How Casinos Stay Profitable

If you’ve ever been to a casino, then you know how beautiful, well-kept, and well-staffed they are. Then when you consider that it’s possible to win thousands of dollars, you may be wondering how casinos stay profitable.

House edge, the fact that most of gambling is losing, and rake agreements ensure that casinos stay profitable. In fact, it’s rare to actually beat a casino. Read on to learn more about how casinos stay profitable.

1. Most of Gambling is Losing

The most obvious answer, and the one people don’t want to hear, is that most of gambling is luck. In fact, other than a few crazy wins, most people who win big(we’re talking mega jackpots), when they look back, have lost far more to the casino than they have ever made.

The issue is that humans forget quickly. And when someone wins a $10,000 jackpot (which is only about $7,000 after taxes), they tend to forget the fact that they put in $200 every Friday night before the lucky night they won that jackpot. In fact, if they were to look back, they likely spent far more than $7,000 during their frequent visits; they simply forgot in the excitement of winning the “big one.”

There have been several studies on this reality, and they have all come to the same conclusion—almost every person who has won big at a casino has bet far more over the years to get there. And remember, when you lose, that is money directly in the casino’s pockets.

2. House Edge

Of course, casinos can’t always predict how much a person will bet and how often they will lose even when they analyze probabilities. Thus, all games in the casino are set up with a “house edge.” A house edge is a term used when casinos plan financially, basically an insurance that they will win more often than the player will. The thing about this, is that casinos are often sneaky when they establish house edges.

The green slot on a roulette wheel? House edge. The fact that a “push” in blackjack (when the casino and the player have the same number) is a loss instead of allowing the player to keep their bet is the house edge. These practices differ from casino to casino, and it’s important that you investigate before you play so you know the type of house edge you are facing. Remember, above all else, the house always wins.

House edge in slot machines is more straightforward, as it is typically a setting. The setting varies from casino to casino, but in general, it is a percentage from 70%-95% and this is the “percentage” of money returned to a player (RTP) for each spin.

So, for example, if you play a machine with a 70% RTP, you can expect to receive 70 cents back for every dollar you bet. Just keep in mind that this is a number expected over time, not every spin. So, if you spend the night with $100, split into 100 $1 spins, you should expect to win some spins, and lose others, and eventually leave the casino with around $70. Of course, there is a chance you hit a jackpot, but this is all based on luck, not on the established house edge. That $30 you left behind? That goes to the casino and pays for their operating costs. But still, this is a small sample, and RTP is established by the number of spins per hour—meaning you will likely leave with far less than $70 unless you play for hours and thousands of spins.

In general, the more operating costs a casino has, the lower the RTP. Online casinos have the highest RTP since they typically don’t have to pay for a building, lights, or many staff. Famous fancy casinos with lots of amenities (i.e., the Wynn in Las Vegas) tend to have the lowest RTP.

3. Rake

There are always some games on the casino floor that aren’t conducive to the house edge tactic. One example includes poker, where the players all put up money that is won by a single player from the pot.

This may leave you wondering why casinos even allow poker and provide dealers for it. The answer is simple: something called rake, where the casino takes a small portion of every pot. This money goes directly to the casino and is generally a percentage applied to every pot.

The amount of rake varies from casino to casino, but know that even casinos with the smallest rake per pot can walk away with thousands per night from a successful poker room.

4. Casinos Make Gambling Extra Addictive

You’re probably reading this, wondering why anyone would plan or enjoy losing $200 every night. The reality is, the emotional rush of gambling is addicting, and casinos play on this. They boost the feeling individuals receive when they gamble—by offering status, perks, a show, and camaraderie, all things humans crave.

Basically, casinos make the aspect of going and losing your money so fun that most people forget about the fact that they are losing. Not only that, but they will continue to return for the serotonin boost, until they eventually look back to realize they’ve sunk thousands into the casino.

5. Loyalty

The final way casinos net positive is by creating loyal players. We’ve already established that you will almost always lose when gambling. Therefore, if the casino finds a player who loves to come to their business and lose, it is in their best interest to keep that player coming back.

Therefore, casinos invest a lot of money into keeping their regular players returning, from points programs to special concierges, there is no benefit too small for the casino to throw at you if it will keep you coming back. And even if the casino appears to have the best loyalty program, know that the casino is netting far more than it is returning to you in benefits—otherwise the loyalty program wouldn’t exist.

Remember, casinos stay profitable because, above all else, the house always wins.