It’s All About The THEO | Casino THEO and Average Daily Theoretical – ADT
Your theoretical loss to the casino (your casino theo or average daily theoretical – ADT) is the way the casino calculates what you are worth to them. It’s not a theoretical win because every game that the casino offers has a house advantage and the payoff for a bet is always less than the odds of winning that bet. This long term expected loss per bet is the take or hold of the casino and guarantees the casino a profit. The casino has a positive expected value (EV) on every wager that is made and the player has a negative EV for every wager they make. The return to player or payback percentage can be close to 100% but the odds are always in the casino’s favor.
House advantage is higher on some games than others (the games furthest away from a 100% payback, like slot machines) and casinos want to lure players who play those games, back to the casino. Theo shows the casino which players make the bets that gives the casino more profit and those are the players they invest in with comps! As I’ve stated in previous articles, comps are a money making tool that the casino uses to encourage more and bigger wagers. Comps are not a reward for your loyalty; they are a casino business expense.
COMPS = A Portion of Your Theoretical Loss
The casino will give you a portion of your theoretical loss back to you in comps. The higher the casino hold on the games you play, the higher your theo is going to be and the more comps you are going to receive, but in essence, YOU are paying for those comps. The longer you play the more probable it is that you will reach the statistical expectation of the game and this means that you will have paid the house edge to the casino. The only way to get around this real loss would be to quit after you get lucky (after receiving much MORE payout than the statistical expectation) but it’s a special player who can quit when they are ahead in a casino and never go back!
It’s possible to figure out the exact long term theoretical payback on video poker (as opposed to slots) because the pay table is plain to see. Jacks or Better (JoB) with the pay table of 9 to 1 for a full house and 6 to 1 for a flush has a long term theoretical payout of 99.54% if you are playing perfect strategy. Theoretically, the casino only makes 0.46% of the money played through the machine over its lifetime, though there are few players who can actually play perfectly on every single hand. The casino’s actual hold is probably closer to 1 to 2 percent and may be higher. Casinos used to base comps on their average hold but now the theo is set closer to the actual theoretical hold or even below it!
JoB is also a low variance game. Generally, that means you take less risk to realize that 99.54% payback. The payouts are not concentrated only on the infrequently occurring big wins so you win back your bets more steadily and it takes less bankroll to play, but—over the short term it’s possible to lose a lot of money anyway.
Let’s Look at an Example
I’m going to use playing JoB at the Borgata as an example because the calculations are fairly transparent. The basic comp rate on video poker at the Borgata is 0.20% and you must earn $5 in comps in a gaming day or you won’t earn anything. For every $1 that you play in the machine, regardless of whether you win or lose, you receive 0.20 of one percent in your comp account. If you earn $10 in comps you would also earn $5 of free play, which is paid at 0.10% of coin in (but will not show on the machine). The only way to calculate this on the day of play is to halve the amount of comps you earned. You also do not receive any free play at all, unless you earn at least $5 worth.
In order to earn $10 in comps and $5 free play we’d need to play $5000 through the machine.
$5000 x 0.20% or .002 = $10
$5000 x 0.10% or .001 = $5
$5000 x 99.54% payback = $4977 so the theoretical casino hold is $5000 – $4977 = $23
So, theoretically, if you played $5000 through the machine, your average loss would be $23 and you would earn $10 in comps and $5 in bounce back free play (you have to wait 24-48 hours after your trip to use it). Great deal you might say, but not so fast. A $23 loss is the average loss for the long term. In the short term, a lot of different scenarios are possible. You could win a 4000 coin royal flush or you could lose 4000 coins.
Playing 25c video poker:
$5000/$1.25 = 4000 hands/600 hands per hour = 6.67 hours of play
Playing $ video poker:
$5000/$5 = 1000 hands/600 hands per hour = 1 .67 hours of play
If I had a $23 loss from either of the examples above, I would consider myself very fortunate. JoB has a high theoretical payout and low variance but you are still gambling. You personally, might not ever get to a return of the statistically average 99.54%.
Your Theo is a Good Indicator
We can only estimate what our theo is with the casino, although it will be close to the actual theoretical loss from the games we play. The casino tries to gauge how much money you are willing to risk, by assigning you a theo. The theo is used to gauge just the right amount of comps, and no more, to get you to keep playing, so they can continue to earn their house edge.
You can use your theo to try to show the casino that you are taking more risk than you actually are, but at the very least, considering your theo will help you understand why you are, or are not receiving the comps you want or think you have earned.