g. 90%) that you lose your bet of let's say €1 and probability 1-p (10%) that you win €9.5. In this case the expected win is p*0+(1-p)*9.5=€0.95 for a €1 bet, so the payout (RTP) is 95%. Now consider playing this game with a 10% cash back. The structure of the game is the same, but if you lose you get 10% of your money back. The expected win from the game will now be p*0.1+(1-p)*9.5=0.09+0.95=€1.04. So, suddenly the RTP=104% and the game is favorable for the player.

Like Cleveland said - that can't be right.
You only get the cashback if you lose all your money. 10% cash-back is then only an RTP of... 10%!

KK

 

[zreb]

Both cleveland and poisson are both somewhat right. If you make one single bet, you might have a positive expected RTP, but playing like that is probably neither worthwhile nor advisable.

10% cashback is best though of as an additional comp if you were going to play a certain game anyway.

Like Cleveland said - that can't be right.
You only get the cashback if you lose all your money. 10% cash-back is then only an RTP of... 10%!

KK

You're confusing "actual RTP" here with "expected RTP" or "average RTP." The first is based on your actual results and luck, the second is based on the distribution of a game's payouts.

 

[paul@bgo]

Interesting question this one and I'm interested to see what people think of Cashback. I think the point of it is sometimes lost in amongst the gigantic bonuses thrown around these days. Yes 10% is a relatively low amount but it's a guaranteed bonus each week if you don't make a profit. Surely that can't be a bad thing?

Giving massive deposit bonuses is all very well but how many of us have deposited somewhere, claimed a bonus, won big in the first few spins and then lost whilst trying to wager through a bonus? I tell you, I certainly have done that and it hurts! Now imagine if that bonus was applied retrospectively, you could have cashed out your winnings and started from a clean slate the following week. Cashback doesn't look at overall net position, only your weekly activity. That to me is how bonuses should work, or am I talking rubbish?

 

[PoissonX]

Just to clarify my previous reasoning somewhat. The same over all idea can be applied even if you are playing multiple spins. Consider this situation: you have a bankroll of €100 and a cash back deal for 10%. If you now chose to play a game, preferably with a high variance, untill you have either won €1000 or bust your BR, you will have some probability p of reaching your cash out level. The value of the game will be bounded from below by: p*€1000+(1-p)*€10=€950*p+€10. This value will be higher than €100 as long as p>90/950=9.5%. For a sufficiently high variance game and a correctly chosen bet size this is not an impossible situation.