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How Casinos Make Money and How You Can Beat The House

You might think it's luck but in fact, it's a calculated trap, so play smart!

Casinos are like a dazzling dream, filled with lights and the promise of getting rich fast, but also risky. This is the built-in advantage they have in every game,  whether it's roulette, blackjack, or flashy slots. It might seem invisible, but trust me, it's there, silently guaranteeing the house comes out on top in the long run.

It's no surprise why the American Gaming Association (AGA) declared an overall casino gambling revenue of close to $110 billion in 2023, including the tribal-owned. 

Let's explore the strategies and tactics that casinos use to keep customers playing, including the house edge, revenue sources, and psychological tricks. Also, discover some tips on how to leverage skills to beat the casino.

The House Edge

The house edge is the baseline method that casinos guarantee themselves a profit, and refers to a mathematical advantage that a casino has over the patrons that are playing the game. 

It is the difference between the approximate average of a bet with a definite result and the actual return of a bet from the player. This rule of the house edge is built into the rules and the payouts of each casino game, thus seeing that the casino will, over time, always win.

How the House Edge Works

Game-Specific Edges

All games have a different house edge like in slot machines, the edge is built into the way the random number generator is programmed to pay out less than the true odds of hitting a winning combination.

In blackjack, the house edge stems from a few factors, including the dealer hitting on Soft 17 while players can stand and the dealer winning all ties. The standard edge is 2%.

Aggregate Edge

The casino does not make profits from one game but from the collective amount of games that are played. Even games with a low house edge, such as blackjack, can be made to generate substantial revenue when played frequently by many players.

Here’s an example of house edge on American Roulette:

Roulette may seem simple but the house edge varies based on the game variant. Here’s a breakdown:

The house edge is higher in American Roulette due to the extra 00, whereas European and French Roulette do not have the 00 slot. For example, a 5.26% house edge means that, on average, a player will lose $5.26 for every $100 bet.

More Than Gambling, Other Revenue Streams 

Food and Beverages 

Casinos have become full-fledged marketing destinations, and food and beverage play a key role in that strategy. This dazzling array of restaurants, ranging from casual cafes to high-end steakhouses, isn't there to satisfy your hunger.

Believe it or not, casino restaurants often don't generate significant profits on their own. Let's consider the case of Ameristar Casinos. In 2009, their gaming revenue reached a staggering $1.22 billion, while their food and beverage revenue only amounted to $135 million.

The reason why casinos are investing in restaurants is to keep, the gambler happy and involved. Restaurants serve as a strategic catch to keep you staying longer and playing more.

A tempting buffet may entice you to stay and play more. Free meals and drinks are part of a strategy to keep you spending time and money on the casino floor.

Entertainment 

Casinos are also famous for hosting extravagant entertainment like concerts, shows, and sporting events that attract visitors who may not directly be gamblers.

Diversifying their revenue streams, casinos also capitalize on additional sources of income, such as ticket sales, concessions, and the sale of event-related merchandise. For instance, when Taylor Swift took the stage at the MGM Grand in Las Vegas, fans not only splurged on costly tickets but also indulged in a wide array of food and beverage options.

Hotel 

Casino hotels form a marketing partnership that benefits both gamblers and the house. The convenience and extra amenities keep gamblers captivated and spending more, while the increased foot traffic boosts the casino's revenue. It's a win-win for an immersive entertainment experience.

Gift Shops and Boutique Stores

Transforming the traditional image of cheesy casino t-shirts and plastic poker chip key chains, gift shops and boutiques have evolved into a market concierge experience. These modern shops offer irresistible merchandise that caters to the unique tastes of the casino audience and embraces the vibrant casino atmosphere.

They work their magic via:

Convenience Shopping

Imagine that you are on a winning streak and feeling generous. Well, a conveniently located gift shop will allow you to shop for all your loved ones at home right from the casino without actually leaving the casino floor.

Souvenirs

Look, casinos are all about making memories. What better place can one retrieve that souvenir-branded mug, lucky charm necklace, or photo album to commemorate one's casino experience than in a gift shop?

Impulse Buys

The bright lights and exciting atmosphere put people in a spending mood. Gift shops are usually located near exits or other high-activity areas, which can lead you to that perfect impulsive purchase.

High-end casino resorts will have designer boutiques mixed in with the usual trinkets. You've got high rollers, and they want to shop with the same degree of luxury they game with. 

Casino shops offer limited promotions to convince you that they aren't your high-scale shopping malls. This kind of marketing adds more thrill to impulse buys.

So the next time you're in a casino, remember that the gift shop isn't there to sell you that plush roulette wheel key chain. It is a method designed to get you to spend more and make the casino more money.

