Casino game examples
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It’s about getting 21 points or as close to that score by two or more cards. The perfect play or black jack is achieved with 21 points with only two cards and is, in turn, the best-paid play 3: 2. That is an ace and a ten or figure (J, Q or K). In our top 10 casino games, we will treat differently the point and banking and baccarat. Mainly because although these are two very traditional casino games that are losing bellows in our country, punto y banca is a game regulated by the general gaming management directorate so we are talking about an authorized game in spanish online casinos.
Casino games examples
There is a variety of casino games to earn money that today with the emergence of technology and the internet we can also enjoy from home and have the option to find free games. In this article, we will try the best 10 casino games to earn money.
Also called french roulette, it is without a doubt the no. 1 game of casinos and the one that occupies the top 10 of our casino games. European roulette is the casino game par excellence and one of the easiest to understand for the general public and in which the player has the most possibilities.
It is a small wheel (hence the name of the game, precisely from the french word “roulette”) in which the first 36 numbers and also the zero is located. You bet with chips to lose numbers but you can also place multiple bets such as pair / odd, red/black or missing / pass, dozens, neighbors, orphans, horses, cadres, streets. The presence of zero is what makes the bank profit, since if you get a number they will pay you 36 times the amount bet when there is, a priori, 1 among 37 possibilities to hit the number.
It’s very similar to french or european roulette. The main difference with french roulette is the presence of double zero, which together with zero, adds up to two boxes that represent a greater disadvantage for the gambler.
In the physical casinos, the structure of the table and the distribution of the numbers on the roulette differ in respect of the french roulette and the chips in the case of the american roulette are of color for each player, unlike the french who used chips of value from the casino.
Also called “21”, this fast-paced casino game in which one or more players face banking on a blackjack table. Each player receives a face-up card at the same time as the dealer also shows a card
It’s about getting 21 points or as close to that score by two or more cards. The perfect play or black jack is achieved with 21 points with only two cards and is, in turn, the best-paid play 3: 2. That is an ace and a ten or figure (J, Q or K).
Along with roulette and blackjack, slots or slots, also called slot machines in any game room in spain, completes the podium of the 3 great casino games. In fact, when you arrive at las vegas airport, there are some slot machines or also called slot machines to welcome newly arrived tourists from all over the world. Hotels also feature a large number of these slot machines in the lobby and playrooms. Slot machines manufacturers try to innovate and create the most fun machines for the public.
Unlike what happens with texas or omaha, as we will see later in this TOP 10 casino games, in caribbean poker the player plays against the dealer. In any case, caribbean poker is another of the most popular casino games. It is played against the bank and after placing the bet, each player receives 5 cards. The dealer’s dealer also receives 5 cards, but unlike the players who receive the 5 blocked cards (only the player can see them), the dealer shows one of those 5 cards (the last one) uncovered.
Traditional casino games include dice, also called craps, which are popular in american casinos. However, it is not the name of the most played casino games in europe or spain, nor on the internet. That’s why we put him in the sixth position. The funny thing is that it’s one of the games where players play with each other and can have more fun.
In our top 10 casino games, we will treat differently the point and banking and baccarat. Mainly because although these are two very traditional casino games that are losing bellows in our country, punto y banca is a game regulated by the general gaming management directorate so we are talking about an authorized game in spanish online casinos.
- Baccarat, mini baccarat or chemin de fer
Undoubtedly, baccarat features the mini baccarat and chemin de fer variants as the most popular forms of game. These are adaptations of the popular is point and bank, and the main difference lies in the number of players. While at the bank point of a casino they can play up to 14 players, the mini baccarat usually has as its protagonist a single-player and a dealer. The rules of this game and the value of the cards are identical.
No doubt, the 21st-century casino game is texas hold’em. A poker modality that has triumphed in the united states and serves to allow more and more young fans to enter casinos in spain and around the world.
We have pointed out texas hold’em as a game of fashion in the casinos, but a variant very much appreciated also in the game face-to-face is the pot limit omaha, especially in games cash games, is a game that also has your trusty share of players that need a game in which it can vibrate in almost every hand and not let the possibility of making a bet of all-in unless you have built up a pot very high during the course of the hand.
Top 10 casino games
Everyone loves to have a gamble from time to time (myself included). Unfortunately we don’t always win, but the real fun is in the playing, not the winning. Here is a list of the top 10 casino games.
Bingo is a game in which players try to match randomly selected numbers to the numbers on their card. The card consists of a 5×5 matrix where each column is represented by the letters B-I-N-G-O. The middle square is typically a free square. The first person to form a specific pattern (usually a straight line) calls out “bingo!”. The card gets checked for accuracy and the winner is announced. Then a new round begins.
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In baccarat each player has three options: player, tie, and banker. When all players have placed their bets, the dealer deals out two 2-card hands, one is the banker hand while the other is the player hand. The hands are added up. If a hand totals over ten, the ten is dropped (I.E. 9+5=14=4). A hand equaled to 10 becomes a 0 or baccarat. The winning hand would be the higher of the 2 and anyone who placed a corresponding bet wins.
8. Wheel of fortune (the big six)
This game is played by placing your bet on one of 6 symbols on the game table. Then the wheel is spun. The wheel is divided into 52 equal sections that are separated by pins around the edge. When the wheel comes to a stop, the pointer will be between two pins. All bets placed on the symbol the wheel stops on, win.
Keno is a lottery game. The player get a card numbered 1 to 80. The player then picks up to 20 numbers and a wager. The card is then registered and the game begins. The caller announces 20 randomly drawn numbers. The player tries to match as many called numbers to their selected numbers. The more numbers matched the higher the winnings paid against their wager.
