How Casinos Make Money

Before learning how to play the games, it's a very smart move to get acquainted with the casinos' angles on them. There are four ways for the casinos to generate gaming revenue; the house edge, favorable rules, commissions and dumb players.

The house edge is the difference between the true odds of an event occurring and the odds used for payouts by the casinos. For example, in double-zero roulette, there are 38 possible winning numbers. If the casino paid true odds, it would pay off a winning number at 37 to 1 (for a total of \$38, which includes your \$1 bet). Instead, the casino pays off a winning number at 35 to 1.

To calculate the house edge, imagine placing a \$1 bet on every spot in roulette, a total wager of \$38. Whatever number wins, you'll be given \$36 (\$35 plus your \$1 bet). That's \$2 less than the true odds payout, two bucks that went directly in the house's pocket. If you then divide the money kept by the house by the total it would have paid on true odds (two divided by 38), you arrive at a house edge of 5.26 percent, which means that the house expects to retain 5.26 cents of every dollar bet at its roulette tables.

The house edge varies from game to game, and within each game. And casinos love it when gamblers keep right on playing for hour after hour, because the house edge grinds away at every dollar wagered.

The rules of casino games are structured to favor the house. The best example of this is blackjack, where the dealer gets to play his hand last. Should a player bust, the dealer wins by default immediately. Even if the dealer ends up busting himself a few seconds later, the player loses and the house wins.

Commissions are collected by the house in a few table games. In poker, the house serves as dealer, but doesn't play a hand. So to make money from poker, the house takes a percentage of every pot, called the "rake", or charges players a flat fee of \$5 to \$7 per half hour of play. In baccarat, the house takes five percent of all winnings from bank bets.

Finally the players, be they drunk, superstitious, careless or ill-informed, dumb gamblers are a boundless and endless source of funds for casinos. Why else would casinos offer gamblers free drinks? Alcohol is wonderful for loosening inhibitions; the inhibition against losing next month's rent or even your child's tuition fees.

For example, although the house edge in blackjack has been calculated at an average of only two percent, casinos expect a win or 'hold' of 15 to 20 percent of the total amount of money brought to the table commonly known as the 'drop', just because of the general incompetence of the players enjoying the game.

If you are hoping to walk out of a casino set up for a good life, it's best not to let those hopes get to high. However, if all you are after is a little fun then the casino might be the right place you are looking for. And the smart thing you can do is just to file your gambling budget under 'entertainment' rather than aiming for those seldom won jackpots, and prepare to chalk up reasonable losses but have a good time doing it.