RTP, House Edge and Margin Explained

Every gambling product has a number that describes how much of the money staked on it comes back to the people who staked it. In casino it is called return to player, or RTP; the complement is the house edge. In sports betting it is the margin, or overround, and its complement is the payout percentage. The numbers are simple to state and widely misunderstood, by players who read a 96 per cent RTP as a promise and by professionals who confuse it with hold. This guide explains what each number measures, how they relate, how they are set and certified, and what they do and do not tell you.

Return to player

RTP is the proportion of total stakes that a game returns to players as winnings, averaged over a very large number of plays. A slot with a 96 per cent RTP returns £96 of every £100 staked, in the long run, and keeps £4. The £4 is the house edge: 100 per cent minus RTP.

Three things about that definition matter.

It is a long-run average. Over a million spins the observed return will be close to 96 per cent. Over a hundred spins it can be anything from a total loss to a large win, because the return is the mean of a distribution with enormous variance. RTP says nothing about what will happen in a session.

It is a proportion of stakes, not of deposits. A player who deposits £100 and plays a 96 per cent game does not lose £4. They lose £4 per £100 wagered, and if they wager their balance ten times over, which a slot session easily does, their expected loss is closer to £34 of the original £100. The number that describes what a customer actually loses is not RTP but RTP combined with how many times the money goes round.

It is a property of the game's design, not of its history. RTP is computed from the game's mathematical model: the probability of every outcome multiplied by its payout, summed. It is not measured after the fact and then reported, although regulators do check that the observed return converges on the theoretical one.

House edge and hold

The house edge is what the operator keeps of every unit wagered: 4 per cent on a 96 per cent game. Hold is what the operator keeps of what the customer brought to the table, and it is always higher than the edge because the customer wagers the same money repeatedly. A table with a 1 per cent edge and a customer who cycles their buy-in twenty times holds close to 20 per cent of the buy-in. Casinos report hold; game designers report edge; the two are related by the number of cycles, and confusing them is the commonest error in discussions of casino economics.

Why two 96 per cent games are different products

RTP describes the mean. It says nothing about the shape of the distribution around it, and the shape is what the player experiences.

Volatility (or variance) describes how far a session is likely to depart from the mean. A low-volatility slot pays small amounts often: a session drifts down slowly with frequent small wins. A high-volatility slot pays rarely and large: most sessions lose steadily and a few win big. Two games with identical RTP can sit at opposite ends of that range, and the player's experience of them, and the operator's revenue pattern from them, are entirely different.

Hit frequency is the proportion of spins that return anything. A game can have a high hit frequency and a low RTP (many tiny wins) or a low hit frequency and a high RTP (rare large ones).

Maximum win is the largest multiple of stake the game can pay, and in high-volatility games it is where a large share of the RTP lives: a few very rare outcomes contribute several percentage points of the return, which most players will never see.

Feature and bonus contribution. In a modern slot, a substantial part of the RTP is delivered through the bonus round, and a player who never triggers it experiences a much lower return than the headline.

The Casino Game Mathematics course covers how these parameters are designed and how a maths model is built.

Configurable RTP

Most modern slots are supplied with several RTP settings, commonly ranging from around 88 per cent to 97 per cent, and the operator chooses which to run. The same game can therefore have a materially different return on two operators' sites. Regulators in some markets require the RTP to be displayed in the game; some require a minimum; some require the operator to publish which setting it runs. A player comparing operators on the basis of a game's advertised RTP should check which version is in front of them, and an operator choosing a lower setting should expect its customers to find out.

Table games

Table game edges are fixed by the rules rather than configurable, and they are generally lower than slots. European roulette with a single zero has a 2.7 per cent edge on every bet; American roulette with a double zero, 5.26 per cent. Baccarat's banker bet carries just over 1 per cent. Blackjack's edge depends on the rules and the player's decisions, and under liberal rules with perfect basic strategy it can be well under 1 per cent, which is why casinos vary the rules and why card counting is a threat. Craps has bets ranging from just over 1 per cent to well over 10 per cent on the same table. Side bets everywhere carry high edges, and they are where a table's revenue increasingly comes from.

