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
2 days ago 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.
To built up a gaming strategy, the slot player must first of all decide on the bankroll and the size of bets. The smartest tips are to stretch the betting amount, pocket all the winnings, know when to stop and never try to win money back, because you can lose even more. Set up betting limits. If a slot machine has $100 inserted into it during a day and pays out $80, the casino win is $20. However, the hold percentage is based on total bets. If it is a $1 per spin machine and the machine recorded 1000 spins, then $1000 was wagered. Winning a total of $20 means the hold percentage is just $20/$1000 or 2/100 which is 2-percent. In order to maximize profits, the casinos will then dial down the payout rate on these machines so they still make enough money on them. Immersive video slots are a huge moneymaker for the casino, so don't go in thinking you have the same chance of winning on these compared to traditional old school slots. Casinos specify the long-term payback percentage they want on a machine when they order it, and the machine stays with that percentage until it comes off the slot floor. Question: My group has been discussing the meaning of video poker royal flush frequency.
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.
To Conclude
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.
The first time I saw people use member cards for slot games, I didn't know what they were. I asked the man sitting next to me and he explained a few details about the rewards club. But he wasn't using a card himself.
When I asked him why, he said he once had a card but stopped winning when he played with the card. He thought the casino was monitoring his playing and adjusting the slot game results.
This rumor has circulated both online and offline for many years. It's normal for people to hear something repeatedly and wonder if there is truth to it. But I've never found any proof that casinos can change the way slot games play by flipping a switch.
What makes it difficult to combat this idea and other rumors about slot machines is the many different markets where you find them. Slot machine games are regulated by each country. Complying with different regulations may mean that a slot maker must change how its games work.
The clearest example I can give is how slot games are decided in the United States. Reddit betonline.ag poker. Class II slot games decide the outcome on the basis of one random number then configure the display to match that result. Class III games use several random numbers to control the reels.
How Modern Slot Machine Games Work
There aren't many physical slot games left. They're all electronic now, and the electronic machines use random number generator chips to decide results.
But there is more involved than just generating a random number. The 'slots' in the slot games are spaces on reels. The computers now simulate these reels.
Former and current slot machine manufacturing employees answer questions about game design on several websites including Quora. This answer was posted in September 2014, and it explains how the simulated reels are managed by software.
The programs to simulate the reels and assign the random numbers are etched into ROMs, Read-Only Memory chips. These ROMs must be physically changed by a technician to change how the game payout percentages work.
Legitimate Online Casino Operators Lease Games From Service Providers
There are over 2,000 online casinos. It's impossible to be sure about how they all manage their slot games. But what is known about the most popular casinos is that they don't run their slot games from their own servers.
Instead the online casinos lease game services from secure data centers. These gaming platforms are run by companies like Blue Ocean and EveryMatrix. Some of the game design companies also run their own servers, leasing resources to online casinos.
Although it would be simple for online gaming companies to switch things up, they would risk losing independent certifications if they allowed the games to be rigged.
There's no need for casinos to adjust the percentages. They can order the percentage breakouts for house edge and return to player that they want to offer. This way, they maintain competitiveness and support long-term profitability.
Many Games Publish the Theoretical Return to Player
Some slot games include the theoretical return to player in their help screens.
If the players see that RTP has been adjusted downward, they can play elsewhere. If players only suspect that the RTP has been adjusted without proper notification, they might still leave.
Casinos need players. The best strategy to grow their customer base is to keep game rewards high enough to make the risk worthwhile.
Some Governments Regulate Return to Player Percentages
Licensed gaming casinos must comply with local laws governing their businesses. Some countries provide more regulation than others.
In the United States, commercial land-based casinos are regulated by their states. However, Native American casinos are mostly regulated by the tribal governments that own them. Each jurisdiction has the authority to set minimal RTP percentages to ensure the casinos don't make too much money.
The 1988 Indian Gaming Regulatory Act creates the legal framework used by tribes to protect their traditional gaming activities from state regulatory laws. The act also defines the three classes of gaming and how they are to be regulated.
Class II games are regulated by the tribes but only in states that allow any kind of gaming. Only Class III games are subject solely to state regulation.
True slot machine games are Class III games. Native American casinos offer Class II bingo games that are made to look like slot games. The game cabinets must display the casino bingo games that are used to determine wins.
Class II slot machines may have reels and bonus games but they're not really slot machine games as defined by federal law.
How Do You Determine the Odds That a Slot Game Pays?
Casinos may or may not be required to declare the return to player for their slot games. Some casinos place a plate or sticker on their slot games with a notice. Other casinos leave it to the game help screens (thus, the manufacturers) to inform players.
The games' odds may be reported as a theoretical RTP percentage, but they could also be reported as a ratio, similar to the way lottery games declare chances of winning a prize. Either way, these games don't have to tell you how often to expect to win a prize of any amount.
Some players merely judge the looseness of slot games by how much money they win or how often they win as they play the games.
Some players judge the looseness of slot games by how popular they appear to be. This observational strategy assumes that the crowd knows more than the individual.
One of my friends tells me he only plays slot games with low jackpots. His reasoning is that players need to lose less money for someone to win $10,000 than for someone to win $20,000.
Slot Machines May Have Programmed Payout Limits
In another post on Quora from 2016, someone claimed to have industry experience in the Caribbean.
In his post, he said that a machine won't pay more than it has accumulated after the first month of operation. That first month establishes the limit based on the profit the machine made.
The system is designed to be random within a range of percentages. The software decides when and how much to pay but won't go over the monthly limit.
It should be obvious that this limit could be reset.
The Games Are Designed to Be as Random as Possible
People who design and repair slot machine games express much trust in the random number generator chips these games use. The RNGs, as they are called, use the latest available algorithms at the time they are manufactured.
