How Casinos Use Algorithms and Math to Make Money

If you are a casino lover or have ever played in a casino, you are bound to ask a question. How do casinos make their money? This is not an uncommon thought, especially when you often see players making a fortune out of casino gambling.

If casinos only gave out money, they should be out of business, right? Wrong! But to understand how casinos make their money, you need to think beyond the generic economic rules.

Casinos follow an unconventional economic rule that can benefit out of a loss. Sounds perplexing, doesn’t it? After all, as a rational human being, it is natural to disregard any deal that may cause a loss.

How Casinos Make Their Money

You should know that casinos make money by taking your money to simplify the subject. The casino business, after all, runs on the thrill-craving mindset of the casino players. The primary focus of both land casinos and online casino games is to keep you playing for as long as possible.

Since it is a game of numbers, casinos will always have the edge over the gamblers. How so? With little help from maths, of course!

Whether you play offline or at an online casino, the games are designed to ensure you stick around, playing.

Using Maths and Algorithms to Become Profitable

Casinos Random Number Generators will always have a statistical edge over the players. This is not just to make a profit for the casino but also to maintain the players’ interest. This is also counted as the house edge, and you will find this to be more evident in the slot machines.

Did you know that a player only wins 90% of the total money a slot machine gets? So, the casino winnings that you see big winners get are always 90% of what the machine has.

So, the casino always manages to keep 10% of the overall amount. The house edge applies to all machines in a casino, but the percentage may vary. For instance, slot machines tend to hold about 17% when keno has a house edge of 25%.

Explaining House Edge

A few factors determine a player’s chances of making casino winnings!

  • The game
  • The rules of the respective game
  • The level of skill of the player

Players tend to increase their chances of winning or losing by placing the bets repeatedly. The wager expectation value or estimated value (EV) is expressed as a percentage.

For instance, the house advantage for roulette might be 5.26%.

The basic formula is:

Estimated value = Bonus – (Wagering Requirement x House Edge)

Or

Estimated value = Bonus – (Average wagering x House Edge)

This is not difficult for someone to calculate if they are good at maths.

Probability vs Odds

Then there are the factors like probability and odds. Probability is the ratio of the number of times a specific outcome occurs to the number of times you experiment.

Odds, on the other hand, is the long-run ratio. That is the ratio of the number of times an outcome does and does not occur.

For instance, if you select a card from a standard deck of 52 cards, the chances of getting a spade are 1/4th. The odds against it, however, are 3 to 1. In the case of a payoff, the true odds have to represent the payoff the right way to prevent unfair casino rules.

So, for instance, a bet on a single-number double-zero roulette will be 1/38. That means the player needs to be paid 37 to 1, even though the actual payoff is 35 to 1.

The Science Behind Slot Machines

Now, casinos utilize the theory that players tend to play longer when losing. This is the principle of slot machines as well as other gambling machines. They tend to keep the players engaged by providing near misses, hoping to win, and that’s what makes them thrive.

Since a near miss can be mistaken as an almost victory, players tend to stay. This belief in the gambler’s mind is why people want to play on. From a psychological point of view, of course, there is a rush of dopamine. All of these combined can keep the players gambling longer and placing bets faster.

Some Game Options at Casinos and Their Win-Loss Rates

A win/loss ratio that is above 1 is usually favorable for the player. This means that the win rate is above 50% at least.

Now you will have the best chances of winning at table games than any other game in a casino. But let’s take a look at some of the most popular casino games and the odds of winning in them.

Blackjack

Based on the above theory, you tend to have the highest chances of winning in blackjack. The odds can be about 49%, and with a little bit of luck and skill, you just might win.

Roulette

Roulette allows several methods to place a bet, and the chances of winning are almost always 50/50. By betting on particular numbers, you can lower the odds and increase the payouts.

Slot Machines

Slot machines have the worst odds, and the win/loss ratio is really not in favor of the player. So, always read the odds on each machine before deciding to play.

Poker

The odds vary drastically in poker, and you may sometimes seem to have some control. However, luck plays a significant role since you are dealt with random cards. However, how you play those cards, that is your skill, determines the outcome.

Tactics to Win at Casinos

There are ways to increase your chances of winning at a casino.

  • The game selection is highly important, so choose more profitable casino games like blackjack or table games.
  • Consider the payouts of each game. In some casinos, the payout in blackjack may be 3:2. In others, it may be 6:5 or worse.
  • More importantly, learn that playing longer does not ensure winning. So, remember to walk away when things are not working for you.
  • For playing poker, blackjack, etc., it will benefit you to learn some strategies. If you choose any of these games, then learn them well, first.

Endnotes

You do not need to be a wizard at maths to figure out the simple rules of statistics and probabilities casino houses have. Once you understand the concept of the basic maths that each game follows, you can also manage to win big rewards.

So, stop worrying and start building a solid strategy for your next casino game!

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