Pai gow poker is played against the house instead of the other players. The dealer deals out 7 cards to each player and himself in rotation. Everyone then looks at their cards and tries to make the best 5-card and 2-card poker hands. The 5-card hand must rank higher than the 2-card hand. The hands are then compared against the dealers. If both hands beat the dealer, the player wins. If both lose, the player loses. If both the dealer and the player win on a hand, it is a push.
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In roulette, the player places his chips on the table where they would like to wager. The table consists of number 0-36 and 00 and then has additional betting for even-odd, red-black, low 18-high 18, low/middle/high 12, and for the first/second/third columns. A player may also place their bet between 2, 3, 4, or 5 numbers and may cross bet between the additional betting area. The dealer will signal no more bets. The dealer will spin the wheel in a clockwise direction then roll a ball in a counter-clockwise direction. The ball lands in a numbered slot on the wheel. All bets that correspond with the number win.
Slots are machines that play a number of different games. They are very popular. In general the player will insert coins into the machine and either pull a handle or press a button. This causes the wheels to spin. In older styled slot machines there were 3 wheels. In the newer machines they tend to have 3 to 5 simulated wheels. When the wheels stop, the player is paid based on the pattern of symbols.
Blackjack is a card game played between the house and the player. The dealer deals out two cards to each player and their self. The dealer has one card face up and one down. The players then take turns trying to get as close to 21 without going over. Aces are equal to 1 or 11. Face cards are 10 and number cards are face value. The player calls hit to get a card, and stand to end their turn. A player may also call double to double their bet and may only receive one card and the turn ends. If a player has two identically numbered cards, they may split. This requires them to double their bet and then get two more cards making two new hands that they may play. After all players turns are over, the dealer reveals their card. The dealer then hits if the total is 16 or less and stands on 17 and higher. Everyone who has a hand that beats the dealer without going over 21 wins.
Craps is a high energy dice game based on 7. The player places bets around the table. There are many places to bet. The pass line is the main focus of the game. 7 and 11 win on this line while 2, 3 and 12 lose. All other numbers rolled make an established point. If that number is rolled again before a 7 is rolled, the bet wins. The don’t pass line is just the opposite, 2 and 3 win where 7 and 11 loses. The field line wins on 2, 3, 4, 9, 10, 11, and 12. 2 and 12 pay double. The come line is playable after a point is established. It plays the same as the pass line. The don’t come plays like don’t pass after the point is established. Then you also can make bets on the horn. These bets are on getting 2, 3, 11, or 12 on the next roll. Other bets include big 6/8, C&E, any seven, and craps.
Poker is a card game base on a 5 card hand. The ranking of hands from lowest to highest are high card, pair, two pair, three of a kind, straight, flush, full house, four of a kind, straight flush, and royal flush. The player with the best hand wins. There are many versions of poker such as 5-card draw, 5-card stud, texas hold’em, omaha hold’em, razz, pineapple, and 7-card stud.
A look at the types of casino games you can play
If there’s one thing you can say about casinos, it’s this: you’ll never run out of stuff to do. There’s no shortage of games to play. And new games are coming out all the time.
This is great if you play online, because with just a few clicks of your mouse, you could be playing a different, unique, or brand new game – one of hundreds (if not thousands) available at any ONE casino.
The question we have for you now is this: do you know all the casino games that are available to you? All the variations you can play? If not, then start with this brief guide. We’ll fill you in on all the types of casino games you can find and play online.
List of casino games online
Let’s start with an overview of the games you’ll usually find at a casino.
But before we list the games, we want to quickly explain how a casino might list them on their website. That way, you know exactly where to find the games you’re most interested in.
Each casino will list their games differently. But here’s how bovada does it:
- Slots – this includes all variations, like 3D or progressives.
- Table games – this includes all card games, like blackjack, baccarat, and pai gow poker. It also sometimes includes dice games like craps, as well as roulette.
- Video poker – this includes all poker games played on a machine similar to slots.
- Specialty games – this includes anything that doesn’t fit in the categories above, such as keno, scratch tickets, lottery games, and bingo. It may also include roulette or craps.
Some casinos will also have an arcade or games section. Here, they’ll list bingo or scratch card games.
Once you click on the general game you’re interested in playing, you’ll find yourself on a page of related games and variations.
Here are the most popular games and variations you’ll find online:
Slots
- 3, 5, 7 reel machines
- Classic slots
- Video slots
- Fruit machines
- 3D slots
- Progressive slots
- Single and multiple payline slots
- Multipliers
- Free spins
- Cascading
- Bonus rounds
You could even add licensed slot titles to the list. This would expand to cover licensed movie, video game, celebrity, and board game slots.
Blackjack games
- Perfect pairs
- Spanish 21
- Pontoon
- Blackjack switch
- Chinese blackjack
- Super fun 21
- Atlantic city blackjack
- Bonus blackjack
- European blackjack
And others. You’ll also find payout variations such as 6:5 or 3:2 for a natural blackjack.
Video poker
- Bonus deuces wild
- Bonus poker
- Deuces wild
- Bonus poker deluxe
- Double jackpot poker
- Jacks or better
- Joker poker
- Loose deuces
Most casinos we’ve reviewed have ten or more different video poker games. Some are variations you’ll find everywhere, while others are exclusive to that casino or software provider. Variations also include progressive and multi-hand video poker machines.
Roulette
- Live roulette (online only)
- European roulette
- French roulette
- 3D roulette
- Multi-ball roulette
- Multi-wheel roulette
Almost hard to believe a simple game like roulette could have so many variations, huh?
Anyway, these casino games have the most variations. Most other games either don’t have variations, don’t have nearly this many variations, or don’t have variations you’ll find at more than one or two casinos.
