How Do Casinos Make Money?

Land based casinos derive profits from several different activities including hotel bookings and extravagant drink menus, on top of various gambling activities. Online casinos do not have this same luxury and derive all of their profits from gambling activities alone. When it comes to profits from casino games, both land based casinos and online casinos will be making money through what is known as the house edge. This phrase means the percentage a casino can expect to make from a particular game over the course of many rounds.

To understand house edge, you will need to understand the return to player percentage or RTP for short. Whereas the RTP is what the players of a particular game can expect to receive back on average, the house edge is what the casino keeps. Therefore, a game with an RTP of 97% means that the house edge on that game will be 3%. For every $100 bet on that game, $97 will be given back to the players, while the casino will make $3.

RTP is calculated over many game rounds. The game will mathematically end up paying out to the stated RTP only at a large volume of game rounds because of the variability of wins and losses. A game that always paid out $97 for every $100 bet would not be fun at all! Using random number generators, safe online casinos ensure that their game results are completely random. This means that for each player betting $100, one may receive $500 while another may receive nothing.

Different games have different expected RTP and house edges. This will depend on the casino that you are playing at, as well as the software providers who developed that game. Table games and online slots have different expected RTP for players. Online slots will typically have an expected RTP between 92-99% depending on which slot you choose. Of all the table games, blackjack has one of the lowest house edge, which can be as low as 0.5%. As these games require a level of skill to play, it is even possible for players to reduce the house edge to 0% depending on how well they are able to implement their gambling strategy. This is why card counting is specifically prohibited in land based casinos and players who are caught will be escorted out of the casino or worse.

How do Casinos Make Money on Poker?

Poker is one of few games that can be played at the casino and in online poker and is not played against the house but rather against other players. Overall it is a skill game because you play and win against players, rather than the luck of RTP games. The exception being video poker, which is RTP based like a slot game. So how do casinos make money on a game where there is no house edge? There are several ways that casinos pull in money through poker games, including:

Pot Rake – The most common method that casinos use to make money on poker games is the pot rake. The rake is the commission that the casino takes based on the pot size. The casino only takes this commission once the betting round has reached the flop and is calculated from 2-10% of the pot, depending on where you play.

Hourly Rate – An alternative to the pot rake is the hourly rate, which is charged in 30 minutes to 1-hour increments. This charge is typically found at high stake poker games and is used to cover the costs of running the poker game.

Fixed Fees – Another alternative to the pot rake are fixed fees charged at poker games. Instead of the casino taking a percentage of the pot, the fixed fee option will be an agreed upon amount of money regardless of the size of the pot.

Tournaments Buy-in – Where casinos host large poker tournaments, they may derive their profit from taking a percentage of the tournament buy-in. Depending on the size of the casino, that may be anywhere from 10% up to 20% of the buy-in total. In this situation, the casino would forego any rake that it would have charged in-game.

What’s the Most Profitable Game for the House?

Slots can be one of the biggest money makers for the casino.

There is no surprise that the most lucrative game for casinos is the slot machine. Slots are super simple to play and require hardly any effort to win big, which is why it is so popular with beginners. Online slots offer the most profitable casinos the opportunity to access hundreds of thousands of players through ludicrously high progressive jackpots, as well as other marketing tactics that bring new players in.

In land based casinos there are tons of slots lining the casino floor and in online casinos you will typically find hundreds, maybe even thousands, of slots for you to choose from. The more slots that the casino has available for players, the more opportunities it has to make money from players. Having varied slots will attract players looking for specific casino game themes or play styles, or those who enjoy a slot for its sounds, design, and lights.  Therefore, online casino games like slots, provided by casinos in high quantity to entice the most players and make the most money from them.

The second most profitable game is the wheel of fortune game, which is typically found at land based casinos. While there is only an 11%-20% chance of winning, this doesn’t stop players from getting involved to have their chance at the huge prize money on offer.

Blackjack is the third biggest money-maker for online casinos in the USA which brings in roughly $1.2 billion dollars. Online blackjack is played against other players as well as the house, where there is a house edge of 2%. The house edge is how the casino makes money from blackjack and is affected by a number of factors including the table rules as well as the playing order. With the right skill and strategy, this house edge can be as low as 0.5%. Fortunately for casinos, there aren’t too many players that know exactly how to play blackjack to the extent where the house edge is that low, which is why it remains one of the highest generators of money for casinos.

Casino Bonuses

Online casinos typically offer new players a casino bonus whenever they sign up. While this may seem like free money for players, casinos have certain terms and conditions in place to ensure that they remain profitable. For the best real money online casino bonuses, we recommend considering trusted online casino reviews to ensure that you get the best ones out there.

A deposit bonus is where the casino gives you money to play at the casino based on the amount, which you have deposited. To ensure that players do not simply withdraw this money, they have wager requirements in place. In order to withdraw your winnings, players are required to satisfy the wagering requirement first. For example, to withdraw a $50 casino bonus with a 25x wagering requirement, you would be required to place $1250 in bets first. There is also usually a time limit in place for you to fulfill the wagering requirement. It is essential to check an online casino bonus calculator before signing up to determine the true value of the bonus that you are about to receive.

Welcome bonuses, particularly the no deposit bonus, bring many new customers to a casino. Ultimately, this creates more revenue than loss through the bonus. With wagering requirements, the casinos ensure that players are bringing in real money. VIP programs are another big source of income for online casinos, as they ensure that players keep playing their favorite games with the expectation of a reward in the future.

Casinos have given out many wins and big jackpots to players but the fact remains that they too have made tons of money through the house edge and hosting games. A gambling-based city like Las Vegas doesn’t come from nowhere, they are big profitable businesses. At the end of the day, you should not worry about the house edge and simply have fun playing the amazing games on offer at casinos.