Online casinos frequently cite their high payout rates and lower overheads as a reason that their players get more bang for their buck than the customers of land-based casinos. But is this really true, or just another marketing myth in an industry that often plays fast and loose with the truth? We decided to investigate and compare the reported payout rates at popular online and land-based casinos for 2013.
We have compared the reported payout rate figures for the full calendar year starting from January 1 through to December 31, 2013, from three online gambling industry heavyweights, 32 Red, Bet365, and 888 Casino, against the aggregated payout statistics reported by the Nevada State Gaming Control Board for Nevada casinos, and Atlantic City casinos as reported by the New Jersey Division of Gaming Enforcement.
We chose our three online casino groups for a few reasons. Each uses a different software provider so we get a broader picture of the payout rates across the online industry. They each have a large customer base which is less susceptible to skewing of the statistics due to a couple of big wins, and of course each group enables us to do this analysis by operating transparently and publicly divulging their audited payout statistics on a monthly basis. As for the land-based casinos, we picked the two most popular regions for casino gaming in the United States.
The numbers favour online casino players, with each of the casinos tested showing a higher average payout rate than the land-based casinos in every comparable game category. In particular, low stakes slot machine players are far better off playing at an online casino as the numbers show that land-based casinos hold a much higher percentage of wagers on their lower denomination slot machines, penny slots being the worst with a RTP of 88% on average. In contrast the online casinos that we tested maintain a fixed RTP across all coin sizes, which means that the payout rate remains the same no matter how large or small a player bets. The bottom line is that you can expect on average to have more spins, deals, or playtime for a given amount of money at an online casino than at a Vegas or Atlantic City casino, with the possible exception of those playing $25 and $100 slots at the nosebleed stakes.
These are the consolidated statistics for online casinos (click to enlarge):
And these are the consolidated statistics for land based casinos (click to enlarge):
We noticed several interesting numbers amongst these statistics. First up, looking at the online casinos you can see that the payout rate on the Microgaming slots at 32 Red averages almost 96%, for Playtech at Bet365 it is closer to 95%, and at 888 it is around 94.5% for the video slots or 95% for the classic slots, indicating that Microgaming on the whole has slightly higher paying slots than the others. This should hold true across all online casinos that use these software platforms.
The classic slot machines at 888 Casino recorded an astounding audited RTP of over 110% in September 2013. Checking this against our jackpot tracker, we found that this was no doubt due to UK based punter "Norm" taking home a £2.4 million Millionaire Genie jackpot win on September 3, 2013. With the payout rate on classic slots at 888 averaging almost 94% in other months, we estimate that the £2.4 million represented around 16.5% of the RTP that month.
The bright lights of the Vegas Strip attract punters from all over the world looking to have a good time and perhaps strike it rich. However a quick look at the reported payout numbers shows that in terms of pure return on your wagers and value for money, the Strip is the worst place for you to gamble in all of Nevada. Apart from the penny slots which have dismal returns just about everywhere, players can get far more value for their money by venturing to the downtown Vegas casinos, or even further afield to other parts of the state. This should come as no surprise though - after all the Strip casinos have to pay for the 5 star hotels, roller coasters, performing fountains, and mini Eiffel Towers somehow.
The payout rates of table games at land based casinos in both Nevada and Atlantic City are astonishingly low. We had a double take when we saw these numbers and had to re-check them to make sure they were accurate. The interesting thing is that we don't see the same low payouts at online casinos, with table games and video poker payouts tracking closely to their expected payout rates based on the built-in house edge of the games. We are really struggling to explain such a drastic difference in the numbers on games that often have a fixed house advantage such as roulette. In games that involve the use of a correct strategy we could assume that a large proportion of land-based players have no idea of the correct strategy to use. A case in point is 3 Card Poker where the land casinos are holding over 30% of all wagers made. We could also factor in the possibility of a large number of side bets that are made for suckers. But are online gamblers significantly more savvy than their land-based brethren, enough to wipe away most of that 30% hold? It is hard to believe and definitely warrants further investigation.
Update: We contacted the Nevada State Gaming Control Board and also checked with Michael Shackleford, aka The Wizard of Odds, when we interviewed him here about this discrepancy. We have not heard back from the Nevada authorities but Shackleford believes that the numbers differ because the authorities are reporting the total hold, rather than the payback percentages for the table games. So if for example, a player starts playing roulette with $100 and plays many spins before eventually leaving the table with $80, the casino would report a 20% hold, rather than the house edge of 2.7% or 5.3% depending on whether the game was American or European roulette. This invalidates any comparison between the land-based and online casino table games without looking into detail at the specific rule variations and calculating the house edge. The slots, however, are directly comparable to online alternatives as the land casinos track each wager made on a spin to calculate these payout percentages.
The numbers reported by each online casino and the land casinos are not directly comparable as reported due to the different categorisations used. Where possible we attempted to aggregate the numbers into matching groups to make comparison easier. Each of the online casinos report their payout statistics on a monthly basis, whereas the Nevada and New Jersey casinos report aggregated annual statistics. The annual average numbers for the online casinos are therefore only approximations because we only have access to the reported payout rate each month. An average of a series of monthly averages is not necessarily going to produce the true annual average because of the different amounts wagered and won each month. Nevertheless the numbers we have calculated are likely to be close enough to the true annual average for the purposes of this analysis.