Other than what’s listed above, here are the most popular casino games you can play today:
- Baccarat
- Pai gow poker
- Craps
- Let em ride
- Caribbean holdem
- Caribbean stud
- Tri card poker
- Vegas three card rummy
- Keno
- Scratch cards
The biggest variations you’ll find with these games (the table games, at least) will be side bets. But we’ve found that they’re often exclusive to brick-and-mortar casinos. They’ll be hit or miss.
Other than side bets, other types of variations or twists to casino games you’ll find include:
- Live dealer – available only online. A real person will deal your game, which will be streamed live to the casino.
- 3D
- Progressive – every (max) bet contributes a small portion to a single jackpot that can be won at random by someone making the max bet.
- Video
- Multi-line
The options you have will vary from casino to casino. It usually depends on the software.
Another thing to keep in mind is that some games will have a different name due to licensing and/or copyrights. For example, tri-card poker is identical (or nearly identical) to 3-card poker.
Skill games vs. Games of chance
When reading or talking about casino games, you might hear someone refer to them as skill games or games of chance.
The difference between skill games and games of chance is there’s more or less a right and wrong way to play games of skill, and if not right or wrong, then definitely optimal and not optimal. You can learn these by studying various books and websites, then practice what you learned at the casino.
There’s not anything you can really do outside of cheating to gain an edge playing those.
That all said, skill games are only skill games if you yourself become skilled at them. Otherwise, they might as well be games of chance.
On top of that, few games can truly be beaten for a profit. Blackjack is one of those games. Some video poker variations can be, too.
Other games, such baccarat, pai gow poker, or craps, have strategies or optimal plays or optimal bets you can make to get the house edge down. Add in some bonuses, and you might turn a slight profit. But you shouldn’t count on it.
We point that out because unless you choose a game that can be beaten for a profit – and you’re willing to put in dozens or maybe even hundreds of hours learning it, and hundreds or probably more like thousands of dollars practicing it live – you’re unlikely to become skilled enough to beat the house for a profit.
Don’t choose a game for any other reason than that you like to play it. Because you’re most likely going to lose while playing it – at least in the long run.
Finding and playing casino games online
Let’s talk a minute about finding casino games online.
Most casinos will have the same options – blackjack, various table games, video poker, and slots. There are few exceptions.
Those exceptions include variations, like live table games, 3D slots, or something “rare” like multi-wheel or multi-ball roulette.
It also includes exclusive games or titles. Since many casinos work with different and/or multiple software companies, you’re likely to find a different selection of casino games at every casino you join.
This will also affect game rules, payouts, and odds – but on a much lower scale.
And it’ll affect the number of games you can play. Some casinos will be lucky to have a few dozen games. Others will have hundreds. Some more than a thousand. Seriously.
Then you’ll have casinos that offer full-blown mobile casinos (for smartphones and tablets), while with others you might be lucky to have five or ten mobile friendly games. Some casinos – if you can believe it – won’t have any.
The point of all this is that you’ll have to do some research if there’s a specific game or variation you want to play.
That way you have a wide variety of games to choose from.
Conclusion: where will you start?
There’s so much you can play online. It can be overwhelming.
If you already know what games you like to play, we highly suggest looking for software companies that have them. From there, find out which casinos work with those software companies. Then read our casino reviews.
Read our reviews. Find a casino with LOTS of games to play. Then get busy. You’ll find the type of casino game you like to play in no time.
List of casino games with best odds
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Our top 10 casino games with the highest payouts
Hitting a jackpot can change your life, and the best way to do it is play casino games with best odds. Most people think of winning a casino game is purely a matter of luck. However, a casino game’s outcome is a purely based on statistics and probability.
You will have a better chance of winning any game that has a lower house edge, and therefore better odds, than one with a high house edge. It is with that in mind that we decided to review casino games with best odds. Read on to find which games give you a better chance of winning a golden jackpot.
So, what casino games offer the best odds?
1) blackjack – house edge from 1%
To many gamblers, blackjack is the best game to play at casino to win money, especially if you apply a basic winning blackjack strategy. This table game has a house edge, or advantage, of an average 1%, which gives the player a winning advantage of 99%. Without a strategy, an average player will face a house edge of 2% to 3%.
When using the basic playing strategy below, you must not alter based on any hunch that you have concerning the game’s outcome.
The only exception is if you are counting the cards. IBM’s julian braun was the first to put the basic strategy of card counting to test using computer simulations. This blackjack strategy predicts a particular outcome after millions of hand play.
| Your hand versus dealer’s up-card | |
| 8 | double on 5 to 6, else hit. |
| 9 | double on 2 to 6, else hit. |
| 10 | double on 2 to 9, else hit. |
| 11 | double. |
| 12 | stand on 4 to 6, else hit. |
| 13 to 16 | stand on 2 to 6, else hit. |
| 17 to 21 | stand. |
| A, 2 to A, 5 | double on 4 to 6, else hit. |
| A, 6 | double on 2 to 6, else hit. |
| A, 7 | stand on 2, 7, 8, or A, and double on 3 to 6, but hit on 9 or 10. |
| A, 8 | double on 6, else, stand. |
| A, 9 | stand. |
| A, A | split. |
| 2, 2 | split on 3 to 7, else hit. |
| 3, 3 | split on 4 to 7, else hit. |
| 4,4 | double on 5 to 6, else hit. |
| 5, 5 | double on 2 to 9, else hit. |
| 6, 6 | split on 2 to 6, else hit. |
| 7, 7 | split on 2 to 7, stand on 10, else hit. |
| 8, 8 | split. |
| 9, 9 | split on 2 to 9, but for 7, 10, or A, stand. |
| 10, 10 | stand. |
Blackjack is by far the most commonly played games among the high rollers and VIP casino players, due to what can be achieved with a basic strategy. Overall, blackjack is the best casino game to win money if you feel you have mastered some basic gaming skills.
