Over the short term, volatility is the single most significant factor in determining the kind of online casino experience you’ll have (or retail, if that’s your thing)
And yet, volatility is something that most players understand only in a vague, abstract way. You’ll usually hear it explained in terms such as:
- A low volatility game gives you a high chance of winning small amounts
- A high volatility game gives you a smaller chance of winning bigger amounts
That makes intuitive sense when it comes to a single spin. A low-volatility slot is more likely to pay out on each spin, but the prizes will be smaller on average. A high-volatility slot has more big prizes but also more losing spins.
But there are so many different possible outcomes for a slot that it’s hard to visualize what this means in concrete terms. Also, casinos and slot manufacturers describe the volatility to customers using vague and arbitrary scales. Knowing what to expect from a new slot can be like trying to guess whether you can handle a new hot sauce based on the number of flames they put on the bottle.
It might help to know how a volatility index is calculated and how it works with a much simpler game you probably already understand: roulette.
What’s a Volatility Index?
In mathematical terms, the volatility index is simply the standard deviation of all possible game outcomes, assuming the bet is one unit. But if you’re not a mathematician, hedge fund manager, or scientist, that explanation might not help.
In layperson’s terms, the standard deviation measures how much a set of numbers “spreads out” from the average. For instance, consider these sets of numbers:
- Set A: 1, 3, 7, 9, 13, 15
- Set B: 6, 7, 8, 8, 9, 10
Both sets have an average of eight. But the standard deviation of the first set is higher. That is, the numbers in Set A are more spread out, and those in Set B are bunched closer together.
Conveniently, when considering a fair bet with only two outcomes (win or lose), the standard deviation is just the square root of the odds.
So, an even-money coin flip (1-1 odds) has a volatility of 1. A 4-1 bet (which you’d win 20% of the time) would have a volatility of 2, and so on.
Slot manufacturers don’t display the actual volatility index to the player, just a qualitative description like “High Volatility.” However, a typical range for slot machines is between 5 and 15. So, even a slot machine that’s considered “low volatility” – with an index around five – is comparable to making simple bets at around 25-1.
Volatility Index for Single Bets in Roulette
If there were no zeroes on the roulette wheel, this would make calculating roulette volatility trivial. However, the presence of the house edge lowers volatility slightly. Losses are always closer to the average result than wins are (assuming payouts are even money or greater), and the house edge makes them more common.
The difference is tiny, however. Here are the volatility indices for all the common single bets in roulette for the game’s single zero (European) and double zero (American) variations. Note that you always want to play European roulette if available since the house edge is smaller.
|Bet Type||Payout||Volatility (Single Zero)||Volatility (Double Zero)|
Volatility Index for Combo Bets in Roulette
Of course, slot machines don’t have just one possible payout per spin. Neither does roulette since you can split your bet up.
There are a massive number of possible combinations of bets to make in roulette, far too many to put into a table. However, some simple combos would be just as easy for you to work out yourself as a single bet. For instance, betting on four separate numbers is mathematically identical to a corner bet, so the volatility would be the same.
Generally speaking, splitting your bet up between various options will reduce your variance. For instance, $10 on Red plus $10 on Even is a lower-volatility play than putting all $20 on one of those things. That’s even more true when the options are mutually exclusive. For instance, betting on Even and 17 is lower volatility than betting on Odd and 17. That’s because 17 is an odd number, so pairing it with Even means your two bets partially hedge each other.
Here are the volatility indices for a few examples of combo bets. To keep it easy to understand, we’re assuming a $25 total bet, but volatility doesn’t depend on the amount you’re wagering.
|Bet Type||Volatility (Single Zero)||Volatility (Double Zero)|
|$20 Even + $5 on 17||1.308||1.296|
|$10 High + $10 Odd + $5 on 27||1.418||1.408|
|$20 Odd + $5 on 17||1.524||1.512|
|$10 "1-12" + $5 each on 1, 2, 3||2.264||2.239|
Are Slots Much More Volatile Than Roulette?
Recall that the volatility range for most slots is reportedly around 5 to 15.
You may have noticed that the only roulette bet with volatility higher than five is betting on a single number. Does that mean playing most slots will result in even bigger swings than betting single numbers in roulette?
Yes and no. The volatility index measures the “swinginess” of a single bet. When comparing games, however, it only tells the whole story if you’re making the same number and size of bet at each game.
So, if you’re comparing, say, ten $10 slot spins to ten $10 roulette bets, yes, the slots will almost certainly be more volatile. However, if you’re playing for an hour at each, with a similar budget, that might not be the case.
The thing about slots is that they play much faster than table games. You’ll probably play about ten spins per minute at a slot machine, while live dealer roulette is closer to one spin per minute. (Auto-roulette or fully digital roulette is faster but not as quick as slots.)
Here’s why that matters.
Making More, Smaller Bets Reduces Session Variance
The variance of a gambling session as a whole depends both on the volatility index of a single bet and the number of bets placed.
For instance, imagine placing one $20 bet on Red, or two $10 bets, on consecutive spins. In the first case, your only possible outcomes are that you’re up $20 or down $20. In the latter case, those possibilities can still happen, but you’ll also break even almost half the time. That’s clearly a lower-volatility scenario.
So, placing $500 in total roulette bets over an hour will be higher volatility than gambling on slots for an hour with the same budget. You’ll be spinning ten times more often and presumably betting one-tenth as much each time.
How much difference does it make? Imagine that you have $100 to bet and split it into ten $10 bets, one number at a time.
Assuming a single zero, you’ll lose all ten bets 76% of the time. You’ll win one of them 21.1% of the time, two of them 2.6% of the time, and three-plus less than 0.3% of the time.
You can see below how that looks in terms of the combined volatility index, treating all ten spins as a single wager. You can see that placing multiple smaller bets reduces volatility almost but not quite as much as spreading your bet out for a single spin.
In other words, a single spin of a low-volatility slot game might be like betting a number in roulette. But an hour of play on such a machine will feel more like an hour of betting columns or dozens at roulette, given the smaller stakes and higher frequency.
|Bet Type||Volatility (Single Zero)|
|One spin, one number, $100||5.838|
|One spin, ten numbers, $10 each||1.599|
|Ten spins, $10 on one number each time||1.846|