Casino Math: The Handle, Edge & RTP


Posted: April 28, 2020

Updated: April 28, 2020

A casino is a business. It employs a lot of people, pays their mortgages and puts their kids through school. So it needs to turn a profit. And that's where you, dear gambler, come into this story. For without you, there would be no casinos to play in. So give yourself a pat on the back. But exactly how do they go about making a profit from you? Let's have a look. Prepare yourself for some casino math.

The Handle

This is probably the most important term for the casino operator. The handle refers to the total spend of each customer. The total amount of money that is bet. With games like craps, all the money on the table goes towards the handle. It doesn’t matter if they were winning or losing bets. Likewise, it’s not important if the totals come from cash or chips. Players often make a confusion between the term “handle” and the term “drop”. In a casino, the drop is simply the cash that’s exchanged for chips. For example at the blackjack table, there’s a metal box attached to the table where all the credit slips and bills are dropped. Of course, you can’t meet those at the online gambling sites in the US.

House Edge

Time for some more casino math! Every bet on every game in the casino has a house edge, which is the statistical advantage the casino holds over the layer. Now without this theoretical edge, then it wouldn’t be called gambling as the outcome would be known. It’s the unknown factor that makes these games exciting. You never know if your bet will pay off. At the end of the day, the casino’s profits are essentially the difference between the dollars they take in and the bets they payout, plus their running costs. Of course, for some lucky gamblers, this can be a negative amount. They win more than they gambled.

Casino math: The Hold

The hold % is the relationship between the casino winning and the drop. For example, if a slot machine pays out $80 after you inserted $100, then the casino wins $20. But that’s only a small part of the whole story here. That’s because the hold % is based on total bets. So if a $1 slot machine records 1000 x spins, it means that $1,000 was bet. So winning a total of $20 tells us that the hold % is $20/$1,000 or as a fraction 2/1000 which equals 2%.

Explaining the Hold Percentage

Let’s take a look at the US version of the Roulette wheel. As you probably already know, this wheel has both a zero and a double zero. On this version of roulette, the house edge is 5.26%. But by the end of each shift, the game would of earned almost 20% of the total drop. This means that for every $100 in the dropbox, the house will maintain a hold % of 20%. This is due to the number of bets. Remember that each time you bet, then the house edge of 5.26 comes into play. The player will win some. But as you can see, with the house edge against them, eventually, they will lose all their bankroll if they carry on betting

Factors Influencing Casino Handle

It goes without saying that a casino needs customers. The term “time on device” refers to this important factor. Obviously without betting customers, then there’s no handle and no profit. That’s why casinos try to maximize their income by increasing bet amounts and also the frequency of them. Ideally, they need all the tables and slots machines to be working. From the point of view of casinos as a business model, then the total handle is the result of the capacity of the rooms, the speed of the games, and the average bet. This is why you’ll find that players comps or freebies are not based on how much you win or lose. Nope, they’re based on your average bet and the hours you spend there betting.

Casino math: Slots RTP

RTP stands for “Return to Player” and is the theoretical statistical amount that the slot machine will pay out with an infinite number of spins over an infinite period of time. Essentially, for every $10 you put in, it’s how much would come back to you in winnings. But remember that this number is theoretical and unless you’re willing to camp out at the casino over a number of years, you probably will not see your winnings or the RTP value reach it’s stated value. This number is fixed in each machine and governmental third party inspections make sure it’s accurate. Each slot machine has the RTP written on it. They can vary hugely, so choose with care. In most casinos, the slots give an RTP of around 97%.

casino math
Low RTP means big prizes

Casino Math: No Players, No Profit

If a casino has rows of 100 slot machines, then their success can only come about if they are in more or less constant use. But it can be deceiving to think that you understand the utilization of games space and betting minimums. Nothing is done without careful consideration of the bottom line of the casino’s business. For example, it’s rare to see blackjack tables with a low $2 or $5 minimum bet. There may well be players wandering around looking for tables with this minimum, but all they can find are tables with a $25 minimum bet.

Winnings Per Hour

Again, this is down to casino math. Every blackjack (or gaming) table will have an expected win per hour figure attached to it. So, let’s say we have 6 players betting $2 per hand. In an hour the dealer can deal out around 375 hands to all the players. So the total wagers will be $750 and the casino expects to win 2% of that as the house edge. That’s just $15! But you have to remember that just a single player at a $25 minimum bet table will produce over $4,125 in bets per hour giving the house $82 in profit. So now you know! Of course, the $25 games will be dead at times. That’s perfectly normal.

Casino Design

But just a single player can quickly make up that time loss difference. If the casino just has low limit tables, and even if they are running well, it’s still difficult to turn a profit on such tiny bets. The last thing you want is a casino full of low cash players with no seating for the one who’ll be making the casino money. You might think that the seat you’re sitting on is really nice and comfortable. But that’s only part of the seating design. The idea behind it is to keep you playing for longer. That’s why the more expensive gaming tables have more comfortable seating. Obvious really when you think about it. Anyhow, they can’t trick you with these things if you play at home at the online casino sites in the US.

Casino Math: Bigger Bets Over Longer Times

Looking at the casino math numbers, it’s now easy to see why a blackjack player whose just playing in a $5 game can only expect to earn 30 cents per hour towards any comps. Ideally, the casino would like you to be playing a minimum of 60 hands each hour. This would mean that your total bets would be $120 per hour. So, using the same 2% house edge, then the casino would be keeping $2.40. As you can see, giving back 30 cents in comps represents a comp value of 12.5%. That’s not bad when you consider the average return on comps is between 10 and 15%.

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