14 gambling probability examples
I’m writing a post with 14 gambling probability examples because I think that examples are one of the easiest ways to teach something. Probability is a branch of mathematics, and a lot of people have trouble with math. But calculating the odds that something will or won’t happen is a lot easier than you think.
Here are the 14 examples and how they relate to probability.
1. How to calculate the probability of an event
The first concept to understand is that probability is something that applies to random events. It’s a way of measuring mathematically how likely it is that you’ll see a certain event happen or not happen.
And the first thing to know is that a probability is always a number between 0 and 1. I’ll go into that a little bit more in the next bullet point, but for now, you need to understand that an event that will never occur has a probability of 0. An event that will always occur has a probability of 1.
Anything that might or might not happen can be measured with a number between 0 and 1. And that number is easily calculated.
You take the number of ways an event can happen and divide it by the total number of events possible.
You flip a coin. There are 2 possible outcomes, both of which are equally likely. You want to know the probability of the coin landing on heads. There’s only one way for it to land on heads, so the probability is ½. That can also be expressed as 0.5, 50%, or 1 to 1.
More about that in the next bullet point.
2. Probabilities expressed as fractions, decimals, percentages, and odds
All probabilities are, by their nature, fractions. But there are multiple ways of expressing a fraction. I gave examples in #1 related to the toss of a coin.
Let’s look at a different example. Let’s say that you have a 2-headed coin.
What is the probability that the coin will land on heads?
And what is the probability that it will land on tails?
Since there are 2 heads, you have a 100% chance of getting a result of heads, and a 0% chance of getting a result of tails.
You can also express that as 1/1 (which is just 1). Or you could express it as 1.0. But most people are comfortable expressing it as a percentage.
In dungeons & dragons, you use different shaped dice with more or fewer sides than just six. Let’s use a 4-sided die for this example.
There’s only 1 way to get that result, but there are 4 possible results.
Expressed as a fraction, that’s ¼. Expressed as a decimal, it’s 0.25. Expressed as a percentage, it’s 25%. And expressed as odds, it’s 3 to 1. (odds are expressed by the number of ways it can’t happen versus the number of ways it can.)
3. The probability of a coin toss
Let’s go back to the coin toss example. I’m going to use it as an example for how to calculate the probability of multiple events.
Suppose you want to know the probability of getting heads twice in a row. When you’re calculating the probability of one event happening AND another event happening, you multiply the two probabilities together.
In this case, we have a 0.5 probability of getting heads. 0.5 X 0.5 = 0.25, which is the probability of getting heads twice in a row.
If you look at the total number of possibilities, it’s easy to see why this is the case:
- You could get tails twice.
- You could get heads twice.
- You could get tails on the first toss and heads on the second toss.
- You could get heads on the first toss and tails on the second toss.
Those are the 4 options, and only one of them is the desired result.
4. Probability and the rolling of six-sided dice
Let’s look at another probability example using a traditional six-sided die. The die has 6 possible results, 1, 2, 3, 4, 5, or 6.
The probability of any specific one of those numbers coming up is 1/6.
But what if you want to calculate the probability of getting a 1 OR a 2?
When you’re calculating probabilities that use “AND” in the problem, you multiply.
But if you’re using “OR”, you add.
The probability of getting a 1 is 1/6. The probability of getting a 2 is also 1/6.
1/6 + 1/6 = 2/6, which can be reduced to 1/3.
You can also express that as 33.33% or 0.33 or as 2 to 1 odds.
5. Probability in card games
All kinds of probabilities come into play in card games, but they’re all based on a handful of qualities that a deck of cards has.
A standard deck of cards consists of 52 cards. The probability of getting any specific card is 1/52.
The cards are divided into 4 different suits—clubs, diamonds, hearts, and spades. If you want to know the probability of getting a card of a specific suit, it’s ¼.
The cards are also divided into 13 different ranks: 2, 3, 4, 5, 6, 7, 8, 9, 10, jack, queen, king, and ace.
The probability of getting a card of a specific rank is 1/13.
But one of the interesting things about card games is that the dealing of cards changes the probability of getting subsequent cards.
Here’s an example:
You’re playing blackjack with a single deck, and you’ve been dealt an ace as your first card. What is the probability that the next card will also be an ace?
There are only 3 aces left in the deck. And the deck only has 51 cards left, too.
So the probability is 3/51, or 1/17, or 16 to 1.
You’re playing 5 card stud. You have 3 aces and a deuce. You only have one opponent, and he has 4 cards, none of which is an ace.
There is only one ace left in the deck. And there are 44 cards left in the deck.
So the probability of getting the last ace on your next card is 1/44, or 43 to 1.
6. Probability on a roulette wheel
An american roulette wheel has 38 pockets in which the ball can land. The probability of the ball landing in a specific pocket is 1/38. This can also be expressed as 37 to 1.
This is a great example, because it demonstrates how the casino gets its edge over the player. This bet pays off at 35 to 1.
Since the odds of winning are 37 to 1 and the payoff is only 35 to 1, over a long enough period of time, the casino will almost surely win a lot of money on this bet.
I’ll discuss the house edge more later, but let’s look at some of the other probabilities offered on a roulette wheel.
The pockets aren’t just numbered. They’re also colored. 2 of them are green, 18 of them are black, and 18 of them are red.
If you want to know the probability of the ball landing in a green pocket, it’s 2/38, or 1/19, or 18 to 1.
