Expected Value (EV) Guide | How it Impacts Your Life

In our busy day-to-day lives, we all expect a return on our investment. Whether that’s from small purchases such as cars, stocks and shares, or jewelry, or much larger ones like houses, this concept is most commonly referred to as Return to Player (RTP). In this guide, we’ll explain exactly how RTP works in a few scenarios and how you can learn from its impact on your life.

Return to Player (RTP) is best known as the ‘House Edge’ in casinos. It’s the concept that, on average, players always have a pretty decent chance of getting most of their money back. For example, if a table has an average RTP of 95%, every $100 will return $95. This expectation is seen in many other instances, from buying stocks and shares in companies to the family car.

Next, we’ll show you how RTP impacts your day-to-day life.

Investments

We’ve discussed investments a lot already, so we’ll cover them first. Investing in a business such as Gamestop requires a risk on your part. You’re putting your money into a company in exchange for a part of that business. You’re betting that the price of your shares will either go up or down. Regardless of your intentions for the shares, you’re expecting to make a certain percentage of your money back.

Most investors would expect at least a return on investment. For example, if a share costs $50, the investor would expect to see at least a $50 return on their investment. The share’s volatility dictates the average return here. The more volatile the share, the lower the average return.

Starting a Business

Entrepreneurs experience RTP every day. When starting a business, there are almost always some associated costs. This could be from registering the company, buying stock or equipment, or paying yourself a wage.

Entrepreneurs expect to see a return on the money they put into a business. If they do, then the business is ‘breaking even.’ The only way to track the average RTP for starting a business is by looking at what percentage of small businesses fail or succeed within a certain field. By choosing to start a business in a field where the percentage of businesses that succeed is higher, entrepreneurs stand a much better chance of getting their money back.

Buying a Car

Purchasing a car is a much more tangible example of where you’ll see RTP at work. Most people know that regardless of how much you pay for a car, the value will immediately drop once you purchase it. This is because the car now has one more previous owner and will have been driven more miles than before.

RTP with cars is incredibly hard to judge. Most people accept that their car will gradually depreciate until they sell it for 10% of what they paid for it or scrap. However, by looking at the classic cars that are worth a lot of money today, you can lessen the impact of RTP. Buying a car from a prestigious brand will greatly increase the average RTP, and investing in unique concept cars will almost certainly push the RTP over 100%.

Casinos

In casinos, we can see the source of RTP. Any casino you walk into will have a ‘House Edge.’ This is a percentage of every machine that the business is guaranteed to keep from every $100 spent. Usually, games are set to have an average RTP (Return to Player) of around 90% to 95%. This ensures that customers don’t feel like they’ve wasted their time and money, but the business still profits.

Some casino games have a lower rate of RTP. You could look at any sort of scratch card or lottery in this way. The initial investment is something that the customer never expects to get back. Therefore the expected RTP is 0%. However, should a customer win, the potential gains have an RTP of more than 1000%. By investing more in these games, customers increase their RTP by buying more tickets or scratch cards, though not by much.

Conclusion

RTP impacts every single one of us, and it doesn’t just have to be about money. Spending an hour trimming an apple tree in the garden has a certain RTP. You expect that the apple tree will produce more fruit because you’ve taken the time to care for it and allow it to focus its energy more productively. When you see RTP in your life, you can learn to measure your expectations and those of others around you to help you make better decisions. Raising the average RTP of everything you do will help you avoid feeling defeated or at a loss.