What a rakeback percentage is actually worth, in dollars, per game type

[rakebackpaid]

Most rakeback offers are quoted as a percentage and almost nobody converts it into money before choosing where to play. The percentage is the least useful number in the deal. Here is the arithmetic, so you can price any offer you are shown.

Rakeback is a share of the house edge, not a share of your losses and not a share of your wagers. Two different formulas are in use and they are easy to confuse.

A casino's own player rakeback is usually a straight percentage of the house edge on each bet. Stake's is 3.5%. On $1,000 wagered on a 4% slot, the house expects to keep $40, so 3.5% of that is $1.40 back.

Affiliate commission normally uses half the edge: (edge as a decimal x wagered / 2) x rate. Stake and Gamba both publish this exact formula. On the same $1,000 at a 25% affiliate rate that is $40 / 2 x 25% = $5.00 of commission generated by your play. Whether any of that reaches you depends entirely on whether the affiliate passes it back.

The part worth internalising is how this scales with the game.

Code:

$1,000 on a 4% slot       house expects to keep $40   3.5% rakeback = $1.40
$1,000 on 1% Originals    house expects to keep $10   3.5% rakeback = $0.35
$1,000 on 0.6% blackjack  house expects to keep  $6   3.5% rakeback = $0.21

The ratio never moves. Rakeback is a fixed cut of the edge, so it is always about 3.5% of what the house expects to take. What moves is the absolute number, and it moves because the edge moves. The games that pay you the most rakeback are the games taking the most from you. Anyone presenting a big rakeback figure as a reason to play high-edge slots is quietly selling you the house edge.

Two things follow that are worth checking before you accept any offer.

First, ask what the figure is per $1,000 wagered, in dollars, on the game you actually play. A percentage alone is not comparable between two sites. A percentage of the edge, a percentage of half the edge, and a percentage of net losses are three different products wearing the same word.

Second, ask when and how it is paid. Rakeback credited per bet and claimable any time is worth more than a points balance that expires, and a lot more than a leaderboard you have to place in.

None of this makes a negative-expectation game positive. At 3.5% you are getting back three and a half percent of the amount the house expects to win from you. It softens the edge. It does not remove it, and no rakeback percentage that any site offers ever will.

Happy to run the numbers for any specific offer people are looking at.

[Hispo]

Rakeback makes much more sense when we see it from.the point of view as the house giving up a bit of his edge in order to give the sensation to their gamblers that they are getting something back from the casino, when in reality the casino continues to get most of the money in the long term.

Thanks for this interesting calculations.
Just another reason for me not to make a big deal out of rakeback.

It is a similar strategy of credit card which offer Cashback to their clients, so they will continue to spend money, even though the money which is given back is pretty much minimal when compared to those purchases...

[OgNasty]

What’s the old saying? Don’t look a gift horse in the mouth…

A rake back isn’t something that should really entice you to choose a casino, but it is a nice thank you for supporting their business. I appreciate anything any business is willing to give back. It is better than a stick in the eye.

[DubemIfedigbo001]

The ratio never moves. Rakeback is a fixed cut of the edge, so it is always about 3.5% of what the house expects to take. What moves is the absolute number, and it moves because the edge moves. The games that pay you the most rakeback are the games taking the most from you. Anyone presenting a big rakeback figure as a reason to play high-edge slots is quietly selling you the house edge.

The casino always has the higher end advantage, rakebacks only softens loses for the gambler, it's accumulated to something tangible for high stakers and is negligible for players with lower stake. Although staking higher to accumulate a bigger rakeback is a stupid decision tbh.

Rakebacks aren't necessarily fixed, the percentages tends to increase as you advance in VIP levels. Casinos increase it as a reward for unlocking various VIP levels. Some affiliate codes can give you higher rakebacks upon registration.

[Don Pedro Dinero]

Most rakeback offers are quoted as a percentage and almost nobody converts it into money before choosing where to play. The percentage is the least useful number in the deal. Here is the arithmetic, so you can price any offer you are shown.

