With so many different online casinos existing in this day and age, you may wonder how they all manage to stay afloat and remain in business. While
it is true that some online casinos will go out of business due to a lack of customers or due to big losses that they have suffered, usually the mainstream ones are around for years and years.
Many of the industry leaders have been around since online gambling first came about around the turn of the century.
There are a couple of ways in which casino ensure that they make money and don’t suffer losses that are too big. If a casino does not cover themselves in terms of risk and exposure to large losses, they will inevitably run out of funds and be no longer in existence.
It is something you may have never thought about before, but it is an interesting topic and it can help to even improve your casino gameplay, as you can watch out for common pitfalls in which casinos try and goad your money from.
Here are the main ways in which online casinos make their money.
By having a house edge
In all forms of gambling establishments, whether it is a poker room, a casino or a bookmaker, they will have a house edge built into the prices and odds that they offer. This is stacking the odds in their favour to ensure that over time when variance is smoothed out, that they will be making a profit.
For example, the odds you are giving in blackjack will be determined based on the house edge, which means that the probability is going to be titled in their favour in the long run. So unless a player has their own edge over the house (a form of card counting, cheating, systems etc.) then over the long run they will struggle to make a profit at this game
Some games will have more of an edge than others. Usually blackjack and craps only provide a small edge for the house, whereas games like American roulette and slots are often where casinos will make the most of their revenues.
Taking the American roulette game as an example. This is the type of roulette where there are two green zeros instead of one (like in European roulette). The house edge for this is going to be 5.26%. Therefore if a player wagers $1 on this game, the expected value of what they will receive back is $0.9474.
Therefore if $1 million worth of bets is placed on this game, the players would on average receive a payback totalling $947,400, giving the casino a profit of $52,600. This makes it an effectively no-lose situation for the casino.
Return to player values
The house edge is going to be known to the player, it is not something that is hidden. This is why when you are looking at different slots games; you will see the return to player percentage. This is effectively the house edge for this game, determining how much on average you are going to receive from your bets. The industry standard for return to player percentages on slots games is in or around 96%. This means that for every $1,000 that is staked on a given slots game with a 96% return to player value, the casino will make a profit of $40.
The way in which you can take advantage of return to player values is by identifying which games have the highest values and utilizing certain promotions which help to boost your chances of winning. For example, if you have free spins or bets available, you can increase the probability of you making a nice profit by focusing on these sorts of games.
Prize draws and jackpots
Another way in which online casinos will make their money is by running different types of prize draws and jackpots. This is where people put in their money into the pot with the hopes of winnings a large prize. Some of the jackpots seen today in online casinos can reach up into the millions, which is a great incentive for people to get their tickets.
The online casinos are smart about this however. Usually they run progressive jackpots which are sweepstakes that have prizes which increase as the pot size gets bigger. Therefore the more people who are buying tickets, the greater the size of the prizes will be.
The casinos therefore can offer these large prizes as they have already gotten more than this amount in terms of tickets bought, so it is a no-lose situation for them. They can easily afford to pay out these big prizes as they have already received more than that amount through the selling of tickets.
No matter what an online casino is doing, whether it is a promotion or a game that they are offering, they always have some sort of motive behind it. There is no such thing as a free lunch, meaning that everything always has a catch to it.
The reason why online casinos offer great promotions and deposit bonuses is because they want to give you an incentive to deposit your money with them, as they know over time that their edge will be superior.
How to combat the online casino’s money earning powers
If you are a smart gambler, then you will be able to find ways in which you can defeat the casinos at their own game. If you have your own proven system of play, you can stack the odds in your favour. You can also utilise promotions and offers in such a way that you are playing with the casino’s money, meaning that you are able to make 100% profits with no downside risks if you fail.
Knowing about the house edge and return to player values will help you in the long term to develop a strategy that eliminates this edge, depending on the type of bets that you place, when you place the etc. This is why so many people are able to consistently beat the casinos in the long run.