# Think Loss Rate

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How much of a difference is there in terms of payback
from one casino game to another? Most
table games have a payback between 97 and 99.5%. Video Poker can range from about 95% to
101%. Slot machines probably range from
about 85% up to 95%. Sidebets, quite
frankly are all over the place, ranging from just over the legal limit of 75%
and going up to the low-mid 90%. While
there is a lot of overlap, one of the largest determining factors is
strategy. More complex strategy means a
combination of more human error and/or Players not even trying to follow
it. Simple strategy is much easier to
learn and follow. Three Card Poker has
one simple strategy rule. Follow it and
you should approach the theoretical payback of about 98%. Don't follow it and you can only do worse.

Video Poker has paybacks considerably higher. Not all of the versions, but you can still
find plenty of them well above 98%.
Video Poker's strategy, however, is far more complex than Three Card
Poker's strategy. The average Video
Poker machine has more than 30 different strategy items that need to be
memorized and in the appropriate order so that you know how to play the hand. So, first you need to review the hand and
determine the realistic ways the hand can be played and then you have to know
which of these ways has the highest expected value, which tells us which way
the hand should be played.

In most games, many of the hands are pretty obvious even
if you knew little. If you're dealt a
6-7-8 in Three Card Poker, I don't think you need to have read a book to know
what to do. What if you are dealt
K-3-2? What about Q-8-2? What about Q-3-2? For each hand, the Player is really asking
himself if he is better off Playing or Folding.
Those are the only two options in Three Card Poker. The answer is pretty obvious for the Straight
and a good deal less obvious for the other three hands. The strategy is determined by the math behind
the question of whether the Player is better off Folding or Playing. By Folding, the Player forfeits his original
wager (one unit). By Playing, he wagers
an additional unit. If Playing can
return at least that additional unit (on average), then the hand is worth
Playing. The Player does not have to perform
some complex calculation on each hand.
The decision is to Play or Fold and the math works out very neatly. For every hand stronger or equal to Q-6-4 the
Player is better off Playing. For Q-6-3
or less, he is better of Folding. You've
just become an expert at Three Card Poker strategy.

Video Poker is not nearly this simple. First of all, there is no folding and no
additional wagers. You make an original
wager and your only goal is to maximize the amount of money you get back on
average for each hand. If you're dealt a
Straight off the deal, there isn't much to think about - unless of course it is
also a 4-Card Straight Flush or a 4-Card Royal - then what? What if you're dealt Three of a Kind and
3-Card Royal? How about a Pair and a
4-Card Flush? Does it matter if it is a
High Pair or a Low Pair? (Yes, it
does!)

In Video Poker, the hands are categorized into about
30-40 different hand ranks and partial hand ranks. Each of these is assigned an expected
value. This expected value is calculated
by looking at ALL the possible draws for that hand and tabulating the total
units won for each final winning hand.
We then divide this total by the number of possible draws so that we can
compare apples to apples. So, to look at
a simple example. Suppose you are dealt
the following hand:

4♥ 5♥ 6♥ 7♥ 8♦

The decision here should NOT be driven by your favorite
Clint Eastwood line ("are you feeling lucky, punk?"). It should be driven by the math. The straight has an expected value
("EV") of 4.00. There is no
draw in this case and the EV is simply the payout of the hand. If you decide to discard the 8, there are 47
possible draws. 2 will result in a
Straight Flush, 5 will result in a Straight (remember that you would have
discarded a card that could also have made it a Straight) and 7 that will
result in a Flush. All other cards
result in a losing hand. So, do you
throw away the sure 4 units to go for the Straight Flush? When we add up the payouts of the winning
hands, we get 162 units (2 x 50, 5 x 4, 7 x 6).
We divide this by 47 (the number of possible draws) and get 3.45. As this is less than the EV of the Straight,
we keep the Straight. In the long run,
this will be the better move.

While most Player would play this correctly (I guess?),
the simple reality is that except for those that learn the right strategy,
there will be a significant number of Players who will NOT play this
correctly. Throw in the roughly 25% of
hands that require a real decision and the casinos can count on Player error to
help pad their winnings. This is why
they can offer the 99.5% paybacks on so many full-pay jacks or better Video
Poker. Someone like myself might sit
down and get the 99.5%, but the vast majority of Players will play well below
this level. They are likely to play in
the 97-98% range if they have some idea of what is going on and perhaps as
little as 95% if they just 'wing it'.
The difference between 99.5% and 96% may not seem like a lot, but I
always suggest you turn that around to the loss rate - 0.5% vs 4%. Now there is a 700% increase from one to the
other. The impact to your bankroll could
be staggering.