If you want to know the probability of the ball landing in a black pocket, it’s 18/38, or 9/19, or 37 to 18.
The probability of the ball landing in the red pocket is the same.
You can also place bets on whether the ball lands on an odd or even number. The 0 and the 00 (the green pockets) qualify as neither. So the odds of winning odd or even are the same as winning a bet on black or red.
Those are just some examples. There are a dizzying number of roulette bets you can place.
7. How the house edge works in a casino game
The house edge is the percentage of each bet that the casino expects to win over the long run. The easiest way to calculate this number is to assume that someone is playing for $100 a bet, and determining how much he’ll lose on average over the long run, then divide that into the number of bets.
I’ll use roulette as an example again, because it’s illustrative.
You place 38 bets on a single number at the roulette table. If you had a mathematically perfect set of spins (which is what you want to assume when you’re calculating the house edge), you’ll win once and lose 37 times.
The winning bet pays off at 35 to 1, so you’ll win $3500 on it. But you’ll lose $3700 on the 37 losing spins. Your net loss is $3700 – $3500, or $200.
If you divide $200 by 38, you get $5.26 per spin, which is your average loss per spin.
That is the house edge for the game—5.26%.
It’s important to remember that the house edge is a long term mathematical expectation. In the short term, anything can (and often will) happen.
But once you get into tens of thousands of results, you’ll start to see the actual results trending toward the expected results.
The casino relies on the law of large numbers for their business model. Players are hoping to have the occasional short-term run of luck. The casino knows that these short-term runs of luck are more than compensated for by the actual expected results on all the other bets being placed constantly throughout the casino.
8. Why betting systems don’t work
There’s a big difference between a betting system and a gambling strategy. A betting system is a method of increasing and reducing your bets based on your previous results. These betting systems don’t work because they rely on the gamblers fallacy.
The gamblers fallacy is the belief that previous events somehow affect the probability of future events. In the case of truly independent trials, previous results have no effect.
Here’s an example:
You’re playing roulette, and you’ve noticed that the ball has landed in a red pocket 8 times in a row. What is the probability that it will land in a red pocket on the next spin?
Since there are still 38 pockets, and 18 of them are still red, the probability is the same—18/38.
This is not to be confused with the question of what the probability is that the ball will land on red 9 times in a row. That’s a different question. You’re not placing a bet on whether or not the ball is going to land on red 9 times in a row. You’re placing a bet on the next spin, which is an individual event.
A lot of gamblers have trouble with the concept of independent events.
So they create betting systems which assume that these previous results affect future results.
9. Examples of the gamblers fallacy
The martingale system is the classic example of a betting system based on the gamblers fallacy.
The idea is simple enough. You place a single bet on red or black at the roulette table. If you win, you pocket your winnings. If you lose, you double your bet on the next spin. If you win that time, you’ve profited a single unit.
If you lose again, you double your bet again.
This is called a progressive betting system because your bets grow progressively larger.
One of two things will happen if you use this system long enough:
- You’ll run into a losing streak long enough that you won’t be able to afford the next bet in the progression.
- You’ll run into a losing streak long enough that the casino won’t let you bet enough to cover your losses.
Here’s an example of the martingale system in action:
You bet $5 on black. You lose.
You then bet $10 on black. You lose again.
You then bet $20 on black. You lose again.
You then bet $40 on black. This time you win.
You’ve lost $35 up to this point, so your net win is $5 (your original betting unit).
What most players seem to lose sight of is how easy it is to run into a streak—it happens more often than they think.
Here’s what the progression looks like:
Let’s assume you’re playing at a casino with a maximum bet of $500. This means that if you lose 7 times in a row, the casino won’t let you place a large enough bet to continue your system.
How often does this happen?
More often than most gamblers think.
The odds of getting the same color 7 times in a row are easily calculated.
The odds of getting a red result are 18/38, or 47.36%.
47.36% X 47.36% X 47.36% X 47.36% X 47.36% X 47.36% X 47.36% = 0.534%.
That’s half a per cent, or about once every 200 times the progression is played.
In the short run, a gambler using the martingale guarantees that he’ll never see anything but occasional small wins.
10. Probabilities in blackjack
Blackjack is one of my favorite examples of probability in action. That’s because, unlike roulette, the deck of cards has a memory. Every time a card is dealt in a game of blackjack, the composition of the deck changes. This means the odds change.
This is why card counters are able to get an edge. They have a means of tracking these changes in the composition of the deck.
Here’s a classic example:
You’re playing in a single deck blackjack game, and you’ve noticed that all 4 aces have already been dealt. What is the probability that you’ll get a blackjack?
Since a blackjack is made up of an ace and a card valued at 10, and since there are no aces left in the deck, the probability of getting a blackjack is 0%.
But you can calculate the probability of getting a blackjack from a fresh deck of cards, too.
You’re calculating the probability that you’ll get an ace on the first or the 2 nd card. There are 4 aces in the deck, so your probability is 4/52. That becomes 1/13 when you reduce it. Since this is an “or” question, we add those together:
But now you get to the “and” part of the problem. You need an ace AND a 10. There are 16 cards in the deck worth 10: the king, the queen, the jack, and the 10.
Your odds of getting a 10 for your other card are 16/51.
16/51 X 2/13 = 32/663. That equates to 4.83% of the time, which is about 5%.
5% is the same thing as once every 20 hands, so you have an approximate idea of how often you’ll get a blackjack.
11. Probabilities in video poker and slot machines
One of the great things about video poker is that even though it looks like a slot machine, it’s NOT a slot machine.
Slot machines are the only game in the casino that have opaque math behind them. In other words, you have no way of knowing what the odds and/or payouts are on a slots game.