Casino Psychology, The Subtle Art of Trap

Casinos are masters at creating an atmosphere that keeps you hooked, and it goes way beyond hoping for a lucky streak.

The Sensory Seduction

Think of all those flashing lights and upbeat music – they're not just there for show. Studies show they get your heart pumping and keep you alert. One study even found people gambled 20% more on slots in a fast-paced environment. It's like your brain gets tricked into thinking, "Hey, I'm awake and focused, I must be winning!"

The Free Stuff Trap

Free drinks? Those friendly waitresses offering endless refills? It might seem like good hospitality, but casinos know what they're doing. 

Research shows free drinks can cloud your judgment and make you take riskier bets. Suddenly, that $20 you came to play with seems like a small price to pay for a shot at a million-dollar jackpot. One study found people with free drinks gambled for an average of 30% longer.

The Almost Win

Have you ever gotten so close to a jackpot, only to have one symbol land wrong?  That agonizing near miss? Turns out, that's a deliberate design. 

Slot machines are programmed to tease you with the possibility of winning, triggering that reward center in your brain and keeping you chasing that elusive big win.  Studies even show near misses can be more stimulating than actual wins when making you keep playing. Very sneaky.

 

How to Beat the Casino

With all these income streams casinos use, it's almost impossible to beat it. But, provided you create and practice the correct strategies, you'll be able to, at least for a short term, have the odds in your favor.

Here are some casino games you can practice and soon beat:

Blackjack

Blackjack is one of the few games where skill makes a difference in reducing the house edge. Card counting, though not illegal, is frowned upon by casinos. It involves tracking high and low cards dealt to determine the likelihood of favorable cards. Skilled card counting can improve your odds, but be discreet. Following this strategy helps you lower the house edge to approximately 0.5 percent.

Roulette

Opt for outside bets for longer playtime. Although the payout may be lower, choosing outside bets such as red/black, odd/even, and high/low provides you with nearly a 50% chance of winning. You can effectively reduce your overall risk and extend your playtime at the table for these bets.

Steer clear of the Five-Number Bet in American Roulette. This particular bet, which includes the numbers 0, 00, 1, 2, and 3, holds the highest house edge at a staggering 7.89 percent.

The Martingale Strategy is a betting system that involves doubling your bet after each loss. While it can be highly effective if you have a substantial bankroll, it is important to be cautious of table limits that may hinder the strategy's effectiveness. This approach carries a high level of risk but can yield significant rewards for those who can afford it.

Poker

Understanding hand rankings is crucial in poker. Keep practicing until you can recognize the value of different hands instantly.

Bluffing

Bluff with caution. Observe opponents for ideal bluffing moments. Skilled players choose to bluff carefully to maintain a strong reputation.

Position Matters

Playing from a later position allows you to observe other players' actions before making your move, which can greatly influence your strategy at the table.

Slot Machines

Not all slots are equal. Find machines with higher payouts to increase your chances of winning. Better payout rates mean more wins.

Maximizing Paylines

Maximizing the number of pay lines you play is a highly effective strategy to boost your chances of winning in casinos. Playing the maximum number of pay lines available greatly increases the likelihood of hitting a winning combination.

Don't forget to sign up for the casino's rewards program to earn points and bonuses. Free spins and other promotions can extend your play and provide additional opportunities to win.

Baccarat

Bet on the Banker

The banker bet is a little better than the player bet overall because of the lower house edge. Over time, this makes a huge difference.

Avoid the Tie Bet

The tie bet offers a large payout but an even larger house edge. Ideally, you'd avoid this bet if you desire consistent wins.

 

The House Always Wins

Casinos aren't just about luck; they're designed to keep you engaged and spending, using a combination of the house edge, diverse revenue streams, and even psychological tricks. While playing casino can be a fun way to spend an evening, remember, the odds are stacked in the casino's favor.

Beating the house is difficult but if you have learned the games and the required skills, a short-time win will do! Focus on the amusement and don't chase losses. Set a budget, stick to it, and know when to walk away.

And as for its future, casinos will likely adapt to stay relevant. Expect them to embrace new technology like casino mobile apps and virtual reality or offer exciting experiences like game shows to keep players hooked. 

They might even target younger demographics with e-sports tournaments or influencer partnerships. One thing's for sure, casinos will keep finding creative ways to make money. That's why it's important to be a responsible gambler and play smart.

About the author

Adan Cabal

I’ve cultivated my writing skills and learned to marry my interests by working as a gaming journalist here at Game Champions. This is a perfect way to talk about the things I’ve always loved and share my thoughts with a wider audience.

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