Expected Value of Casino Bonuses

April 10, 2013 Posted in Bonuses by No Comments

Deposit bonuses are a big draw for online gamblers. The idea of getting free money to gamble is alluring

In a past post, I discussed the process of clearing bonuses. That post explained that all casino bonuses come with wagering requirements that must be met before you can withdraw the bonus money or any money won by wagering the bonus.

In many cases, casino bonuses come with a wagering requirement of 20 times the bonus plus deposit amount. So if you make a $100 deposit and get a $100 bonus, you would have to wager 20 times $200 or $4,000 before the bonus has been cleared for withdrawal.

That leads us to today’s topic. How much is a bonus really worth when you consider the clearing requirements and house advantage? You can use a simple calculation to get a rough idea of how much money you can expect to lose, on average, by clearing a bonus.

Calculating the Cost of House Advantage

Let’s say you want to get a standard 100% bonus with a 20x rollover on the bonus plus deposit amount. You like to play Caribbean Stud, so your plan is to place a total of $4,000 worth of wagers on Caribbean Stud in order to clear the bonus.

The first thing you have to do is figure out how much money the house advantage is going to cost. It just so happens that you can calculate the cost of any game’s house advantage by multiplying the house advantage by the total number of dollars wagered in that game:

House advantage x total amount bet = expected value (loss)

The house advantage of Caribbean Stud is about 5.2%. If you multiply 5.2% times $4,000, you get a total of $208. That means you can expect to lose $208 on average for every $4,000 you wager on Caribbean Stud.

.052 x $4,000 = $208

So what this means is that you can expect to lose about $208 while releasing your $100 bonus. In other words, the bonus has actually set you back $108. You got a $100 bonus but you also spent $208 trying to clear it.

Keep in mind the effects of variance. The house advantage calculation only shows what you can expect to lose on average. It is unlikely that you’ll lose exactly $208 after placing $4,000 worth of wagers. You might lose more than that and you might come out ahead. Anything is possible in the short term.

But from a purely mathematical point of view, this calculation shows that given the rules of this particular bonus, clearing it with Caribbean Stud is not a winning proposition. In this case, you would be better off NOT claiming the bonus.

You can use this same basic calculation for any casino game and any bonus. The first thing you have to do is figure out what the exact clearing requirements are. See what the bonus terms are and then compare that to the size of your deposit.

Note 1: The above example is using a standard 20x rollover rule on the bonus + deposit. Not all gambling bonuses have the same wagering requirements. You will need to see the rules of the bonus to find out what the wagering requirements are for that exact bonus.

Note 2: To perform this calculation, you need to know the house advantage of any particular game. You can do it the hard way (by calculating the house advantage manually) or you can simply jump on Google and search for the house advantage of any particular casino game.

Note 3: This calculation does not take into account any extra money that you win by wagering the bonus. There may be times in which you start off winning money right away. That extra money will make it easier to meet the clearing requirements without dipping into your original deposit.

Note 4: Don’t feel like doing the calculation by hand? VPGenius.com has a simple bonus EV calculator here. The calculator doesn’t tell you the exact EV of any bonus, but it does tell you if the bonus is +EV or –EV.