Photo: Ivan Samkov

Why do casinos never lose?

The House Edge No matter what game you choose to play, the odds of the casino winning your money are greater than the odds of you winning the casino's money. That's because all casino games are designed to provide the house with a built-in edge, diminishing the chances and sizes of potential payouts.

investopedia.com - Why Does the House Always Win? A Look at Casino Profitability

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There’s one certainty in gambling: Nothing is left to chance. In the end, the house always comes out the winner. A casino is a business, not a charitable organization throwing free money away. Like any other business, it has a business model in place designed to ensure its profitability. Key Takeaways A casino has a number of built-in advantages to ensure that it, and not its customers, will always win in the end. These advantages, known as the “house edge,” represent the average gross profit that the casino expects to make from each game. The longer you play, the greater the odds are that the result of your play will match up with the house edge—and that you will lose money. The house edge varies significantly among the different casino games, with blackjack the lowest and keno the highest.

The House Edge

No matter what game you choose to play, the odds of the casino winning your money are greater than the odds of you winning the casino’s money. That’s because all casino games are designed to provide the house with a built-in edge, diminishing the chances and sizes of potential payouts. For example, a roulette wheel is numbered from one to 36, so you might think this puts the odds for winning a single number bet at 36 to one. However, roulette wheels also have a zero, and sometimes they have a double zero and even a triple zero. The actual odds of winning are thus 37 to one, 38 to one, or 39 to one, not 36 to one. The house edge, which is the odds advantage in its favor, represents the average gross profit that the casino can reliably expect to make from each game. On the games with the lowest house edge, a casino might be generating a meager profit of anywhere from around 0.5% to a bit over 2%. On other games, it may make profits of anywhere from 15% to 40%. 5.26% The house edge when playing American roulette, which uses a roulette wheel with both a zero and a double zero The house edge on an American roulette wheel, which contains a double zero, is 5.26%. For every $1 million that’s bet at the roulette tables in a casino, the management expects to pocket a profit of slightly more than $50,000. The other approximately $950,000 is returned to the bettors. The casino isn’t aiming to bankrupt a player in one sitting—it just wants to make sure that in the long run, the players walk out with a little less money than they came in with, leaving money in the casino’s pocket.

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Many people who are aware of the house edge still don’t really grasp its implications for their bankrolls. They believe that the roughly 5% edge that the house has at the roulette table means that they can reasonably expect to sit down with $100, gamble for a few hours, and the odds are that they will only lose about $5. They fail to understand that the house edge applies not to their starting bankroll but to the total amount that they wager. For example, assume a person is making $5 bets on every spin of the roulette wheel, and the wheel spins 50 times an hour. While the person betting may be winning some bets and losing other bets, they are wagering $250 an hour. If the house edge plays out perfectly, at the end of four hours of play, they lose $50, or 5% of $1,000—an amount 10 times greater than they had expected. In 2018, the U.S. Supreme Court gave states permission to legalize sports betting if they wish to do so. It is still fully illegal in 17 states, including California, Massachusetts, and Texas. In four other states, there is some form of pending legislation.

The Extra House Edge

The longer you play, the greater the odds are that the result of your play will match up with the house edge. A player may well be ahead in the short term, but over the long haul, the house edge eventually will grind them down into unprofitability. That’s why casinos do all they can to keep you playing longer. For example, casinos are famous for lacking clocks and windows. They’re designed that way to keep players unaware of the passage of time. Many first-time players are pleasantly surprised at being offered free drinks by the management. Those complimentary libations will cost you, though, as being inebriated doesn’t usually improve judgment when it comes to betting. If you or someone you know has a gambling problem, call the National Problem Gambling Helpline at 1-800-522-4700, or visit ncpgambling.org/chat to chat with a helpline specialist. Why do people gamble if the house always wins? People gamble for fun and because there is a possibility, however small, of winning some money. Most bettors are aware that the house holds an edge. However, they often misunderstand just how big that edge actually is. Casinos are crafty, giving players just enough hope to keep them betting. Ultimately, the longer you bet, the bigger the house advantage becomes. In which games do casinos hold the highest edge? Casinos have the odds stacked in their favor for all games, although the house edge does vary on each one. Sic bo and keno generally offer the house the biggest edge. Blackjack and video poker are the games at which gamblers usually have the best chance of succeeding.

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What percentage of gamblers win? Not many, since casinos are highly profitable businesses. Various studies have been published over the years, and the numbers vary. In 2013, The Wall Street Journal gained access to a private gambling database, which revealed that just 13.5% of gamblers end up winning.

The Bottom Line

Although all the laws of probability are in the casino’s favor, the house edge varies significantly among the different casino games. The game with the lowest advantage to the casino is blackjack; if a player follows a perfect betting strategy, the house edge is only 0.5%. At some very liberal casinos, the house edge at blackjack may even be as low as 0.28%. Craps offers the next lowest edge, 0.8%, followed by baccarat, with a 1.06% house advantage. The smallest edge only applies if the player is playing the odds perfectly, which few people do. The house edge increases as players wager less expertly. American roulette remains one of the most popular casino games, but it carries a high 5.26% edge for the house. The house edge on slot machines goes as high as 15%; for keno, it is a massive 40%.

investopedia.com - Why Does the House Always Win? A Look at Casino Profitability

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