Electronic gambling machines (EGMs) can have different reward schedules. These reward schedules vary in terms of volatility and return-to-player (RTP) rates. Volatility is the fluctuation in wins and losses across multiple bets. RTP is what people are expected to lose in the long term by gambling on a game. The researchers ran simulations of a simplified video poker game. The purpose of these simulations was to demonstrate how changes in game volatility affect patterns of wins and losses. Across the simulations, the probabilities of each win were the same, as were the overall RTP rates. But the individual win sizes differed across three levels of volatility (low, medium, and high). The level of volatility was defined mostly by the size of the main prize.
The researchers found that winnings over the short term were relatively frequent. But the percentage of people still winning decreased over more sessions. The simulated people were on a winning streak about 26% of the time in the low- and medium-volatility versions of the game. They were on a winning streak about 18% of the time in the high-volatility version. The average number of people who were winning after various lengths of time gambling depended on the game’s volatility level. In the game versions with low and medium levels of volatility, the proportion of winning people dropped to almost 0 by 30 hours of gambling. But in the high-volatility version, about 5% of people were still winning after 100 hours of gambling.
