How does cashback affect variance?

Hello everyone,

Is it possible to calculate how much the variance of a video poker game changes according to the amount of cashback one gets?

Quote: gunbj

Hello everyone,

Is it possible to calculate how much the variance of a video poker game changes according to the amount of cashback one gets?

Separate accounting. The variance of the video poker game does not change.

Ok thanks, I understand that the variance of the game itself doesn't change but does the variance of the whole exploit change when you're basically getting free money? I mean, the swings you're experiencing in your bankroll (not in the amount of coin-in/out) are going to be lower thanks to the freeplay?
How does one account for that?
When making RoR calculations for a video poker exploit should I use the variance of the video poker game knowing that my edge is not coming from the game itself?

Quote: gunbj

Ok thanks, I understand that the variance of the game itself doesn't change but does the variance of the whole exploit change when you're basically getting free money? I mean, the swings you're experiencing in your bankroll (not in the amount of coin-in/out) are going to be lower thanks to the freeplay?
How does one account for that?
When making RoR calculations for a video poker exploit should I use the variance of the video poker game knowing that my edge is not coming from the game itself?

What I mean is the Standard Deviations based on coin-in for the Video Poker game itself won’t be any different. Thus, if you have calculated particular ranges of results to 1SD, 2SD, etc…then you would just add whatever fixed percentage to that.

NOTE: This also assumes that your bankroll is such that your coin-in will be unaffected by how you, ‘Run.’

Ok mmh not sure I get that, if I need to calculate the SD/h of a game (let's say SD of 4 and bet $10) + 1% cashback, how do I do that?

Quote: gunbj

Ok mmh not sure I get that, if I need to calculate the SD/h of a game (let's say SD of 4 and bet $10) + 1% cashback, how do I do that?

You’ll get the return range from your SD calculation and you just add the fixed 1% to both ends to get your new return range.

Because the 1% cash back doesn’t have any variance if you’re bankrolled such that how you run won’t impact your coin in amount.

Misssion, if you want to do a fun excercise try to figure out how much it costs the casino to give someone XXX amount of freeplay. Many people have tried and I have never seen what I consider a good or realistic number or formula to calculate it.

Quote: DRich

Misssion, if you want to do a fun excercise try to figure out how much it costs the casino to give someone XXX amount of freeplay. Many people have tried and I have never seen what I consider a good or realistic number or formula to calculate it.

Hmm...I think I would have to ask whether you mean just the free play, or am I to try to guesstimate the costs of mailing offers, as well?

If I had to guess how much it costs the casino in terms of the Free Play actually being cashed out...I think what I would do is look for some sort of revenue report in a state with legalized Commercial Casinos, and from that, look at the total handle relative to the amount that the casino reported in revenues.

I would get a percentage of casino revenues relative to the total handle from that. That would tell me the average percent that the player is losing across the floor. From that, I can reverse engineer how much actual cash they put into the machine, on average and as an estimate, unless a report actually did have actual cash in on it.

Using that information and the information from the report where they do have a line item for free credits they have given out, I could extrapolate roughly how much of that Free Play is likely lost, which is going to be more than player losses on actual cash in...but that would be the hard part. How MUCH more than player losses relative to actual cash in would be a pure guess.

Shooting in the dark, I'm going to say the casino loses about 10% of the face value of the Free Play due to people who play it and cash it out with no additional play at any point. But, maybe I will try the method outlined above and see what I get.