The house doesn’t always win. Seriously.
I’ve been working as a casino dealer for a while and I can tell you, casinos do lose money from time to time.
Casinos lose money every time a player gets lucky and wins a significant amount of money. And although casino games are designed to always be profitable in the long run, casinos may lose money if they don’t have enough customers, or if expenses are too high.
Keep reading to find out more…
How casinos make money
Alright, first of all, let’s have a look at how casinos make money and generate enough income to survive and keep growing as a business.
Besides money earned from food and drinks, or other services offered by the same company (think of big resorts), casinos make money with roulette, blackjack, and all other games.
This is because each game has what’s called a house edge, which is basically a statistical advantage over the player.
But, contrary to popular belief, the house edge is usually quite low.
For instance, if you play blackjack and you know what you’re doing, the house edge will be about 0.5 to 1 percent.
This is assuming you don’t play the side bets which, despite offering very good payouts if you do win, have terrible odds.
The longer you play, the more you lose
Despite the house edge being relatively low, casinos usually end up making a lot of money from the games purely because of the player’s psychology.
The truth is that while some customers are good at managing their money (or chips), and know when to cash out and leave the casino — the majority will play until they lose.
This means that even when a customer does win big, chances are he or she will keep betting until they lose their last chip (I am a casino dealer, and I’ve seen this countless times).
Do casinos ever cheat?
Absolutely not. Unless you’re referring to some kind of underground casino, or something you’ve seen in a movie.
Why would a casino risk their reputation (and potentially commit a crime) when they already have a mathematical advantage against the players?
Plus, casinos actually want their customers to win from time to time — that’s what keeps them coming back.
Yes, I did mention that most players will play regardless, and lose every single time, but it doesn’t apply to everyone.
Some customers genuinely enjoy gambling and its highs and lows, and do expect to win from time to time. If they never won, they’d stop playing.
Some games, especially side bets and bonus bets, will have a much higher house edge, but that’s not cheating, and the casinos are very transparent about it.
Some even display leaflets where you can check the house edge and odds of every single game.
How casinos can lose money
Okay, let’s now have a look at the four main reasons casinos can, indeed, lose money and in some cases go bankrupt.
In no particular order:
1. Not enough customers
Probably the most obvious one. Just like all other businesses, casinos need to make money to survive, and simply cannot rely on a few customers — even if they’re high rollers.
Ideally, a casino will have both a steady flow of customers and a few elite players who gamble large amounts (and therefore lose large amounts).
But this isn’t always the case. And ultimately, when there’s not enough customers, there won’t be enough income, and the casino may be forced to close down.
2. Too many expenses
Even when there is a sufficient number of players, casinos may still lose money simply because there are too many expenses.
Again, casinos are a business, so it’s as simple as money invested versus profit. Even if profit is stellar, it must be higher (ideally much higher) than the money spent each month.
And yes, I’ve seen this myself — for instance, one of the casinos I used to work at did attract quite a lot of players but still had to close down because rent and other costs were simply too high.
Alright, reason number three…
3. The house doesn’t always win
Put simply: occasionally, a player may get really lucky, and win a ridiculous amount. When that happens, that’s bad news for the casino.
Imagine a player sits at the blackjack table, buys in for a few thousands and ends up cashing out hundreds of thousands a few hours later.
Or, someone puts a hundred on a number on roulette, and it comes in, and they have an insane winning streak eventually cash out over a million (I’ve seen both examples).
Although it’s rare, it’s very possible, and casinos must be prepared for that.
The house will always win in the long run, but guess what, bad luck does exist and sometimes it’s the house that loses, not the player.
4. Things outside their control
And finally, there’s things that can’t be controlled or predicted in any way. Some examples:
- A global pandemic or emergency (in which the casino is forced to shut down either because of government restrictions or because people won’t visit anyway)
- A new gambling law that restricts what casinos can do or which games they can offer, or that forces casinos to pay more taxes
- Online casinos taking over, recessions, or financial crises (although in this case if the casino closes down it probably means it was already losing money; people tend to gamble even when they earn less, or lose their job)
- A new competitor that puts them out of business
How often do casinos lose money?
Generally speaking, it is quite rare for casinos to lose money.
I’d say all the scenarios mentioned above are unlikely — especially the last four (things outside their control). But hey, they do happen from time to time.
Assuming the economy is healthy and there’s enough people playing, and assuming management uses the right strategies to both attract and retain customers, it is unlikely for a casino to lose money in the long run.
The thing is, people will always gamble, whether it’s legal or illegal, live or online, for leisure or as a job (think professional poker players).
So it’s not like casinos are just a trend that may be short-lived — quite the opposite.
No casino is guaranteed to make enough money forever, but then the same could be said for any other business.
How Crockfords casino (almost) lost £7.7 million
I’ll mention Phil Ivey’s story because it shows how a player can, technically, win against the house without doing anything illegal and without relying on pure luck.
For those of you who don’t know, Phil Ivey is a professional poker player. Some say he’s the best ever.
However, in this case Ivey wasn’t playing poker, but punto banco.
In 2012, he requested to play at a private table of punto banco at the Crockfords Club in London.
He also made a request for a specific shuffling machine and a specific deck of cards. The casino agreed to all his requests.
What the casino managers didn’t realize was, Ivey was trying to exploit some of the game’s vulnerabilities so he could actually have an advantage over the casino.
Ivey used a technique called edge sorting, in which the player studies the back of the cards and notices the minuscule, but still somehow visible, imperfections of the print.
Long story short, Ivey ended up having an advantage over the house of about 5 percent, which is a lot. He won £7.7 million.
So, did the house lose? Not exactly.
Crockfords took Ivey to court and accused him of cheating, and eventually won the case. Which is surprising, considering all his requests were agreed to in advance.
Either way, Phil Ivey won, at least technically, and showed us that some casinos, or casino games, do have vulnerabilities, and it is possible to exploit them if you really put your mind to it.