How Casinos Make Money – Gambling Business in a Nutshell
10 minutes
Posted by: Ivan
Fairly often, you’ll hear casino players saying how the games are rigged and how it’s impossible to win. These misconceptions and conspiracy theories are easy to fall for, especially if you find yourself on the losing side. However, none are based on any facts.
The truth is, casinos don’t need to fix games to make money.
Since the first commercial casinos, these gambling houses have always had simple methods for ensuring profit while offering fair games in a safe environment.
So, how is this possible? If you want to learn more about how casinos make money, you’ve come to the right place.
How Casinos Make Money
Casinos make money through the house edge. The house edge is the inherent small advantage that the casino has over the player in almost every game it hosts.
To put it in even simpler terms, the house edge ensures that the casino has better winning odds, so it’s guaranteed to win more than you.
The house edge is the opposite of the RTP (Return to Player) percentage, as both combine to make 100%.
For instance, if a casino game has a house edge of 4%, it means that, over time, you get back 96% of the money you put into a game. The casino keeps the remaining 4%.
It’s important to remember that the house edge only matters when you observe a game for a longer period of time. When you play short-term, it doesn’t matter much. Everyone can hit a big win short term.
This is how we see impressive stories like those featuring multi-million slot game winners. But, looking at a period of months or years, the house edge always guarantees the casino comes out on top.
From the player’s perspective, this seems unjust, as the “odds are fixed against you.” But, casinos are in the business of making money.
And, despite many players’ belief that the only reason to play in casinos is to have a chance of winning big, the main purpose of a casino is to offer entertainment value and provide you with a fun time.
So, the responsible thing to do before starting your gambling experience or getting deeper into it is to accept that you’ll likely be in the vast majority that ends up losing money.
How Much Money Casino Makes from Different Games
We’ve established that all casinos make money through the house edge. But, seeing that there’s no universal answer to what house edge applies to each specific casino game, we should look at each game separately.
Each casino game comes with a different house edge, so picking the right one to put your money into can make a substantial difference. With that in mind, here’s how much money the casino makes from various popular games:
How Much Do Slots Make Casinos?
Slots are the main source of income for every casino. The main reason for this is that slots are the most numerous type of game in every casino.
Additionally, slots are fast-paced and don’t require any skill to play.
For the purpose of this page, it’s also easy to calculate how much, on average, a casino earns from one slot machine.
With that in mind, let’s say that a slot has a house edge of 5% and that a player can make around 600 spins per hour on it.
If a player bets $1 per spin, it means they are betting $600 per hour. Due to the house edge, the casino takes $30 per hour. If the slot runs around the clock, $30 times 24h equals a profit of $720 per day just from one machine.
If a casino has thousands of slots, it can easily profit hundreds of thousands of dollars just from its slot games. This is even when you factor in that every slot won’t be constantly occupied by a player.
Moreover, for a large online casino with a big player base, these profits can go into the millions.
Additionally, sticking to these casino machines, video poker games are also a solid earner. That said, they are not as popular as slots and have a lower house edge. So they are not close to slots in terms of overall profitability for the casino.
How Much Casinos Earn From Blackjack Tables
Calculating a casino’s profit from blackjack is challenging, as there are many variables that go into the equation.
With that in mind, the numbers we give you are just ballpark values that can significantly fluctuate even from table to table.
The main reason for this is that blackjack isn’t only a game of luck.
As you make decisions for every hand you play, blackjack also demands a certain degree of skill.
More precisely, a skilled blackjack player can play with a house edge of 0.5%. But, a novice player who tends to make a lot of mistakes will play with a house edge of up to 2% or more.
To put this into specific numbers, let’s say that an average blackjack dealer deals around 350 hands per hour. There are four players at the table, betting $30 per hand on average combined. So, they’re betting $10,500 in total per hour.
For simple calculations, all of them are playing with an average house edge of 1.5%. In this scenario, the casino rakes in $157.5 per hour from a single blackjack table.
And, seeing that a blackjack table can fit up to seven players, the casino can make much more money during its peak working hours.
How Profitable is Roulette for Casinos?
Roulette is similar to slots in the sense that it’s entirely luck-based, so you don’t need much skill and experience to play. Just like slots strategies won’t make much difference in the long terms, your decisions in roulette are of little consequence.
