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A few words on hold, theoretical hold, and profits

If you already have some knowledge of the casino business, the concept of "hold" is pretty standard. If you are not familiar, we will try to delve into it in more detail.

We begin with the operation's "Cash in", which means the amount of the players' buy-in to the casino. This can be represented by a customer buying $100 in chips to play.

Following the "Cash in" is the "Cash out", which is the amount of money being withdrawn by players. Obviously, it is profitable for the casino for its "Cash in" to always be higher than its "Cash out". This can be represented by that same previous customer losing $30 of his original $100 buy-in, and withdrawing his remaining $70. By this example, we introduce the "hold", which equals "Cashin - Cashout", in our case, $30. If we were talking about percentages, it would be 30%, which we can calculate as "(1 - Cashout/Cashin) * 100" [%].

Any respectable casino operation should have an appropriate Prize Percentage, which can be known also as payout, or payout rate. This is a ratio set by the operator. Each time a "spin" or "hand" is played, it will return a certain amount. So, if a player has made 500 plays, at $1 each, that player has made a total cash bet of $500. If the average return was of 94 cents per bet, the prize percentage, or payout rate would be 94%, with the total of Cash Won being $470. There will be higher and lower payouts than 94 cents, however, the AVERAGE will still hold true to 94%, calculated as (1-cashwon/cashbet)*100.

There is an interesting correlation between the profit which is Cash In - Cash Out, and the profit coming from Cash Bet - Cash Won. If we assume that the player's current balance is 0, then these two profits are equal.

Again in our example:

CashIn - CashOut = $100 - $70 = $30 (Hold of 30%)

CashBet - CashWon = $500 - $470 = $30 (Payout rate of 94%)

A sign of a healthy operation is the HOLD.

Keep in mind that in a standard operation, the ratio of Cash In to Cash Bet is usually 3x to 5x. In this example we are using 5x.

There is another interesting variable called volatility or volatility index. This number talks about the game experience, or the behavior of the game. High volatility games come with no wins in many spins in a row but then a big or middle win will appear. Low volatility games will give a low win in almost every spin (where the win is lower than the bet). However, it's important to understand that volatility has nothing to do with payout rate. A game could be set to a 94% payout rate and the developer could set this game as high or low as he wants in the volatility index.

In general, good games will attract and keep customers playing, since they will not feel cheated. Basically it's a magic combination of payout rates, volatility, theme of the games, graphics and sound/music, and last but not least the market and targeted customer/player.


eGameProvider Team

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