I have re-read my previous articles in this series and realize that I need to stop and talk about the big bugaboo for every video poker player, the characteristic of this game that can cause more grief than anything else: volatility. I have been discussing EV (theoretical expected return) and the long term a lot - and those subjects are important. But the short term is also important to players and that is where volatility must be considered.
The math experts talk about “variance” when they discuss volatility—in other words, how much your winning and losing sessions will vary from the "average" return or the theoretical EV. I like my non-mathematical real-life definition—I call it "the roller-coaster effect." I don't have to explain that to anyone who has played VP for even a short period of time.
Why is VP so volatile? One word - jackpots. Whenever you have a "pyramid-pay" game (from lots of smaller payoffs to a few larger ones), where a big part of the long-term payback is dependent on jackpots that aren't hit very often, you have a recipe for high volatility.
Blackjack, for example, has much lower volatility; although you win more on blackjacks/doubles/splits, it's not many times more than the usual hand—like a royal flush is in video poker. Speaking in averages again, a royal comes up only about every 40,000 hands, more or less depending on the game and strategy used. If you play 500 hands an hour and even if the royal comes up exactly at the average point (which it never does), that means you're playing 80 hours without that jackpot. A royal contributes, on average, about 2% to the EV in most games. That means if you're playing a positive game with a high EV of 101%, you're only actually playing at a 99% rate of return for most of the 80 hours, even if you get the average number of smaller paying hands. So, you're losing for many more hours than you're winning, even if you end up a net winner when you finally hit the royal.
The math says that when we play a positive expectation video poker game we will lose, on average, two out of three sessions, but the money we make in those fewer winning sessions more than makes up for what is lost in the losing ones. But how can we last during those long losing streaks between jackpots? The answer to that question goes back to the subject we discussed in our 4th article in this series – bankroll, which I also described as a bugaboo.
Those two bugaboos, volatility and bankroll, are tightly entwined; the more volatile the game the bigger the bankroll you need. This presents a problem for many players. Many high-EV plays are very volatile and require a large bankroll, and the players with smaller bankrolls may have to sacrifice EV and choose a less volatile lower-EV play to be sure their bankroll will last in the short term.
I don't have a specific remedy for that will solve this problem for every player, but here are some tactics that have worked for myself and other players:
- Do everything you can to increase your bankroll since the larger your bankroll the more higher-EV but volatile plays you can do. This could mean saving more from non-gambling income. Or, waiting to play until you have an adequate bankroll for what you want to play. Or, it could mean never spending any of your video poker profits but always plowing them back into your bankroll.
- Make a strenuous effort to add extras to your game play. This is SO important since there are so few “good” video poker games compared to years past. However, these extras are increasing in many (but not all) casinos now that they are having to scramble for customers during these bad economic times. And the beauty of the extras, in contrast to the game roller coaster, is they are always positive. We continue to make a nice profit playing every year even though we rarely play a 100%+ video poker game. How? We chase promotions tirelessly and utilize slot club benefits to the max!