Moreover, it also has a fixed house edge, which is favorable for players who are looking for numbers they can rely on over time.
From the house’s perspective, a casino’s profitability is directly impacted by the roulette variation that the players pick.
The American roulette has a house edge of 5.26%, while the European version has a significantly lower edge of just 2.7%.
The average number of spins per hour can be anywhere from 25 up to 90, depending on whether it’s a mechanical game or one involving a croupier. For easier calculation, let’s say that there are 50 spins per hour, on average.
If you’re betting $5 per spin, it makes $250 per hour. If the house edge is 2.7%, the casino is earning $6.75 per hour just from one player. If the house edge is 5.26%, the casino is profiting $13.15 per hour.
So, just by picking the wrong roulette variation, players are giving the casino almost twice as much money over time.
How Much Money do Casinos Earn From Baccarat?
Baccarat is a solid earner for casinos, especially because a considerable percentage of baccarat players are high rollers.
Even though this game earns the casino a lot of money, it only offers players three basic bets—the player bet, banker bet, and tie bet.
While the player and banker bets have a house edge of 1.36% and 1.17%, respectively, the tie bet is where the money lies for the casino.
Unskilled baccarat players who bet on a tie outcome give the casino nice profits in the form of a 14% house edge from every bet.
Additionally, many players are unaware that the casino also has a 5% commission on winning banker bets. So, even if you win by betting on the banker, the house still manages to take a small chunk of your profit.
How Casinos Make Money from Craps
Like baccarat, craps is a very interesting game in the context of how much money it can earn the casino. This is because, much like in baccarat, you’ll find several bets with wildly varying house edge percentages.
So, for example, if you’re an inexperienced casino player and make ill-advised single-roll craps bets, you’ll play with a house edge of up to 16.67%.
Assuming that an average craps game has around 100 rolls per hour and an average bet of $10 per roll, the casino is taking a whopping $166.7 per hour through the house edge.
On the opposite side of the spectrum, experienced players who know their way around the craps table will choose pass and don’t pass bets. These come with a house edge of just over one percent.
Considering that, sticking to these simple craps bets, you can keep more money in your pocket and minimize the casino’s profit.
The Casino’s Profit from Poker – A Different Setup
Understanding how casinos make money from poker requires us to go a bit deeper and expand the topic.
This is because poker games don’t have a classic casino edge that exists in other games we’ve discussed above.
Instead, casinos make money from poker by collecting the rake. This is a commission fee that covers the casino’s expenses of hosting the game and ensures a certain profit.
In this sense, the casino always earns its money and isn’t really invested in how much players win at the table.
There are several ways a casino might charge the rake. For example, it can have a fixed hourly fee or a fixed fee rake. With these two forms of rake, the casino always earns the same amount of money, no matter how much money is at stake.
That said, the most popular type of rake, and one you’ll come across in most casinos, is the pot rake. This type of rake sets a certain percentage that the casino will take from each pot. Most casinos take anywhere from five to ten percent as the pot rake.
Moreover, the pot rake in online casinos is generally more player-friendly. As online casinos don’t have the same operating expenses, they can set lower pot rake percentages.
For instance, most online casinos have a pot rake of up to five percent, although you can find poker sites that charge just around one percent.
How Casinos Make Money – A Cost You Have to Accept If You Want to Play
It’s good to be interested in learning how casinos make money, as it helps you get a clearer picture of the overall industry. More importantly, it clears the air in terms of what you can expect from your gambling experience, especially if you’re invested in it long-term.
In other words, the built-in casino edge that comes included with most games is a mechanism that ensures that the house always wins in the end.
It uncovers that behind the glitz, glamor, and prospects of winning big, lies the cold truth that most players lose more than they win.
Unfortunately, there’s no legal way to get an edge over the casino. This is how every casino operates and is something you need to accept if you want to play. But, that doesn’t mean that you can’t do anything to ensure you have the best winning chances possible.
A simple way to go past it is to look at the house edge as a tax you have to pay to play. Also, you should preferably pick a skill-based game and only bet what you’re prepared to lose. And lastly, the most important thing is to always gamble responsibly.