Rakeback is a share of the house edge, not a share of your losses and not a share of your wagers. Two different formulas are in use and they are easy to confuse.

A casino's own player rakeback is usually a straight percentage of the house edge on each bet. Stake's is 3.5%. On $1,000 wagered on a 4% slot, the house expects to keep $40, so 3.5% of that is $1.40 back.

That’s a good explanation, and it’s something that’s clear to those of us who understand this, but in this very forum I’ve seen people think – and write – that if the house edge is 4 per cent and the rakeback is 3.5 per cent, it’s as if the house edge were actually 0.5 per cent. With such a lack of understanding of basic maths, it’s no wonder that casinos are such a lucrative business.

[swogerino]

What’s the old saying? Don’t look a gift horse in the mouth…

A rake back isn’t something that should really entice you to choose a casino, but it is a nice thank you for supporting their business. I appreciate anything any business is willing to give back. It is better than a stick in the eye.

Most casinos though offer the same models like faucet claims, daily bonus, daily rakeback, weekly and monthly bonus which is actually good considering you get as most of them say "a free bet from us". I would not play now in a casino which does not offer any benefit to the players though such casinos as far as I know do not exist or are not known and popular at all. My conclusion is that any free money offered is worth taking when there is nothing sketchy tied to it like in the case of casino bonuses, usually monthly or rakeback has no wager requirements at all.

[Perfectbaby]

What’s the old saying? Don’t look a gift horse in the mouth…

A rake back isn’t something that should really entice you to choose a casino, but it is a nice thank you for supporting their business. I appreciate anything any business is willing to give back. It is better than a stick in the eye.

Bonuses or rakeback is something that I do not need to be looking after when gambling because I know that must of these things are to do it tie down many gambler into their casino, what that is is important is, let the casino be transparent up and running and then you would see that I do not really care about it. Of course, you are right because many people do think that all these things attributes to their winnings without knowing that things doesn't works as planned because casino knows where they are getting it back from players or bettors.

[danherbias07]

Damn, that's a long explanation and a lot of numbers.

I just use the simple calculation of (rakeback percentage x the wagered amount). But you are right. There are different ways they give it and the time it is given. Some have an instant rakeback system, and others have a 1-day system. Mostly in local online casinos.
I think the most important part is whether they are following their own rule. Let's face it, some are using rakeback percentage promotions to lure a lot of gamblers, but it doesn't really use that percentage once you are already signed up.

[Smartprofit]

As I understand it, rakeback isn't a percentage of a player's total bets or their total losses. It's a percentage of the house edge (relating to a specific player's bets). For example, in roulette, the house edge is determined by the presence of the 0 slot in European roulette (or the two 0 and 00 slots in American roulette).

The house edge is relatively small in percentage terms (since the casino's profit comes from a large number of bets over a long period of time). In other words, the casino gets rich when players play frequently, for a long time, and bet big. And there have to be a lot of players...

Therefore, rakeback is a small percentage of the house edge. That is, it's an insignificant amount initially. It can't be considered a significant source of income for the player. It's simply a promotion. The casino uses rakeback to encourage players to play frequently, for a long time, and bet big. Then, the house edge translates into significant profits over the long term.  This is beneficial for the online casino, not for the player. 🙆

[Fortify]

That is actually helpful to see it broken down like that, because the only calculation my mind has ever done when it comes to rakeback is against the overall figure. If this is true for others (or at least the inexperienced) then they're probably thinking for every $100 they drop in the house they get back $4, but actually it's only $0.15. That's a huge difference in expectations versus reality and it actually helps them to perpetuate this idea to the clueless, so they don't want to explain it too deeply until you go looking for it. I imagine that there are some casinos where rakeback is not released on a set date but rather when a threshold is reached, like $5, which would be very unattainable for people playing very small bets or on a tight budget. You can see it would only be a sizable number to the whales out there, but they'll see it as only a few dollars too.

