How the Casino Makes Its Money And Why It Can’t Lose

Man Smoking a Cigar With a Drink And Money On a Table in Front of Him With a Casino Logo on His Left

There seem to be a lot of casino gamblers that don’t understand how the casinos make their money. Many believe the casinos to be an altruistic endeavor, and they’ll win money whenever they gamble.

That group of gamblers will sometimes realize the reality of casino gambling after a few sessions. However, they’ll more often join the other segment of gamblers who believe casinos are cheating.

Having an advantage is not the same as cheating. It eliminates the need to cheat ultimately because the casino can’t lose.

Let’s examine how the casino makes its money and why it can’t lose. Knowing how the house edge works against you will make you a more efficient gambler.

How the Odds Play a Factor

One of the best ways to learn odds is by looking at a game like “rock paper scissors.” I like this game because there are different outcomes other than winning or losing.

You could play heads up against a friend and have odds of 1 to 1. That equates to a 50% probability; you have one chance to win and one chance to lose.

Yet, if you expand to betting on what a player will choose, the odds go to 2 to 1. For example, you could bet on a rock coming up for player “A.”

You’d have paper and scissors going against a rock. So, the payout on a rock bet would be at 2 to 1. Those are your odds.

The casinos use the probability of outcomes in various games to create your odds. The caveat is that the likelihood of a result won’t always translate to the odds you’ll get.

Betting Lines Offered by Sportsbooks

In the sportsbooks, the oddsmakers work diligently to offer favorable lines for the sportsbook and appeal to gamblers.

The experts that work to craft the perfect lines are some of the brightest minds in the gambling industry.

One of the clever areas of sportsbooks lines is that they shift. The sportsbook will open betting to the professional sports bettors before making an offer to the general public.

Sportsbook Booths and TVs

This backup ensures the oddsmakers aren’t entirely missing the mark before millions roll in from the less informed gamblers.

Sportsbooks will also shift the line leading up to a contest to encourage equal action on both sides of a bet. I’ll get into the importance of having equal money spread across a bet when I go into the vig.

Variance Keeps the Casinos Alive

None of the casino’s models mean a thing without variance. Casinos need gamblers walking through their doors to make money.

If everyone lost their cash and went home, the casino industry would dry up and die. But casinos can’t let everyone win either; that would be equally devastating.

So, they rely on variance to keep the water flowing. Variance is achievable due to the random nature of casino games.

For example, a coin flip is a 50/50 proposition. If you played a coin flip in the casino, the house edge would be 0%.

That means that eventually, everyone breaks even. Yet, in the short-term, you’d have winners and losers.

When you flip a coin 100,000, the split of head and tails should remain pretty close. Yet over 500 tosses, the results might vary considerably.

That variance is in play on a casino game, too. Except the variance works despite the casino having an edge.

Why is variance an essential element of casinos’ success?

It sends some players home a winner. Those players tell their friends and family about their financial windfall, which drives more business.

When players don’t win, nobody wins. Let’s look at how casinos make money on popular gambling activities.

The Sportsbooks Make Money on the Vig

Sportsbooks make their money on the vig. The vig is the money you have to bet to win an amount.

For example, you bet $110 to win $100. That $10 goes to the sportsbook.

How does this make any money for the sportsbook?

People Sitting at Casino Sportsbook, Three Dollar Bills Spread Out

It works by getting even money on both sides of a bet. If gamblers bet $11,000 on the Dallas Mavericks to win a game, the sportsbooks need $11,000 in action for the team to lose.

Using the standard vig, the casino would make $1,000 on that game. They take the $11,000 from losers, pay the winners $10,000, and keep the rest.

Slot Machines Use the Return to Player for Massive Profits

Slot machines are immensely profitable for casinos for two reasons. The first is that the games are incredibly popular. Casino gamblers love the opportunity of spinning the reels and leaving with a huge jackpot.

The other factor of the slot machine’s success is the return to the player. In Las Vegas, penny slots rule the casino floor. These games outnumber other slot machines 3 to 1.

The games are so profitable because the return to players on these machines averages around 88%. That means casinos keep $0.12 of every $1 played on penny slots.

Casinos have managed to make their most popular games among the worst for the player. A 12% house edge is terrible for players; that’s a significant chunk of change for casinos.

Casinos Love Blackjack Because They Make the Rules

Blackjack is the preferred table game in a U.S. casino. The beautiful aspects of blackjack for players are engaging, and you can use strategy to lower the house edge.

The casinos love blackjack because they make the rules. In a standard blackjack game, the house edge is only 2% for the average gambler.

However, the casinos can bend the rules to make the house edge over 4%. One way casinos do this is by changing the payout for a natural.

There’s a trend in casinos to move to a 6 to 5 payout, leaving the more player-friendly 3 to 2 in the past. This subtle change effectively doubles the casinos’ advantage over players.

Closeup of a Blackjack Table

Card counters can gain an edge on the casino in blackjack. But since the casinos make the rules, they take specific measures to ensure players can’t get the upper hand.

Casinos do not cheat, but they don’t necessarily play fair.

Baccarat Is a Slow Burn with Huge Stakes

Baccarat has a low house edge compared to many casino games. The banker bet has an advantage of only 1%. The other popular wager, the player bet, isn’t much worse at 1.24%.

While the game isn’t crazy popular in the United States, it dominates in Asia. The game tends to attract whales, which makes the lower edge acceptable to casinos.

When players are wagering millions during a session, the 1% rake adds up quickly. Baccarat can be equally enjoyable for low-stake players.

The element of pure chance adds a significant amount of entertainment.

Roulette Isn’t for Suckers, but They Love the Game

Roulette breaks down probability and odds brilliantly. The game has a variety of wagers, from any of the numbers to what color comes up.

Each option has a unique probability, which sets different odds. Every wager on a roulette board has the same house edge of 5.26%.

That means whether you’re betting on black or the number 12, you can expect to lose the same amount over time.

Suckers will try to employ betting systems to beat the casino, making you lose faster. Avoid betting systems, and you’ll enjoy your roulette sessions more.

Craps Uses Excitement to Create a Frenzy

Craps has a lot of great things going for it. The house advantage is low on the safe bets, but there are plenty of sucker bets to add to the casinos’ profits.

Closeup of a Casino Craps Table

The number one reason craps makes a profit for the casinos is it’s extremely fun to play. Get a crowd of players around a craps table, and the electricity draws players from all over the casino.

When players are having a blast, the casino gets to enjoy the money rolling in like floodwaters.

The Need to be Entertained

It’s the basic desire of casino guests to be entertained that makes the casino industry profitable. As long as casino guests are being entertained, they don’t mind losing a little cash.

The casinos are masters of entertainment that allows them to rig the games in their favor without too much protest.

When casino gamblers are smart with their approach, they can enjoy much more value from their entertainment budget than other activities.

The Importance of Balance

Casinos maintain an edge over the players, but they must walk a fine line between profits and player satisfaction.

That creates a balance between winning and losing. Players who never win or feel like they can never win won’t continue gambling.

More importantly, new gamblers won’t be steered into the casino by tales of players losing their entire bankroll. Ensuring winners are walking out of the casino serves to increase casino profits.

Conclusion

Understanding how the casino makes its money can assist players in finding ways to lose less. The casinos can’t lose; it’s built into the games.

Sure, a handful of players will get the better of the casino on any given day, but they’re merely winning the losers’ money.