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Do Casinos Ever Lose Money?

closing down signsAnyone who is in-the-know about casinos will realise that, generally speaking, the games always fall in the favour of the house over time. And even with this being fairly common knowledge it still begs the question as to whether casinos ever actually lose money given there are many instances of casinos going out of business.

Well, if you were to answer that question, it would be that yes, it can lose money, but also, at the same time, it can’t.  While the games themselves will always make money there are various instances where a casino will lose money as a business.  This is mostly because of mismanagement or factors beyond the control of the casino that reduces footfall, e.g. a pandemic that forces closure.

Naturally real casinos have a lot of overheads so you can understand at times they will lose money if not making enough through the games.  Online, however, things are much cheaper to run but even here lots of casinos go under and again it is mostly due to mismanagement, loss of licenses for failings or ineffective marketing that causes them to fail.

Casino Games Are Always Profitable

rtpThere is a reason why casinos have existed for so long offline and online, and that’s because they are designed so as to ensure profitability. And it is because of this that the phrase, “the house always wins” has been coined. Of course, if it were true that casinos always win, every single time, then nobody would want to register at them and play the games. After all, it’s a road to nowhere in that instance, and nobody wants to engage in something that they know they will always be on the losing end of.

While some casino gamers may actually state that they engage in casino gaming for fun, the likelihood is that the majority are doing it so as to try and secure some winnings.  Casinos will always win in the long run on average but any individual can of course win more than they lose during a gaming session.  Occasionally some high stakes players can take millions off a casino in a day and that might even make the casino lose for that given day.  Over the course of weeks, months and years, however, the casino games will always come out on top.  It is almost impossible for a casino to lose money on its games over time.

For most people engaging in casino gameplay, when they win, it won’t be of a monumental amount. Games will usually pay out, but it will often be something lower than the initial bet or little more than this. Many people use any winnings they get to continue gaming, ergo to place more bets on the chosen game and further increase the chances that the casino takes your money in the end. If playing online you might save it in your casino account for the next time you login to play, but in the end, it’s most likely to be used for subsequent gaming sessions.

Ultimately if there are enough people playing the games in a casino, online or offline, then they will always make money over time.  Many people that win will often spend those winnings on subsequent gaming sessions in any case and so the casino knows very few players will ever truly ‘win’.  Casinos will also push many games that are poorer value for players.  Things like wheel of fortune, instant win games, low RTP slots, etc., over games that have a lower profit margin like roulette or blackjack.  It’s why the front of a casino and the home page of a casino website is splashed with slots.

It’s Hard To Lose Money?

man happy money raining down graphicWhile it’s clear that casinos can lose money (and this much was proved by the closure of such venues during worldwide lockdowns, thanks to the COVID-19 pandemic), what about losing money in the long-run (or at least, when a pandemic isn’t looming). Well, the theory is that casinos always remain profitable, because there are enough people losing on the various games to fulfil the winning gamers and leave plenty for the casino businesses themselves.

This is because the games involved in online casino sites rely on pure luck, rather than much of anything to do with skill or strategy. To put it simply, you are the one playing against the casino, and it is from this that the house edge can be understood. This is the advantage that the casinos have over you, the player. It incorporates probabilities, and casino games have alternate payout percentages too, which is known as the return to player (RTP).

Because this is the case, the majority of the players accessing games at an online or offline casino will lose a part of their investment over time. Some players may end up winning and some gamers may end up losing everything that they have deposited and played with. The portion that is lost by gamblers represents the casinos’ profits, meaning that they never end up running out of money as long as they have enough people playing and losing. Players don’t have the same chances that the house does, so it is more likely that over time, they will lose to the games, and by default, the casinos.

Even if a casino pays out a jackpot to a player it knows it has still earned more money over time on that game than it has payed out.  While it may look like the casino has lost and the player has won in reality they haven’t, they just happened to be the outlier who won while all the rest lost.  This is also great for a casino as it gives it further publicity to help it get more people playing games and therefore making it more profit.

What About Advantage Players?

blackjack looking at cards dealer in backgroundAdvantage players may not be as well-known as the average player, but they do exist. These are men and women who devote themselves to getting an upper hand over the casino house. They do this through a combination of comps and legal play, and while some of them do end up losing as large an amount as other players, there are those few who manage to outdo the casinos on a frequent basis. Tactics used by these players are completely legal as well, but they have to be on the ball to the point.

All advantage players are looking to secure that edge over the casino house so as to make their own long-term profit, so they often turn to different casino options to be able to do this. This sees them playing options like video poker, blackjack and craps, and utilising such tactics as card counting and basic strategy. Of course, some of those skills are a lot easier to make use of in land-based casinos than online. And as a way of ensuring that these types of players (and those who are simply fortunate with their gaming sessions and win big) don’t send the casino into the red, they employ various other measures.

Often times, land-based casinos will utilise their own sorts of tactics to be able to balance things out even more in their favour. This includes providing complimentary drinks to players (because alcohol will always affect the senses and ability to judge situations properly), highlighting when someone wins big (incentivising other players to keep betting), not incorporating clocks into their décor (because people won’t be able to keep track of the time passing so easily), and more. Plus, chips are used in casinos instead of cash, which are simple pieces of plastic. Through these, a player probably won’t realise how much they are spending in comparison to if they were placing their wagers with actual cash.

Statistically speaking, an online casino provides a better chance of winning than if you were to go to a physical establishment, because their overheads are lower, they offer more bonuses and can feature higher RTP games. Brick-and-mortar casinos cost more to run, so it is much more essential for them to be making a profit over the long-term. Of course, this means that players need to lose more so that this can happen.

Management Issues

success fail jenja towerNow, you may be thinking that if casinos are always able to remain profitable, how is it that some of them have ended up being closed down over the years? In July of 2020 for example, it was reported that the Genting brand was to cut up to 1,642 jobs at three of its establishments across the United Kingdom, due to not being able to maintain profits (which were affected severely by the coronavirus pandemic).

And it’s not only land-based casinos that have closed down, either. Online companies have ended up shutting their virtual doors for good, with operator PT Entertainment Services (PTES) doing exactly that back in May of 2020. This came about after the death by suicide of one of the brand’s customers, with PTES surrendering its operating licence in the UK to the Gambling Commission before a review of it was conducted.

Yet in these circumstances, it generally comes down to money management and general running of the businesses themselves. This has little to do with the players who are looking to win big on the available games. Ultimately, if a casino is not run well, be it online or offline, then it can leak money left, right and centre until it goes bankrupt. It costs a lot for a land-based casino to be run in the first place. Add to that the salary for employees working at them, the licences they need to obtain to legally provide their services, the marketing that has to go into bringing people in, and even pandemics such as the COVID-19 disease that remains active today. And even though most of those issues affect land-based establishments, even online casino sites require a certain number of customers to be able to cover costs.

An online casino doesn’t have the massive outgoing payments that a land-based one does, but it still has to maintain its licences, pay employees working in their support centres, provide funds for the upkeep of the official websites, pay games providers for licensing their software, and so on. When compared with the outgoing of a land-based casino though, it is nowhere near as much. That doesn’t mean they can’t go bankrupt and have to close down, though.

Anything that is mismanaged can swiftly end up losing money and go out of business, which is why it is vital that operators of both online and offline casinos get the balance just right. Everything really needs to work in their favour as much as possible, and this is probably why when someone hits a huge jackpot, it becomes something to sing and dance about – because it doesn’t happen very frequently. But think of all the money that the casino has managed to acquire between those large wins. And it is because of this that they have the funds to be able to cover that big winner’s payout, as well as keep themselves up and running.

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