[obuoma]

What’s the old saying? Don’t look a gift horse in the mouth…

A rake back isn’t something that should really entice you to choose a casino, but it is a nice thank you for supporting their business. I appreciate anything any business is willing to give back. It is better than a stick in the eye.

Every player usually aim to get the best that he can and that includes both winnings and bonuses. Rake is just one of those bonuses and very important one at that because it is calculated based on the amount wagered irrespective of winning or losses. There are times the rake back will amount to something big that may help me avoid making deposits. I will always go for casinos that give me enticing rake backs instead of those that don't. 

[rakebackpaid]

I just use the simple calculation of (rakeback percentage x the wagered amount).

Worth checking that against a real balance, because it overstates things a lot. 3.5% x $1,000 wagered would be $35. On a 4% slot the house only expects to keep $40 of that $1,000, so a casino paying $35 would be handing back almost its whole edge. The real figure is 3.5% of the $40, which is $1.40. Where a site does credit a percentage of the full wager, the percentage is usually a small fraction of one percent for exactly that reason.

As I understand it, rakeback isn't a percentage of a player's total bets or their total losses. It's a percentage of the house edge

Exactly right, and roulette shows it cleanly. Single zero is a 2.7% edge, double zero is 5.26%. At 3.5% rakeback, $1,000 on the single zero wheel pays about $0.95 back and on the double zero wheel about $1.84. The double zero table pays nearly twice the rakeback because it takes nearly twice as much from you.

[rakebackpaid]

they're probably thinking for every $100 they drop in the house they get back $4, but actually it's only $0.15. That's a huge difference in expectations versus reality

That gap is the whole business model of the code you sign up with, and it is worth spelling out. On that same $1,000 on a 4% slot, the player's rakeback is $1.40. The affiliate whose code you used is paid on the same formula in the first post, and at Stake's standard 10% that is $2.00, at a negotiated 25% it is $5.00. So the person who sent you there earns between one and a half and three and a half times what you get, for the life of your account, and almost none of them tell you that.

Disclosure, since it is relevant: I run Rakeback Paid, which is exactly that kind of affiliate. The difference is that we pass most of the commission back to the player every Friday and publish every payment, including the weeks that are $5. I mention it because the honest way to read any rakeback offer is to ask two questions: what does the code earn on my play, and how much of it comes back to me. If the person offering the code cannot answer the first one in dollars per $1,000, they are hoping you will not ask.

[Alphakilo]

What’s the old saying? Don’t look a gift horse in the mouth…

A rake back isn’t something that should really entice you to choose a casino, but it is a nice thank you for supporting their business. I appreciate anything any business is willing to give back. It is better than a stick in the eye.

Bonuses or rakeback is something that I do not need to be looking after when gambling because I know that must of these things are to do it tie down many gambler into their casino, what that is is important is, let the casino be transparent up and running and then you would see that I do not really care about it. Of course, you are right because many people do think that all these things attributes to their winnings without knowing that things doesn't works as planned because casino knows where they are getting it back from players or bettors.

Casinos have the final say and own the scorecard, so that means any rake back is more like a marketing approach towards retaining greedy gamblers that see it as a yardstick or opportunity to take advantage of.
Whereas in dollars when the rakeback is calculated, you actually get to see how much Bs it is with conditions and even expiration and that's why it's important to use trusted casinos instead of gambling on a casino because of freebies or rakeback they offer.

[rakebackpaid]

Whereas in dollars when the rakeback is calculated, you actually get to see how much Bs it is with conditions and even expiration and that's why it's important to use trusted casinos instead of gambling on a casino because of freebies or rakeback they offer.

Agreed on the dollar test, and the conditions point deserves its own line, because it is where most of the "up to 20%" headlines fall apart. A percentage with a claim window, a minimum, or an expiry is not the same product as a percentage that simply lands.