Yes, slots have pay tables. So you know what the payoffs are for various combinations of symbols on the reels.
But you have no way of knowing what the probability of getting a particular symbol on a reel is.
If you DID know this, you could calculate the probability, the house edge, and the payback percentage.
You’re playing a game with lemons as one of the primary symbols. The probability of getting a lemon on each reel is 1/10. If you get 3 lemons, you win 900 coins.
The probability of getting 3 lemons is 1/10 X 1/10 X 1/10, or 1/1000. In odds terms, that’s 999 to 1.
(remember, to calculate probability when the question includes the word “and”, you multiply. Here, you want to know the probability of getting a lemon on line 1 AND on line 2 AND on line 3.)
Let’s assume this is a high roller game and that you’re betting $100 per spin.
You make 1000 spins. On 999 of those spins, you lose $100, for a total loss of $99,900. On 1 of those spins, you win 900 coins, or $90,000. Your net loss is $99,900 – $90,000, or $9900.
So the house edge on this game is 9.9%. The payback percentage is what casino people look at when dealing with gambling machines, though. That’s just 100% less the house edge—in this case, 90.1%. It represents the amount of each bet that the casino gives back to the player, rather than the amount it gets to keep. It’s also sometimes referred to as return to player.
The casinos and slot machine designers know these odds. They designed the game. But since the games are powered by a random number generator, they’re the only people who know these odds. If the game were mechanical, you’d be able to calculate the odds just by knowing the number of symbols on each reel, because each symbol would have an equal probability of turning up.
But a lemon might be programmed to come up once every 12 spins, or once every 15 spins, or once every 20 spins. There’s just no way to know.
Video poker, on the other hand, duplicates the probabilities you’d find in a deck of cards. Not only do you know what each combination of cards pays off at. You also know the probability of getting each combination.
You can use that information to calculate the house edge and the payback percentage for the game.
Here’s an example:
We know that in a standard jacks or better game with a 9/6 pay table that a pair of jacks or higher pays off at even money. You’ll see that hand about 21.5% of the time. So the expected value (the payback percentage) for that particular hand is 1 X 21.5%.
You can do that same calculation for every possible hand. You multiply the amount you stand to win by the probability of getting the hand. Then you add up all the possibilities to get the overall payback percentage for the game.
And the great thing about video poker is that the payback percentages are almost always higher than for slot machines.
The other great thing about video poker is that you have a certain amount of intellectual stimulation that isn’t present during a slot machine. You have to decide how you play each hand. Playing them correctly increases your chances of winning.
12. How to calculate expected return
The expected return of a bet is how much you expect that bet to be worth. If it’s worth more than you’re risking, then it’s a positive expectation bet. Otherwise, it’s a negative expectation bet. Gamblers sometimes use +EV or -EV as a shorthand for this.
Here’s how you calculate what a bet is worth:
You take the probability of losing and multiply it by the amount you’ll lose. Then you take the probability of winning and multiply it by the amount you’ll win. You subtract one from the other, and you have your expected return.
Let’s use roulette as an example (again).
You place a $100 bet on a single number. If you win, you get $3500. If you lose, you lose $100.
There are 38 numbers on the roulette wheel, so the probability of winning your bet is 1/38. The probability of losing your bet is 37/38.
The difference is $5.26. And since the negative number is greater, that’s the amount you expect to lose. The expected value of that bet is -$5.26.
You can use this kind of calculation in life, too. I’ll talk about that more later.
13. How to invent a casino game
The trick to inventing a casino game is to come up with something that looks like a fair bet but isn’t. If you’re too obvious about putting the odds in favor of the casino, no one will want to play.
Let’s use a bet on a coin toss as an example.
Suppose you run a casino, and you offer to pay 25 cents to anyone who correctly guesses the correct result on a coin toss. Here’s how you get your edge—you make the player put up 50 cents in order to win that quarter.
The casino has an obvious large edge in that situation, even if you don’t know how to do the math. But we do know how to do the math, so let’s look at it:
You have a 50% chance of winning 25 cents.
You also have a 50% chance of losing 50 cents.
50% of 25 cents = 12.5 cents
Your expected value is -12.5 cents. Your expected loss on every bet is 12.5 cents. Since you’re betting 50 cents on every bet, the house has an edge of 25%.
But let’s see if we can make the game a little more interesting.
Let’s say you have to bet a dollar, minimum.
This time, you toss a coin and so does the casino. If one of you gets heads and the other one gets tails, the party with heads is the winner. The party with tails is the loser.
And let’s say this game offers an even money payout.
Looks like a break even game, doesn’t it?
It is, but what do we do in the event of a tie?
What if you both get heads?
What if you both get tails?
If you want to give the casino an edge, you just add a rule that if you both get heads, the game is a push. Your bet is returned, but you don’t win anything.
But if you both get tails, the casino still wins.
Let’s look at the probabilities involved:
You have the following potential outcomes, all of which are equally likely:
- You both get heads.
- You both get tails.
- You get heads, and the house gets tails.
- The house gets heads, and you get tails.
So you have a 25% chance of a push, which has a net effect of 0. (you don’t win anything, but you don’t lose anything, either.)
You have a 25% chance of winning a dollar, which is an expected value of 25 cents.
You have a 25% chance of losing a dollar, which is an expected value of -25 cents.
And you have a 25% chance of losing a dollar, which is an expected value of -25 cents.
The house still has a 25% edge, but it isn’t nearly as obvious now, is it?
The house could make the game even more fair by returning half your bet in the case of both of you getting tails. That would reduce the house edge to 12.5%, which is better but not great.
Another option would be to take any tie result and have 2 options:
- You could put up another dollar in order to get another coin toss.
- You could just surrender your bet.
