So, we’ve all heard of the house edge, and you may have wondered whether it is true that the house always wins. The average house edge varies between different types of games. Online slots usually have a house edge of between 3% and 5%. This means that for every $1 gambled the casino keeps 3-5¢. So can casinos ever lose money?
The answer is, very occasionally, yes. Most casinos have a few good players who win, and many others who lose. If a casino has too many of the former and too few of the latter, it is possible for the casino to lose money.
Breaking the Bank
The phrase ‘break the bank’ has been in use since the 17th century and refers to a situation where the casino doesn’t have enough reserves to pay out a large win. But has it ever actually happened?
Sometimes a big win can cause difficulties, even if the casino is profitable in the long run. In 2011 Don Johnson won 6 million dollars at the Tropicana Casino in Atlanta City and in 1999 Kerry Packer took 33 million dollars from the MGM casino in Las Vegas. He was later banned from the blackjack table because the casino couldn’t match his financial resources.
There is no recorded instance of anyone actually breaking the bank, but in the Kerry Packer case, his greater resources put the casino in a vulnerable position.
How do Casinos Make Money?
The house edge of most casino games is quite small, so the casino only makes a small profit from each bet placed. For instance, blackjack has a house edge of less than 2%. This means they need a lot of players playing to cover a big payout. On reason casinos are so profitable, though is the way that players manage their money.
Some players keep an eye on their chip and know how to quit while they’re ahead. But many others simply play until they lose. This means that, unless you are very lucky, the casino always wins.
Why do Casinos Fail?
Despite all the advantages casinos have over players, some still fail. So, why is that?
Lack of Customers
For many casinos, the problem is simply not getting enough customers through the door. Without a steady flow of chips across the table, it is impossible to meet the cost of overheads. A lack of customers is for the most part a problem for new casinos trying to establish a place in the market. In times of economic uncertainty, even big players can be affected.
Bad Management
Online casinos are particularly vulnerable to bad management practices. Some of these may be due to corruption, but many are due to inexperience in the business. Non-compliance with legislation, poor customer service and a sub-standard customer interface are all factors that can lead online casinos to fail.
With the huge growth in online gambling, it can be hard for a new entrant to attract customers. New casinos need a large marketing budget and will have to offer generous bonuses to attract gamblers.
How To Win
While you’re unlikely to break the bank, there are a few things you can do to increase your chances of coming out ahead. Many people visiting a casino set an amount they are prepared to lose before walking away. However, it also pays to set a target for how much you want to win and cash out when you reach that target. Remember, most players just keep on playing till they lose.
Once you have a cash out strategy, take a look at the house edge on the different games. Choose a game with a low house edge and make sure you know the rules before you start to play. When you reach your target, do not be tempted to carry on playing. Cash out and enjoy your winnings.
Biggest Casino Payouts
- $50 million — Archie Karas, a Greek immigrant won €50 million in one sitting at the poker table, starting with only $50 in his pocket.
- $38.7 million — An America software engineer, who didn’t want to be named, put only three $1 coins into the Excalibur slot machine to win a $38.7 million jackpot.
- $38 million — “Peter”, an anonymous Norwegian, won $38 million on a progressive jackpot slot at an online casino.
- $33 million — Kerry Packer, the Australian media tycoon, won $33 million at the blackjack table and was later banned from the MGM casino.
- $22 million — A Belgian player won the highest ever payout on a single spin, winning $22 million from a $17 stake.
So, while the casino usually wins, sometimes the tables are turned and the house loses.