It is worth separating three ways money gets back to a player, because they carry very different amounts of trust.

The first is the casino's own rakeback, which is small but unconditional: about $1.40 per $1,000 on a 4% slot at Stake, about $2.00 at Gamba's entry level. Nobody has to be trusted, it just appears.

The second is an affiliate paying cashback by hand out of their commission. This is where "trusted casino" and "freebies" pull in opposite directions, because now you are trusting a person, not a casino, and there is no shortage of codes whose rewards quietly stop arriving. That is the model I run on Stake, which is why I publish every payment, but I would not blame anyone for treating it as the weakest of the three.

The third is the one I think more people should know exists. Gamba lets an affiliate set a share of their own commission on the code, and Gamba pays that share to the player automatically, in the player's own account, with no claim, no window and no expiry. On a 50% share that is about $2.50 per $1,000 on a 4% slot, on top of the base rakeback. The casino is the payer, so the trust question goes away, and the number is checkable in your balance rather than in someone's Discord.

So the honest ranking, on your own criterion, is: unconditional and paid by the casino first, conditional and paid by the casino second, paid by a person last. Any affiliate who will not say which of the three their offer is, and what it comes to per $1,000, is answering the question by not answering it.

[Alex077]

The ratio never moves. Rakeback is a fixed cut of the edge, so it is always about 3.5% of what the house expects to take. What moves is the absolute number, and it moves because the edge moves...

The casino always has the higher end advantage, rakebacks only softens loses for the gambler, it's accumulated to something tangible for high stakers and is negligible for players with lower stake. Although staking higher to accumulate a bigger rakeback is a stupid decision tbh.
Rakebacks aren't necessarily fixed, the percentages tends to increase as you advance in VIP levels. Casinos increase it as a reward for unlocking various VIP levels. Some affiliate codes can give you higher rakebacks upon registration.

Yeah, I don’t really see much point in chasing higher rakeback if you have to increase your bets or choose games with a higher house edge just to get it. In the end, the player risks losing much more than they will ever get back in rakeback. Basically, it’s just a small return on part of the money you’ve already wagered, not some extra source of profit.

And that’s exactly where the psychological trap comes in. A player sees that the next VIP level offers higher rakeback and starts betting more to reach it faster. As a result, the extra losses from the increased amount of gambling can be much higher than the amount they eventually get back.
So I would only see rakeback as a small bonus for gambling that you were going to do anyway within your normal budget.

[Free Market Capitalist]

That is actually helpful to see it broken down like that, because the only calculation my mind has ever done when it comes to rakeback is against the overall figure. If this is true for others (or at least the inexperienced) then they're probably thinking for every $100 they drop in the house they get back $4, but actually it's only $0.15. That's a huge difference in expectations versus reality and it actually helps them to perpetuate this idea to the clueless, so they don't want to explain it too deeply until you go looking for it.

That's right. Very good summary. And the worst part is that most gamblers don't even realize it. In fact, if this thread gets a little long, I guarantee there will be shitposting comments that will have something to do with what the OP says but that won't understand (or even read) the concept, summarized in your post.

[suzanne5223]

Affiliate commission normally uses half the edge: (edge as a decimal x wagered / 2) x rate. Stake and Gamba both publish this exact formula. On the same $1,000 at a 25% affiliate rate that is $40 / 2 x 25% = $5.00 of commission generated by your play. Whether any of that reaches you depends entirely on whether the affiliate passes it back.

I have never looked deeply into this aspect when it comes to online gambling, but I believe the information you provided is one of the clearest explanations of how rakeback on online gambling platforms is operated.
I do like to see the link to the exact formula provided by the casino you mentioned so I can look more into it, since most we gamblers just see 30% rakeback or 20% rakeback and have the impression that it's a big deal without doing/knowing the actual math.
Like, the higher edge games = higher rakeback in dollars, but it will also come with higher losses.