How to Calculate the Value of Casino Bonuses
It’s no surprise there many gamblers are tempted by the first generous welcome bonuses on offer for new customers at online casinos. But how many of them stop to consider what they are really getting? If you’ve been reading our articles, you’ll already know about bonuses and betting. You’ll also know that the most important point of these is “Expected Value.” Today, let’s have a look at how to calculate the Expected Value of casino bonuses. And also, how to discover the best deposit bonuses available.
Ideally, you should be using welcome bonuses as a means to increase your jackpot winning chances. For example, Bovada Casino offers all new players a very tasty welcome bonus of $3,000! With this generous offer in mind, you still need to ask yourself what is a casino’s bonus really worth. Once you’ve done some research, you’ll discover that the answer depends on a number of factors. With that in mind, let’s have a deeper dive into the finer details of casino welcome bonuses.
What Is the Expected Value of Casino Bonuses?
Before we look into the value of casino bonuses, it’s important that you understand the concept of Expected Value. If you don’t understand what this means, or its implications, then you could end up simply throwing money away when you’re betting on casino jackpot games or sports.
Explaining Expected Value
Expected Value is, to all intents and purposes, a concept found within probability. As such, it describes the average outcome from a random event. Utilizing Expected Value can help you determine exactly how much profit you can make from certain bets over the long term. As an example of Expected Value, let’s have a look at it in terms of a coin flip game. This will allow us to keep things simple and also clarify the concept for everyone.
As you well know, the coin flip has a 50/50 outcome over the long term. You should also keep in mind the following:
- The odds of each outcome
- The payouts for each outcome
In this example, let’s say that if you win a coin flip, you will win $1. Should you lose, you will lose $1. Here we have no built-in edge. Now as you are well aware, with a 50/50 wager, you have the same chance of winning as you do of losing any given flip.
Outcome Odds Payout
- Tails 1/2 $1
- Heads 1/2 $1
Using the numbers outlined above, the next step is to perform a simple calculation.
- (½)*1 = 0.5)
- (½)*-1 = -0.5
- Total sum: 0
As you can see from the above, the sum of the Expected Value in a simple coin flip game is going to be $0 in the long run. It’s important that you don’t think about this in the short term, as it will not hold true. Judging very few coin flips over a short period of time can produce a huge variance in results. You will see your numbers go up and down considerably. But over a long enough timeline, everything will revert to $0.
How to Calculate the Expected Value of Casino Bonuses
Now let’s take the same concept of Expected Value and see how we can apply it to online casino promotions. Before we begin, we need to know three important pieces of information:
- Wagering requirements: the number of times you have to roll over the bonus before you can withdraw.
- The house edge of the game: the advantage of the casino (for example, 2.7% in European roulette).
- The actual bonus size: the amount of bonus cash you receive in your account.
Then all you need to do is multiply the house advantage by the wagering requirements. Let’s look at an example. Say you visit a new casino and you grab the 100% first deposit bonus of $500. The wagering requirements oblige you to wager 20x, which in this case is $10,000 in bets. Let’s say that you’re going to pick a game with a house edge of 3%.
- The formula is simple: $10,000 x 0.03 = $300
Looking at the total, you should expect to lose at least $300 when you’re wagering this bonus. In order to see if it will be profitable, you must deduct this number from the total bonus size. As the initial bonus was $500, when you subtract $300, you’ll end up with $200 as the Expected Value. It’s important to keep in mind that variants will play a role in this. In practical terms, you may find your results will differ widely from our calculations. But that is of little importance.
Before you accept any online casino welcome bonus, it’s important to understand that they are not all equal. The main differences will be found in the bonus terms and conditions. Probably the major factor will be what’s known as “wagering requirements.” Before you’re allowed to withdraw any bonus, you need to wager the total amount a said number of times. Imagine for a moment that the casino welcome bonus has a 12x wagering requirement attached to it. Now let’s imagine that you’ve deposited $1,000. Technically the wagering requirements mean that you need to wager $20,000 before you’re able to withdraw either the bonus cash or your winnings.
You may find that some casinos offer outrageous bonus wagering requirements going up to, and beyond, 50x the initial bonus amount, or even more. Just to add some more spice into the mix, these same casinos may insist that the bonuses are played through in a very short time frame. The idea here is rather cynical. It’s to ensure that players cannot withdraw deposited funds or winnings.
The house edge is the way the casino always wins. Technically, it’s the mathematical advantage that the casino has in a game. Let’s have a look at a typical jackpot slot machine that has a house edge of 3%. This means that, at the end of the day, and over a long period of time, the casino will make $3 for every $100 you’ve wagered. The bottom line here is that if you want to improve your casino bonus Expected Value, then you’ll need to look for games with a lower house edge. If you take a look at Bovada Casino, you’ll see that many of their slots and traditional table games offer some of the lowest house edges in the whole iGaming industry.
How to Improve the Expected Value of Casino Bonuses
Now we’ve been through what the house edge and Expected Value are, and how to calculate them, let’s see if it’s possible to improve upon them to help you win the jackpot online. Probably the best way of doing this is to find games that offer a lower house edge, along with bonuses with low wagering requirements.
Play Games With a Lower House Edge
In truth, the house edge of casino games can vary widely from casino to casino. Also, within similar games, such as if you play European or American roulette. In this example, you’ll find that the American variant of roulette has a house out of 5.26%. This compares very unfavorably to the European wheel which offers a house edge of just 2.7%. But when it comes to online casino slot machines, there is also a huge variety of house edges on offer.
On the whole, you’ll find that jackpot slots will have a much higher house edge than standard ones. As a given, we suggest that you only play slots with a low house edge. Though is true that the majority of slot machines will offer a house edge of around 5%, it is possible to find machines with just 2%, if you look hard enough.