An Intuitive Guide to Volatility in Online Slots

August 4, 2014

When it comes to online slots, there are two main figures that people should know: volatility and house advantage. The house advantage is pretty easy to understand because it's easy to quantify. If you have a two percent advantage, for example, it's easy to understand that it means that the house will win $2 for every $100 that you wager, on average. With volatility, it requires a bit more of a feeling for what's going on, and we want to help you to build that understanding with an intuitive guide to volatility for online slots.

Let's start with a great example of a low-volatility situation. Suppose that if we flip a coin, the winner wins $1 and the loser loses $1. This game has an advantage of zero because you'll break even on average, but there is a chance for some swings. The swings will be very small, on average, and it's unlikely for you to ever be down more than $4 to $5 or so at any point over a few dozen throws. As you can see here, the volatility comes from the nature of the game and the distribution of winning and losing results.

Now let's look at another situation. Suppose we roll two fair, six-sided dice. If we roll a total of two, then we win $35. If we roll any other total, then we lose $1. This game has an advantage of zero, but it has a much higher volatility. The way the volatility has changed in this game comes from the fact that we lose much more often, but when we do win, we pick up a much larger prize. We need to point out that this is a lot like progressive jackpot games where so much of the value of the game is tied up in a single payout.

If you can relate to the coin-flipping game and the dice-rolling game we mentioned above, then you can gain a pretty good understanding of how volatility works in slots. Everytime you add a big payout to the top end of the payout schedule, you have to compensate by taking away some of the smaller and medium payouts. This increases the volatility of the game. Likewise, you can do the opposite to decrease the volatility of the game. Overall, most slots these days have fairly high levels of volatility, and that affects the streaks you have in the game as well as the swings that the game has for your bankroll.

Top of Page