You may often wonder how casinos make money. The question is befuddling when you hear about people making fortunes by winning real money casinos or lotteries. If you take the conventional economic rules, casinos should not even exist and yet, they do. The conventional economic rules are set on the assumption that humans are rational beings. The rules have the foundational basis that disregards any deal that reflects a loss. Therefore, casinos use unconventional economic rules and benefit out of one’s loss.
The simpler answer to how casinos make money is that they take your money. They take advantage of your dopamine craving drive and hope that you keep on gambling. Furthermore, gambling is solely a game of numbers, and casinos manage to take an edge over their gamblers with the help of math. Whether you play a game of slots (online or offline), or you wish to swing dice on a game of blackjacks, the design of the machine ensures that you keep playing.
Casinos always have a Statistical Edge
If casinos did not operate in a way that gives them a statistical advantage, no one would bother gambling. You can also refer this to as a house edge; its use is quite evident in the slot machines. In a slot machine, the money each gambler could win is 90 percent of the total money a slot machine gets. Therefore, even if you notice a gambler winning a large sum of money, the machine has a rate of how much money it gives out, which is 90 percent.
This means that the machine manages to keep 10 percent of the overall amount, hence, always having an edge on the gambler. The house edge applies to all the machines and varies accordingly. The house edge on the slot machines is high (about 17 percent), along with keno, which has a house edge of about 25 percent.
Therefore, the casinos are likely to make plenty of returns on these two games. However, there are some games with less house-edge and more chances of winning. This includes blackjacks or craps, both estimate a house edge of about 0.8 percent. Without the proper understanding of how a house edge operates, gamblers can ultimately lose all their money to the casino.
The Science behind Slot Machines
It is scientifically proven that gamblers play faster and longer when they are losing. The way slot machines and other gambling machines successfully keep players busy is by giving them near misses. A near miss refers to an outcome that is almost close to victory.
This puts a belief in the gambler’s mind that a win is nearly coming and they keep on playing. Furthermore, psychologically speaking, a near miss also results in the release of dopamine inside the player and so does the reward. Slot machines use this rush of dopamine to keep the players busy with gambling.
The More You Play, the More You Lose
The psychological exploitation of most casinos towards the gamblers keeps them constantly gambling. The mathematical odds that casinos entail upon gamblers, favor them if a player makes a high number of small bets rather than one bet of a high amount. Take roulettes for an example. The odds encompassing the roulette machine reflects a 47 percent chance of doubling your cash. Consider the fact that this is an unfair odd, yet people keep gambling regardless. Studies show that humans love to take a low-probability risk.
The natural love for having a small chance of winning big, along with the addicting atmosphere keeps people betting. Therefore, the higher the frequency of the bets, the more a casino earns out of the house edge.
Casinos exploit the simple rules of statistics and probabilities to make a fortune out of helpless gamblers. However, with knowledge of the house edge and math involving each game, some gamblers manage to earn a hefty amount.