Live casino and game shows

Live dealer games follow the table game edges for their base games and add side bets and multiplier features with higher edges. Game-show formats (wheels, dice, money drops) are designed like slots, with an RTP set by the distribution of outcomes and multipliers, and typically sit in the 95 to 97 per cent range with high volatility.

The bookmaker's margin

A sportsbook does not have an RTP in the casino sense, because the outcome probabilities are unknown. It has a margin, built into its odds. If a bookmaker prices a two-outcome event at implied probabilities that sum to 105 per cent, the 5 per cent is the margin (also called the overround or the vig), and the expected payout to bettors is 100 divided by 105, about 95.2 per cent of stakes.

Margins vary by market. Major match-result markets in competitive jurisdictions run at 2 to 5 per cent; less popular markets, props and outright markets run higher; same-game parlays, which multiply the margin across each leg and add a correlation adjustment, can run at 20 per cent or more. Whether the margin is realised as hold depends on results: a bookmaker with a 5 per cent margin can lose money in a week when favourites win, and make double its margin in a week when they do not. The Sportsbook Trading course covers pricing and liability.

Prediction markets and exchanges

On a betting exchange or a prediction market there is no house edge, because the venue is not a counterparty. The customer pays a commission or a fee, and crosses a spread. Total cost on a liquid market can be lower than a bookmaker's margin; on an illiquid one it can be higher. The Prediction Markets course explains the economics.

Certification and verification

In regulated markets, a game's RTP is not taken on trust. The supplier submits the game and its maths model to an accredited test laboratory, which verifies the model, tests the random number generator, and simulates the game over millions of rounds to confirm the observed return converges on the theoretical one. The regulator requires the certificate before the game may be offered, and operators are required to display the RTP in many markets. Unlicensed operators may run uncertified games, certified games in uncertified configurations, or games whose displayed RTP bears no relation to their actual return. A displayed RTP on an unlicensed site is a claim, not a fact.

"Provably fair" schemes on crypto casinos prove that a given result was not altered after the bet was placed; they do not prove the RTP. The Crypto Casinos course explains the distinction.

What the numbers mean for a player

RTP tells a player which game keeps less of their money per wager. It does not tell them how much they will lose in a session, which depends on how much they wager in total and on volatility, and it does not tell them anything about whether they will win today. A 97 per cent game is better value than a 92 per cent one in exactly the way a shop with 3 per cent margins is cheaper than one with 8 per cent, and no more: the customer still pays.

The honest summary for a player is: the house edge is the price of playing; RTP is 100 minus the price; volatility is how bumpy the ride is; and the total cost is the price times the number of times the money goes round.

What the numbers mean for an operator

For an operator, RTP is a lever with a trade-off. A lower setting increases revenue per wager and reduces player value, session length and, over time, retention; a higher setting does the opposite. Competitive markets, transparent regulation and price-sensitive players push settings up; unregulated markets and captive players push them down. Hold, not RTP, is what appears in the accounts, and hold depends on product mix, cycle rate and volatility as much as on the edge. The How iGaming Companies Make Money guide sets RTP in the context of the whole economics.

Frequently asked questions

What is a good RTP? For online slots, 96 per cent and above is standard in competitive regulated markets; 94 per cent and below is worth noticing. Table games run higher. The "good" number depends on the product.

Does a higher RTP mean I will win? No. It means the game keeps less per wager over the long run. Any session can lose everything or win a great deal.

Is RTP the same as hold? No. RTP is the return per unit wagered; hold is what the operator keeps of the money the customer brought, which is higher because the money is wagered repeatedly.

Can operators change a game's RTP? Often, yes: many slots ship with several settings. Some regulators require the setting to be displayed or set a minimum.

How is RTP verified? In regulated markets by accredited test laboratories that check the model and simulate the game, before the regulator permits it. Unlicensed sites' figures are unverified.

Related on iGaming Times

Casino Game Mathematics is the full course on models, volatility and certification. How Online Slots Work covers the mechanics of the game itself. The glossary defines RTP, house edge, hold, volatility, overround and vigorish.

---

Regulation, tax and market figures move quickly, sometimes mid-year. Where this guide gives a number, treat it as a starting point and confirm the current position with the named primary source before you rely on it.