Hold Percentages and Payouts

You've probably heard of the term "house edge" to describe the percentage that a casino expects to earn on games such as roulette, blackjack or craps. Blackjack, for example, has a house edge of between .5% and 1% when someone plays with what amounts to "perfect" strategy over the long term. (Note that this is over the long term. In the short term, wild variances can occur).

Slot machines, on the other hand, are described according to their payout and hold percentages. A payout percentage is just what it sounds like: the percentage of money that the slot machine will pay out over the long term compared to what is wagered. If a slot machine is set to have a payout percentage of 98%, that means that for every $100 bet, $98 goes back to the players. It's important to note that this is over the long term, which means that multiple players' losing sessions means that another player will get a massive payout.

The hold percentage is the inverse of the payout percentage: it's the amount kept by the casino, which you can determine by subtracting the payout from the total amount taken in. A slot machine with a 96% payout percentage is holding 4% for the casino. For all intents and purposes, a slow machine's hold percentage acts as the house edge.

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Casinos are not cheap to maintain, as you can imagine, which means that many of them have their hold percentages set as low as they can manage in the area they're established. They have to balance that with the fact that players naturally prefer a higher payout percentage. In Nevada, for example, the hold percentage statewide is around 6%, but there's a great deal of variance within that.

Areas with a lot of guaranteed players such as the Las Vegas Strip have a higher hold percentage. The strip, for example has an average hold percentage of 6.88% and downtown hits 6.31%. On the other hand, Reno, which actively tries to get players to come out to visit has a significantly lower hold percentage of just over 5%. Overall, brick and mortar casinos have seen an increase in their hold percentages over the last few years with some casinos in Atlantic City holding up to 9% of the money they take in.

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Online casinos have lower overhead and also feature more players, which means they can be more profitable while holding a smaller amount of money. In fact, it's not uncommon for an online casino to have a hold percentage as low as 1%, as they have greatly reduced costs. With the number of players that a popular online casino sees, this means that progressive jackpots grow larger faster and that you're more likely to win in the long term.