I’ve played with some really hard-nosed gamblers who wanted to maximize their profits no matter what. Mostly, these were poker players, but the thing I noticed about them is that they absolutely HATED tipping.
One of the most well-known successful gamblers, Bob Dancer, once described a situation where tipping was a really profitable thing to do in a casino.
In this post, I’m going to relate that situation and provide some analysis as to why tipping was so profitable in the casino.
Getting an Advantage in a Casino
To get an advantage in a casino, you have to find a game where you’re getting a positive expected return on every bet instead of a negative expected return. This is all but impossible at most casinos and at most games.
Also, you must be able to play these games perfectly to get this positive expectation. You can have the best blackjack conditions in the world, or even the best video poker pay tables in the world, and still lose 2% of every bet you make on average if you play poorly.
Sometimes, the only way you can get a positive expectation is by finding a game that’s close enough to break even that the value of any promotions or rebates brings your total expectation over 100%.
You Can Measure Your Expected Return in Dollars and Cents
The formula for calculating your hourly expected win rate isn’t complicated. It’s a step-by-step process.
The first step is to calculate what kind of edge you have over the casino. When counting cards in blackjack, this is likely to be an estimate. 1% seems to be the standard estimate for card counters.
In real money video poker, it’s just a matter of crunching the numbers against the pay table. This can be calculated online at various sites. Input the pay table and the site spits out a payback percentage and will even generate an appropriate strategy for you.
You can buy software that accomplishes the same thing, too.
Once you’ve determined your advantage over the casino, you determine how much action you’re bringing the casino per hour. This is the average bet you’re making multiplied by the number of bets you’re making per hour.
In video poker, for example, you might be betting $1.25 per hand and playing 600 hands per hour. Your hourly action in this case is $750.
In blackjack, you might be betting $10 per hand and playing 80 hands per hour. Your hourly action in this case is $800.
If you’re playing with some kind of promotion, you can add that amount into your hourly calculation, too.
An Example Video Poker Promotion
Let’s suppose the casino is running a promotion where you get a card with 25 squares on it, and every time you hit a four of a kind or a straight flush on video poker, the change person stamps one of your squares. Let’s also assume that six of the squares were freebies, so you only need to get 19 squares stamped to fill your card.
Now, suppose that the casino pays you $200 for a completed ticket. What does this do to your hourly expectation?
The first thing to do is break the squares on the card down into a dollar value. $200 divided by 19 squares is $10.53.
The next thing to do is figure out how often you’ll hit one of the hands that warrant getting a stamp. If you’re an average player getting in 600 hands per hour, you’ll get one of your squares stamped 1.5 times per hour.
1.5 x $10.53 is $15.80 per hour in free promotional money. You’d add this to your hourly expected win or loss to come up with your hourly expected win or loss after the value of the promotion is accounted for.
Now, let’s assume that you’re playing a breakeven game besides the promotion, so you’re making just the value of the promotion every hour—$15.80 per hour.
The Value of Tipping Becomes Clear Soon
Suppose you tip your change person $2 every time you get your card stamped. That’s going to reduce the amount you’re winning by $3. Now, you’re making $12.80 per hour.
But say you’re a recreational gambler, anyway, so you don’t necessarily need to maximize your wins. It makes you feel good to be polite.
Now, suppose you’ve hit a losing streak and haven’t gotten your card stamped in a couple hours. The change person comes over and asks you what’s going on, and you tell her you’ve been on a losing streak.
She likes you, though, because you’ve been tipping and you’re polite. So, she decides to give you a free couple of stamps on your card gratis. That $3 you tipped her in the first hour of her shift just resulted in $21.06 worth of free stamps on your card.
Now, suppose the change persons are excited to be stamping your card. One of them rushes over to stamp your card, and you thank her and tip here. Another change person comes over to see if you’ve been taken care of, and you laugh and say, yes, my card’s already been stamped, but only once.
She laughs, too, and stamps the card a second time. Before it’s all said and done, you’re averaging two to three stamps on your card for every one you’ve actually earned just because you’ve been tipping at a rate of $3 per hour.
You’re trading $3 for $21.06. I’d make that trade repeatedly for the rest of my life anytime it was offered to me. Wouldn’t you? And on top of that, you’re a mensch.
This Actually Happened to Bob Dancer
I’m re-reading Million Dollar Video Poker, and the hypothetical scenario I outlined above actually happened to him. It’s one of the reasons he was able to win his million dollars in the course of three years.
One of the things I love about stories like this is that they provide insight into a side of professional gambling that’s beyond the obvious. After all, how many times does someone have to tell you that the better pay tables in video poker result in a higher payback percentage before you say you get it?
How many times do you need to be told that higher ranked cards favor the player in blackjack, so a deck rich in 10s and aces results in more blackjacks?
I’d much rather read an interesting story about the human side of gambling for a living.
Does all this constitute cheating? What do you think?
If you were offering to bribe them to stamp your card endlessly, that would be different. No one’s suggesting you create a counterfeit stamp so you can stamp your own card.
This isn’t cheating at all. It’s just savvy gambling.
Our Final Thoughts on Tipping the Casino Employees
Tipping is the right thing to do at the casino because it’s polite. Those employees work hard, and they get some relatively low wages. They rely on their tips to earn a living.
But tipping can also be profitable in surprising ways, as you saw in this post.