The catch is if you put up the other dollar and win, you only get $1 in winnings. But if the casino wins, you lose both dollars.
And in fact, this is almost exactly how casino war works.
That’s just a simplified version of how to create a new casino game. You could have multiple bets, multiple payouts, and multiple probabilities for each outcome. You just have to look at the expected value of all of them to determine how much of an edge the house.
Then you have to test the game in front of a live gambling audience to see how they respond. If the gamblers don’t like the game and refuse to play, you don’t have a potential casino game at all.
The house wins nothing if no one likes the game.
14. Using probability in real life
This is the most important section of the post, actually. You can use your knowledge of probability to make decisions in real life that are better than the decisions of most people.
Here’s an example:
You work at a job making $50,000 a year. You decide to take a job making $200,000 a year, even though you estimate that there’s a 25% chance of the company paying you $200,000 a year going bankrupt after your first year of employment.
The expected value of that decision is simple enough.
But let’s look at a more day-to-day practical application. Suppose you’re considering parking in a handicapped spot.
The probability of getting a ticket for this might be 20%, and the parking ticket might be $200. That’s an expected loss of $40.
But parking in that spot will save you half an hour of walking, and you’re a highly paid consultant earning $250 per hour. That means your time is worth $125 per half hour.
Since your time is worth well over $40, it makes financial sense to take the risk.
Of course, that example ignores any moral implications involved. You might have a moral problem with taking up a parking spot intended for a handicapped person.
Here’s another practical example:
You’re obese, and you’re 45 years old. According to the doctor, your life expectancy if you don’t lose weight is 60 years old. But if you have weight loss surgery, your life expectancy becomes 68 years old.
But you also have a 1 in 800 chance of dying during the weight loss surgery.
Let’s assume that the life expectancy numbers are absolute certainties, because that makes the math easier to do.
You have a 100% chance of dying 15 years earlier if you don’t use the surgery. That’s -15 years.
You have a 799/800 chance of gaining 18 years if you have the surgery. That’s an expected gain of +17.98 years.
You also have a 1/800 chance of dying 30 years earlier (at age 45). That’s another -0.04 years in expected loss.
17.98 – 15 – 0.04 = 2.94 years of expected additional life.
And chances are, you’ll enjoy life more during that time. You’ll be able to engage in more activities, find more people to date, and require less medical attention.
You can make the math even more complicated by factoring in the possibility that you could lose the weight without surgery. But we don’t need to get into that much detail; we just wanted to look at how this type of thinking (probability based) can be applied to real life issues to make better decisions.)
Conclusion
You can find an almost unlimited number of gambling probability examples to discuss. But all of them start with the notion that probability is always a number between 0 and 1. The other thing to remember in probability problems is the difference between “or” and “and”. If you want to know the probability of this happening OR that happening, you add the probabilities of each together. If you want to know the probability of this happening AND that happening, you multiply the probabilities by each other.
You can multiply the probability of winning by the amount you win and compare it with the probability of losing and the amount you’ll lose to get the expected value of any bet. In casino games, the edge is always with the house, although the way they present the games is subtle.
It’s not always clearly obvious how the casino gets it mathematical edge over the player. But it’s always there, unless you’re a card counter or expert video poker player.
Must-know: the most popular casino games
Leakage effect
Casinos can impact the society where they’re located. The size of the effect depends on how many visitors the casino draws from outside the area. It also depends on the number of jobs the casino generates within the area.
Casino revenues that support jobs and purchases are generated by casino visitors’ spending. The jobs and purchases generate funds. These funds are diffused into the community. The funds have secondary or multiplier effects in subsequent rounds of spending. There’s a second category of direct and secondary effects. They include the non-casino expenditures generated from visitors outside the area. These non-casino expenditures include purchases in local stores or meals in local restaurants.
A variety of factors impact the degree of the direct and secondary effects experienced outside the local area. This occurs when a casino purchases supplies from an out-of-area vendor. It also occurs when a casino hires a worker who commutes to the casino from outside the community. The individual takes the income they made at the casino and spends it outside the local area. This is a phenomenon known as “leakage.”
Displacement effect
The positive economic impact is offset by other local economic activity. It’s negatively affected by the casino. The casino could cause a loss of a business in the existing local economy. For example, an existing restaurant could lose business to a restaurant that’s located inside the casino. Also, local residents could take money that they would spend for other purposes and redirect the funds to the casino. This is referred to as “displacement.” casino-related spending displaces or substitutes other forms of spending.
Social cost
Social costs impact major players including las vega sands (LVS), MGM resorts, wynn resorts (WYNN), and caesar entertainment (CZR). Social cost includes is the increase in corruption or organized crime. Casinos offer gambling for entertainment. However, they also have financial activities that are similar to financial institutions. These activities put casinos at risk for money laundering. This could be controlled through careful regulations.
Exchange-traded funds (or etfs) like the vaneck vectors gaming (BJK) and the consumer discretionary select sector SPDR fund (XLY) track leisure companies.
To know more about the casino gaming market performance click here.
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Discretionary consumer spending effect
The casino business is sensitive to reduced consumer spending. Reduced spending can be caused by economic downturns. Consumer demand for hotels, casino resorts, and luxury amenities is also impacted by the state of the economy.
This could impact major casino players like las vegas sands (LVS), MGM resorts (MGM), melco crown entertainment (MPEL), and caesar entertainment (CZR). Exchange-traded funds (or etfs) like the vaneck vectors gaming (or BJK) and the consumer discretionary select sector SPDR fund (XLY) track the performance of leisure companies. The etfs could also be impacted by an economic downturn.
