How To Play Video Poker in New Zealand – Part 5 | Variance

One of the benefits of playing video poker is the transparency with payback also known as return and the house edge the game has to offer. Another aspect of video poker that we need to look into is variance or volatility.

Volatility

The term volatility refers to the lack of stability associated with a situation. The stock market is often associated with volatility with prices going up and down. Suffice to say it denotes a bumpy ride, a roller coaster ride with high highs and low lows. Volatility with poker refers to the manic swings that you can experience. With high volatility casino games, you can reach unthinkable highs due to the multiple opportunities to win jackpots. On the flip side you can also sink to deep lows with high volatility increasing the frequency of lesser paying hands in order to fund the high paying ones.

The way to explain this is to take the example of betting on either red or black on a game of roulette. With every spin of the wheel there can only be one outcome and your money is doubled if you guessed right or taken from you if you guessed wrong. The game will not have a massive impact on your bank account which is why the return is also less compared to other bets that can be placed.

For some players, the game would be very boring and would not offer the thrill of reaching the peaks associated with certain casino games be it in terms of enjoyment or the increase in the bank roll. In poker however, even the most non-volatile game has jackpots associated with in the form of the royal flush. As there is only one jackpot with a low frequency of it appearing the volatility of the game is described to be low.

Let’s use the game of Jacks or Better to illustrate this further. Playing the game over a long period will lead to a royal flush happening every 43,000 hands meaning that it contributes to only two percent of the overall return of the game. For the hands you play between the royal flush you are expected to lose at an additional rate of two percent of the money you play through the game. Along the journey you will encounters highs with a straight flush, four of a kind, full house and lows of losing at an additional two percent rate.

A game of Double Bonus Poker has more volatility as it adds a large additional pay for a hand of four aces, bumping it from 160 to 1 from 25 to 1 on the game of Jacks or Better. Other hands pay more as well than the standard Jacks or Better game with a hand of four 2’s,3’s or 4’s paying 80 to 1. Even four 5’s through kings pays 50 for 1 rather than the standard 25 for 1.

To compensate for the high returns on these hands, the pay for two pairs is reduced to 1 for 1 from 2 . The royal flush, straight flush and four of a kind contribute to 17.65 percent of the winning hands. The pairs contribute to 12.5 percent which is down from the 26 percent offered by Jacks or Better. The large reduction in pay for the two pair creates a more volatile game.

Variance

As explained above, volatility refers to bumpiness caused to your bank roll by video poker, but it does not give an indication of the magnitude of the bumpiness. Variance illustrates the extent of the bumpiness by putting a number on it. It is a mathematical term that shows that magnitude of the instability can run from a low of 12 to 15 to a high of 200, a quite diverse range depending on the game being played. As a result, variance influences the game in three different ways –

1. Short term results are not an indicative of how well you are really playing. You could be playing the best poker of your life but might still end losing money which makes it difficult to analyse what you are doing right or wrong.

2. Based on the point above, it can be quite taxing on a mental level knowing that you are making the right moves and still losing. A game of poker should not be analysed over a short term, but you should learn to play it over a longer term along with the challenges that variance has to offer.

3. On a positive note, variance can help even the bad poker players win at the casino.