Math has not yet progressed to the point where truly random numbers can be generated. Mechanical devices require input from an outside source to be truly random.
The way slot game designers handle this limitation is they design the chips to generate thousands of random numbers every second. The random numbers each take a turn at being available for use by the game.
Indian Casino Slot Machine Secrets
Because of the percentage payouts and internal limits they use, slot machine games don't have to be reprogrammed to improve casino profits. Everything is designed to run with as little intervention as possible.
And that is better for the casino because the more they can intervene in a game's function, the more likely they'll face regulation over that intervention.
There aren't many physical slot games left. They're all electronic now, and the electronic machines use random number generator chips to decide results.
But there is more involved than just generating a random number. The 'slots' in the slot games are spaces on reels. The computers now simulate these reels.
Former and current slot machine manufacturing employees answer questions about game design on several websites including Quora. This answer was posted in September 2014, and it explains how the simulated reels are managed by software.
The programs to simulate the reels and assign the random numbers are etched into ROMs, Read-Only Memory chips. These ROMs must be physically changed by a technician to change how the game payout percentages work.
Legitimate Online Casino Operators Lease Games From Service Providers
There are over 2,000 online casinos. It's impossible to be sure about how they all manage their slot games. But what is known about the most popular casinos is that they don't run their slot games from their own servers.
Instead the online casinos lease game services from secure data centers. These gaming platforms are run by companies like Blue Ocean and EveryMatrix. Some of the game design companies also run their own servers, leasing resources to online casinos.
Although it would be simple for online gaming companies to switch things up, they would risk losing independent certifications if they allowed the games to be rigged.
There's no need for casinos to adjust the percentages. They can order the percentage breakouts for house edge and return to player that they want to offer. This way, they maintain competitiveness and support long-term profitability.
Many Games Publish the Theoretical Return to Player
Some slot games include the theoretical return to player in their help screens.
If the players see that RTP has been adjusted downward, they can play elsewhere. If players only suspect that the RTP has been adjusted without proper notification, they might still leave.
Casinos need players. The best strategy to grow their customer base is to keep game rewards high enough to make the risk worthwhile.
Some Governments Regulate Return to Player Percentages
Licensed gaming casinos must comply with local laws governing their businesses. Some countries provide more regulation than others.
In the United States, commercial land-based casinos are regulated by their states. However, Native American casinos are mostly regulated by the tribal governments that own them. Each jurisdiction has the authority to set minimal RTP percentages to ensure the casinos don't make too much money.
The 1988 Indian Gaming Regulatory Act creates the legal framework used by tribes to protect their traditional gaming activities from state regulatory laws. The act also defines the three classes of gaming and how they are to be regulated.
Class II games are regulated by the tribes but only in states that allow any kind of gaming. Only Class III games are subject solely to state regulation.
True slot machine games are Class III games. Native American casinos offer Class II bingo games that are made to look like slot games. The game cabinets must display the casino bingo games that are used to determine wins.
Class II slot machines may have reels and bonus games but they're not really slot machine games as defined by federal law.
How Do You Determine the Odds That a Slot Game Pays?
Casinos may or may not be required to declare the return to player for their slot games. Some casinos place a plate or sticker on their slot games with a notice. Other casinos leave it to the game help screens (thus, the manufacturers) to inform players.
The games' odds may be reported as a theoretical RTP percentage, but they could also be reported as a ratio, similar to the way lottery games declare chances of winning a prize. Either way, these games don't have to tell you how often to expect to win a prize of any amount.
Some players merely judge the looseness of slot games by how much money they win or how often they win as they play the games.
Some players judge the looseness of slot games by how popular they appear to be. This observational strategy assumes that the crowd knows more than the individual.
One of my friends tells me he only plays slot games with low jackpots. His reasoning is that players need to lose less money for someone to win $10,000 than for someone to win $20,000.
Slot Machines May Have Programmed Payout Limits
In another post on Quora from 2016, someone claimed to have industry experience in the Caribbean.
In his post, he said that a machine won't pay more than it has accumulated after the first month of operation. That first month establishes the limit based on the profit the machine made.
The system is designed to be random within a range of percentages. The software decides when and how much to pay but won't go over the monthly limit.
It should be obvious that this limit could be reset.
The Games Are Designed to Be as Random as Possible
People who design and repair slot machine games express much trust in the random number generator chips these games use. The RNGs, as they are called, use the latest available algorithms at the time they are manufactured.
Math has not yet progressed to the point where truly random numbers can be generated. Mechanical devices require input from an outside source to be truly random.
The way slot game designers handle this limitation is they design the chips to generate thousands of random numbers every second. The random numbers each take a turn at being available for use by the game.
Indian Casino Slot Machine Secrets
Because of the percentage payouts and internal limits they use, slot machine games don't have to be reprogrammed to improve casino profits. Everything is designed to run with as little intervention as possible.
And that is better for the casino because the more they can intervene in a game's function, the more likely they'll face regulation over that intervention.
Casino game techs often say that replacing chips in slot machines must follow a special procedure (in the United States). They are closely monitored and every part must be accounted for. So, it's less expensive for casinos if they don't tweak the games.
Best Slot Machines At Casinos
Conclusion
An honest casino doesn't need to control who wins at a slot game. They already control who can play a slot game. They can ask anyone to leave for any reason.
Naturally, casinos don't do that. Instead. they purchase gaming systems that are designed to create an entertaining experience for patrons while legally retaining a profitable percentage of wagers.
No matter how much one's frustration tempts a player into wondering about Big Brother Casino tweaking the game, it's more profitable for the casino to let nature take its course.
