Why Casinos Focus on Win Percentage, not House Edge
Long-Term Logistics: Is casino win rate superior to house edge?
To the average gambler – one with enough experience to know what the initials RTP stand for – the casino’s house edge is the first number they look for when choosing a game worthy of their wagering dollar. It’s a number that tells them how likely they are to win that game.
A 2% house edge, for instance, means the player will win 49% of the time, and the casino will win 51% of the time. Notice the 2% gap between 49 and 51? Easy math, right? Who knew it could be so simple?! But there’s more to it than that.
A less educated gambler might look at those numbers and say wow, 49 to 51, that’s really close to a 50/50 chance. And 50/50 is fair. So they might be more inclined to take those odds, thinking it’s practically a fair shot at winning. Would a casino really offer such reasonable odds to players? Don’t they exist on the financial philosophy of having such a great advantage over their customers?
Yes, they do, but not in the short term, because they don’t look at the house edge the way players do. To the casino, there’s a far more important number.
Casino Win Rate Far Superior to House Edge
There are two key differences between gamblers and casinos. Both are risking money, but players tend to look at their wagering expenses and results in the short-term, not long-term, and individually, they risk far less money than the casino.
The average bettor might spend $200 a night, and if 5,000 people move through the casino per night, the casino is handling $1,000,000 in wagers. And if the average player loses 2% of those wagers, that’s only $4 lost per player, but $20,000 funneled into the casino’s wallet.
A casino isn’t looking at what the make daily, though. Some gamblers will take the house for a large amount of money. It happens. The lucky streak at the craps table. The random jackpot payout on a slot machine. Casinos have good nights and bad nights. They may win 15% of all wagers one night, and pay out a $500,000 prize the next.
This is why they don’t deal in house edges or short-term results. The only number they care about is their own win percentage over the long term – monthly, quarterly, annually. A short-term player cannot do the same.
Evaluating Profits and Potential Leaks
A blackjack game, played strategically, might have a house edge of 0.5%. But the player can’t say that each bet will have a 99.5% return. Each bet will either win or lose. There’s no way that 10 blackjack bets can end in a 99.5% return rate. It’s just not possible. But if that same player looks back over their lifetime history – years worth of gambling in casinos – they might find that their win rate is equal (or very close) to the house edge of the games they play.
This is how casinos determine their success. They forget about house edges, since there are so many different games with variable RTPs among them. All they are concerned with is the casino win rate. How much are they winning from players, compared to how much they’re handling in bets?
If a casino’s win percentage over the long term turns out to be lower than the average of all games’ house edges, then they might scratch their heads and look for a cause. The fact is, probabilities don’t lie. Short-term is volatile, but long-term is not.
After a million $10 blackjack hands at 0.5% house edge, the casino expects to make $50,000. If they only make $5,000, something is wrong. A dealer or player is cheating, or someone is skimming from the cashier cage. And for all these reasons, the casino win rate is the only thing that really matters to gambling establishments.
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