Luke Seidel Casinos are the most profitable businesses in the world. But how is it possible that these companies have profits every year, even though winning or losing in gambling is mainly the outcome of chance? We will describe all in this article, where you will learn how gambling works and how it is possible for a casino to always win.

First, let’s look at what gambling is. In general, there are several definitions of gambling. If we simplify this definition greatly, we can say that gambling is a game where the outcome of which depends in part or entirely on chance.

Games of chance

For example, slots or roulette are random. In these games, the player cannot influence whether he wins or loses. The player is just watching the game and waiting to be lucky.

Skill games

Skills games like blackjack, poker or video poker. By using knowledge or skills here, the player can increase his chances of winning. These skills include, for example, card counting techniques or understanding of optimal strategies for selected games.

As you can see, the element of chance is key in casino games. But how do casinos ensure the randomness of results? In land-based casinos, mechanical devices, such as electronic card shufflers or roulette bars that reflect the ball to a random spot or a physical roll of the dice, take care of the randomness. In electronic and online games, there is an algorithm so-called a random number generator.

How a Random Number Generator Works

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Before we dive into understanding how the random number generator operates in gambling, it’s important to differentiate between a true generator and a pseudo-random number generator.

True random number generator

These are physical processes that create sequences of random numbers. They typically involve thermal, electrical, or atmospheric noise, as well as the radioactive decay of photons from a radiation source passing through a semi-transparent mirror.

Pseudo-random number generator

In this case, numerical sequences of numbers are generated by computer algorithms. These sequences are not truly random because if you know the algorithm, you can predict the numbers. So, what makes these numbers random? Well-designed algorithms make it impossible to identify patterns or regularities using statistical methods.

Pseudo-random number generators are used in online gambling to ensure fair gameplay. How does this work in gambling? Let’s take a look at online slots.

Imagine a simple slot machine with one payline and three reels. Each reel has nine pockets with 3 x 3 symbols. These pockets are numbered from 1 to 9.

The number generator in the slot continuously produces numbers. When the player presses STOP, the process halts, and the machine selects three numbers between one and nine, one for each reel. Based on these selected numbers, it assigns a symbol to each pocket on the reel. If three identical symbols are displayed, the player wins.

This is an oversimplified example. Modern online slots have more reels and up to hundreds or even thousands of paylines. However, the underlying principle remains unchanged.

❓ If results are random, how can casinos be profitable in the long run?
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Probability and Chance of Winning

Now that we understand how the outcomes of each round are decided, let’s consider another factor that determines whether you win or lose: your chance of winning. We can quickly calculate this probability using a formula:

Number of winning events / Total number of events

In a single game, there can be different types of bets, each with its own probability of winning. For example, in European roulette, there are a total of 37 numbers (0-36). If you bet on red, there are 18 winning events (the red numbers) out of 37 total events. So, your chances of winning are:

18/37 = 48.6%

This means your probability of winning is just under 49%, which is not bad. On average, almost every other bet on a color wins. However, since the outcomes of individual game rounds are random, you may win or lose several games in a row. The probability becomes more apparent in the long run.

💡 Discover how gambling probabilities are calculated.

This leads us to the real secret of gambling and the answer to the question « How do casinos always win? » The answer lies in the Casino Advantage, or payout settings that do not reflect the actual probability.

House Edge of Casino Games

The house edge is the casino’s advantage over the player, expressed as a percentage. It represents how much the casino profits from a single bet on average. It’s essential for every regular casino visitor to understand this, as it affects the chances of winning and the potential losses in the long run.

In simple terms, even if a player has a 50% chance of winning, they can still end up losing over time due to the house edge. Casinos set their payouts to ensure long-term profits, so it’s crucial for both professional players and beginners to choose games with lower house edge to minimize potential losses.

The house edge of casino games

Game
Bet/Rules
House edge
Baccarat
Banker – 1.06%
Player – 1.24%
Draw – 14.36%
Blackjack – about 0.5%
Craps
Pass/Come – 1.41%
Don´t pass/Don´t come – 1.36%
Keno – 25% up to 29%
Roulette
European – 2.70%
American – 5.26%
Video Poker
Jack or Better – 0.46%
Online slots – 2% up to 15%.

Return to Player at Slots

Some gambling games, like slots, use a measure called Return to Player. This tells us how much the player gets back on average from each bet. It’s difficult to calculate this for slots because we don’t know the distribution of symbols on the reels. However, the good news is that online slots list this return.

Overall, online slots generally offer a slightly higher return than electronic and mechanical ones. Since more people play online games at the same time, online casinos don’t have to set such high profitability. On average, the return on online slots ranges from 95% to 98%, while mechanical ones, especially older ones, may only return 80% to 90%.

Games with Player’s Advantage

Currently, many people want to know if there are any games where the player has an advantage. The answer is yes!

Certain video poker games like Deuces Wild or Double Bonus have a return of over 100%. However, there’s a catch – the player must use the optimal strategy designed for these specific games. Casinos openly offer these games, hoping to attract players who don’t know the optimal strategy, minimizing their losses.

Progressive jackpot games offer jackpots that grow until someone wins them. At a certain point, the bonus becomes so high that it flips the odds in favor of the player, but this only applies if the player qualifies for the jackpot win (e.g. by meeting the condition of the maximum bet).

In blackjack, card counting is a well-known strategy that allows players to determine when the game is favorable and adjust their bets accordingly. While card counting is legal, casinos disapprove of it and may ask you to leave if they catch you doing it.

Gambling Volatility

Volatility in gambling refers to the risk and potential profitability of different games. High volatility games pay out large winnings less frequently, while low volatility games offer smaller but more frequent payouts. The level of volatility does not affect the house edge, but it does impact the player’s chances of winning big or losing their bankroll. Players who prefer a higher chance of winning big may opt for high volatility games, while those who want to enjoy a longer game with lower risk may choose low volatility games. The table below shows the analysis results for three different betting scenarios and their corresponding percentages of winners and chances to play 100 rounds:

– Bet: €5
– Bet Type: Color
– % of winners: 35.6%
– % winners with 100 up to 200 €: 34.1%
– % winners with 200 up to 500 €: 1.5%
– % winners with more than 500 €: 0%
– Chance to play 100 rounds: 95.7%

– Bet: €5
– Bet Type: Straight
– % of winners: 24.6%
– % winners with 100 up to 200 €: 7.4%
– % winners with 200 up to 500 €: 7.8%
– % winners with more than 500 €: 9.3%
– Chance to play 100 rounds: 24.6%

– Bet: €20
– Bet Type: Straight
– % of winners: 46.2%
– % winners with 100 up to 200 €: 33%
– % winners with 200 up to 500 €:13%
– % winners with more than 500 €:0.2%
– Chance to play 100 rounds:61.4%.

Tips on Responsible Gambling

No matter how you play, remember that the casino always has the advantage. While there are techniques like bonus hunting and card counting that can give you an edge, they are time-consuming to learn and use. It’s often better to see gambling as entertainment rather than a way to make money.

Here are some important tips for minimizing losses and staying out of financial trouble:

1. Only gamble with money you can afford to lose.
2. Understand the game before betting real money.
3. Learn optimal strategies for games like blackjack and poker.
4. Use self-limiting features offered by online casinos to control your betting.