How Casinos Actually Make Money
Last Updated: September 6, 2021
How Casinos Actually Make Money
There’s a common saying that the house always wins. And, there’s a good reason why this saying has prevailed through the years.
No matter how big of a jackpot win some lucky players cash out, the largest casinos in the world can always afford to stay in business and remain profitable in the long run.
Moreover, most casinos are constantly in the black and racking up millions each fiscal year, regardless of any situation, crisis, or financial turmoil. So, how do casinos actually make money? Read this page and find out all of the necessary details on this intriguing topic.
The House Edge
If you’ve spent any time in the casino world, you’ve probably heard of the house edge. In simple terms, the casino edge is the built-in advantage the casino has over you in every game they host.
No matter how optimally you play or how good your strategy is unless you’re cheating or have some sort of advantage play strategy, the house will always have the edge.
Whether you’re playing online or in a land-based casino, enjoying a table game, video poker, or slot machine, you’re always going up against the house edge.
To be fair, for some games, it’s low, and for some, it’s higher, but the constant theme is that it’s always there.
The best thing to do is to avoid playing games with a high house edge. To give you a better feel of just how much the casino takes on each game it features, here’s a quick rundown of ballpark casino edge numbers for each popular casino game:
- French Roulette – 2.70%
- American Roulette – 5.26%
- Blackjack – 0.5% with optimal betting strategy
- Baccarat – Up to 15.75%
- Craps – Up to 16.67%
- Keno – From 20% to 40%
- Slots – From 2% to 15%
- Video Poker – Less than 0.5%
Of course, most players that spend their time in casinos end up with a negative balance. And, seeing that only a small percentage of gamblers are able to win consistently, it’s easy to understand how the house racks in massive profits from most of its customers, only to pay out a small percentage of lucky players.
It’s worth mentioning that poker doesn’t have a house edge, as you’re playing against other poker players and not the house.
However, even in this scenario, you can’t escape the house’s cut. This is because the house charges a rake, a fee for hosting the games in their poker rooms.
So, while there’s no house edge in the classic meaning of the phrase, the casino is still getting its share. The only difference, in this case, is that it doesn’t care if you win or lose.
The Hold Percentage vs. Casino Edge
The hold percentage is directly tied with the house edge but more complicated to understand, especially for beginners. This is the total amount the casino earns from one game from all players.
It describes the overall amount of money a particular game earns the house in one session, week, or over a more extended period of time.
It’s key to differentiate the hold percentage from the house edge, as the hold percentage is always much larger. For example, if the casino edge on blackjack is between 0.5% and 1%, the casino will take between 50 cents and a dollar for every $100 you bet.
However, the more realistic numbers, measured by the hold percentage, are that the casino will take much more. This is simply because you’re running through the amount in your stacks several times.
Statistically speaking, the hold will be anywhere between 10% and 100%. For this reason, casinos actually measure their profits based on the hold percentage rather than purely relying on established house numbers.
Selling You the Excitement
Although most casino players are losers, the casino does its best to convince you otherwise. When you walk into a casino, you get the feeling that everything is there for you and that you’re the one who’s going to trigger the life-changing win and walk out on cloud nine.
Naturally, as casinos are primarily in the business of making money, they specifically design the atmosphere in which you’ll feel loose and excited to spend as much money as you can.
Casinos know that they’re selling you an escape from reality, a fun night in town, or a promise to win more money than you’ve ever dreamt of.
However, this dose of excitement is seldom free. Although you’re enjoying the free drinks or some other comps, the casino has precisely planned a business model in which you’re incentivized to leave money on every corner.
From different fees, pricey amenities, or tips, casinos use a wide variety of tricks and tactics to earn money from the channels that aren’t directly tied to the games themselves.
So, to sum it up, the house always wins, and there isn’t much you can do about it, although there are some strategies to help you increase your winning odds. The best thing you can do is play responsibly and purely for fun, without expecting any massive wins. If they happen to come your way, all the better, but don’t count on it!