How Honest are Tezos-Based Casinos?

How Honest are Tezos-Based Casinos?

Disclaimer: Gambling always involves the risk of losing money. Don't bet more than you can afford to lose, play responsibly, and don't succumb to gambling addiction.

This post is about how lawmakers measure the honesty of casinos, whether projects on Tezos meet these requirements, and why blockchain is good for gambling.

We know of two classic gambling projects: SalsaDAO Gaming Hall and Tezos Degen Club. Have you ever wondered how honest they are? Spoiler alert: in fact, they’re more honest than a typical Vegas casino.

Why the House Always Wins

Gambling can be divided into two types: those without the mathematical advantage on one side and those with one.

An example of a game without an advantage is coin flipping. Theoretically, the probability of heads is 50%, and with an infinite number of games and money, each participant will remain with their money.

Casinos, bookmakers, and other gambling organisers create themselves a mathematical advantage either in the rules of the game itself or in the rules of betting:

  • The green field, aka the “zero” in roulette. If a player bets on red or black, the probability of winning is 48.7% and losing is 51.3%;
  • The difference in odds is found in sweepstakes, bookmaker bureaus, and other types of betting. Even if a player bets on all possible events, the winnings will be less than the initial bet;
  • The sequence of moves in card games. In blackjack, the probability of losing is 50.28% just because a player can lose before the dealer starts taking his cards;
  • Game fees. In poker, players pay a commission to the poker room for organizing the game called the rake.

In the end, whichever game you choose, the organizer will have a mathematical advantage. That is why they say that the casino always wins.

Measuring the Greediness

In offline gambling, the probability of winning and losing in a particular game depends on a deck of cards, a ball, a horse, or a soccer team. But in online gambling, everything is controlled by pseudo-random number generators (PRNGs).

The PRNG in online gambling tweaks the outcome to ensure its advantage. In gambling, this advantage is called the percentage return (Return To Player, %RTP), which is the percentage of the total amount of bets that RPMG will return to the players as a win. For example, if the %RTP of a game is 90%, then with an infinite number of games users will get 90% of all bets, and the casino will earn 10%.

In jurisdictions with legal gambling, the minimum percentage of return is specified in the gambling laws:

Other jurisdictions like Sweden, Great Britain and the Isle of Man do not regulate the minimum %RTP, but oblige casinos to indicate its value on slot machines and sites.

In general, the greediest legal casino can take up to 25% of bets.

Checking the %RTP of Tezos-based Casinos

We didn’t include Juster.fi because it doesn’t have a user vs. institution game format, and instead of the RNG (random number generator), the outcome of the game is determined by real events.

The first project is Tezos Degen Club. For each game the user pays a rake of 5% as in poker rooms. There is no mathematical advantage.

We calculated the payout percentage from the Coin Flip at tzkt.io, where the user plays against the RNG. Since February 2022, players bet 238,000 tez and won 222,000 tez. Taking into account the commissions the payout percentage was 93.4%.

The RNG oracle works honestly: according to Tezos Degen Stats, heads fell out 13,452 times and tails 13,568. The chance of heads falling out is 49.79% and the chance of tails falling out is 50.21%.

The second project is SalsaDAO Gaming Hall. Players do not pay any additional commissions. The dice and roulette games are controlled by a smart contract with an RNG. Users make bets in WTZ, uUSD, kUSD, USDtz, GSAL, and RSAL.

The mathematical advantage of Gaming Hall is embedded in the betting odds. For example, when playing dice at a rate of 1 WTZ on one side the potential win is 5.82 WTZ, and at a rate of 1 WTZ on three sides, 1.94 WTZ. The calculated payout percentage is 97%.

We have calculated the payout percentage for the last 30 days for WTZ bets. From June 13 to July 13, users bet 293 WTZ and won 265 WTZ, and the actual %RTP was 90.4%. It is likely that the return percentage will be higher in the longer run.

Now for the best part, we found a report by the Nevada Gaming Control Board with the %RTP of slot machines at physical casinos in Las Vegas. The average %RTP for the year was 92%.

That is, Tezos Degen Club and SalsaDAO Gaming Hall operate at the same %RTP as the average casino in Vegas, although no one is forcing them to do so.

Conclusions

The coolest thing about blockchain gambling is its openness. The user can independently check the statistics of games and draw conclusions about the honesty of the project.

The %RTP of Tezos gambling projects is even higher than that of the largest offline casinos full of licenses and palm trees.

The second cool thing is the lack of deposits. Among the reviews of online casinos, there are often stories like “Won a million dollars, but the casino does not want to give it back!” There is no such thing in blockchain projects because the user sends the bet to a smart contract without an intermediary depository.

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