The above chart shows that in 2012, consumers spent more at commercial casinos than they did on movies, craft beer, and outdoor equipment combined. However, consumers spent less on casino gambling than what they spent on full-service restaurants or consumer electronics.
Changes in discretionary consumer spending could be caused by many factors. These factors include:
- Weaknesses in the job or housing market
- Additional credit market disruptions
- High energy costs
- Fuel and food costs
- Increased travel costs
- The potential for bank failures
- Recession fears
- Changes in consumer confidence in the economy
- Fears war and terrorism
These factors could reduce consumer demand for luxury amenities and leisure activities.
Political effect
The casino business is prone to extensive regulations. The compliance costs—or the cost of not complying with regulations—may have a negative impact on the business, financial conditions, operations, or cash flows.
The casino business is sensitive to customers’ willingness to travel. As a result, acts of terrorism, regional political events, and conflicts in other countries could disrupt air travel. This would reduce the number of casino visitors. Fewer visitors could hurt the casino’s financial conditions, operations, or cash flows.
The business is also subject to taxation and regulation by various government agencies—primarily in macao, singapore, and the U.S. The government agencies include the federal, state, and local levels. U.S. Federal, state, local, and foreign governments change tax rules. Changing rules could result in higher taxes than existing tax laws. Changes in tax laws and regulations could have a severe impact on the business’ financial condition and operations.
How does it work?
The right location has to be selected before a casino is built. The local zoning laws have to be checked to make sure they will allow a casino in the area. The casino has to register with the city and state. It also has to get the required licenses and employer identification number (or EIN).
The capital that the casino raises could be invested to get gaming equipment like slot machines, video poker machines, roulette tables, poker tables, blackjack tables, craps tables, baccarat tables, chips, cards, and card shoes.
Advertisement is important for a casino. Television and radio commercials draw attention to the casino. Internet advertisements also increase tourism and recreation.
The above chart shows how an accurate business plan and enough funding make sure that a casino is established correctly. Generated revenue is used to meet business costs—like license fees, capital expenditures, and wages. The revenue is also used to distribute the free cash flow to the shareholders—through dividends and share buybacks. If there’s any remaining free cash flow, the business keeps it. The business uses it to provide for more growth. It can also use it to meet any contingent liability.
Licensing requirements
Three types of licenses are required to run a casino:
- Operating license – this is required to run a casino or offer casino games—for example, running a website that offers poker, roulette, and blackjack.
- Personal license – there are two kinds of personal licenses—the personal management license (or PML) and personal functional license (or PFL). PML is for individuals who are responsible for specific areas in the organisation. Casino employees would have to apply for PFL if they are involved in gaming or handling gambling money.
- Premises license – this is required to run small or large casino. It’s also required to run an existing casino. It’s issued by the local licensing authority.
Key stocks and exchange-traded funds (or etfs)
Key players in the casino industry include las vegas sands (LVS), MGM resorts (MGM), penn national gaming (PENN), and melco crown entertainment (MPEL). Exchange-traded funds (or etfs) like the consumer discretionary select sector SPDR fund (XLY) and the vaneck vectors gaming (or BJK) track leisure companies.
To access our premium industry primers, company overviews and financial models, please email premium@marketrealist.Com. Specify the industry or company ticker(s) you are interested in and a representative will get in touch with you.
Casino visitors’ demographics
The commercial casino industry plays a vital role in the overall U.S. Travel and tourism industry. Roughly a quarter of the U.S. Adult population visits a casino at least once a year. Casinos attract a substantial number of overseas visitors.
Today’s casinos—including las vegas sands (LVS), MGM resorts (MGM), caesar entertainment (CZR), and pinnacle entertainment (PNK)—provide top-notch entertainment experiences that go beyond gaming. Exchange-traded funds (or etfs) like the vaneck vectors gaming (or BJK) and the consumer discretionary select sector SPDR fund (XLY) track the leisure companies.
Modern casinos have diverse amenities. The amenities attract a variety of tourists. The tourists also visit neighboring attractions. This stimulates the local economy.
The above chart shows that young people aged between 21–35 visit casinos the most. Nearly four out of ten individuals in the age group went to a casino in 2012. However, this visitation rate is only slightly higher than respondents aged between 50–64 at 36% and those aged between 36–49 at 34%. Only a quarter of older americans aged 65 and over visited a casino during 2012.
What’s your total household income?
The above chart shows that casino visitors have similar household incomes compared to national survey respondents. Casino visitor households make slightly more. Nearly 50% of all casino visitors’ households make more than $60,000 per year. Only 34% of households in the overall national sample have the same annual income. Household incomes for young adult casino visitors are almost in line with the broader population of casino visitors.
Casino gambling is an activity that adults aged 21 and over enjoy every day across the U.S. However, there are underlying differences. Young adult casino visitors, as a group, have distinct gambling habits that could shape casinos in the future. Also, young adult casino visitors are more likely to participate in other forms of gambling—like casual betting with friends, playing poker, or gambling on the internet.
It’s the “house edge”
Casino games have a built-in advantage for the operator. It’s known as the “house edge.” the house edge is the difference between the true odds and the odds—or probability—that the casino pays you when you win. This is known as the casino odds. The likelihood of rolling a particular number is known as the true odds.
The more combinations possible, the higher the odds. For example, you’re more likely to roll a seven than a two or a 12. However, since casinos take a portion of the winnings as a result of the house edge, the winner gets true odds less the difference between true odds and the casino odds.
Depending on the game and player, the house edge may be larger than what the above data suggests. As you can see from the chart above, there are different house edges for blackjack. The stats are based on three types of games. The games are played with a particular basic strategy. In those games, the house edge can be lessened by learning advanced strategy. Also, the house edge can grow based on rule changes.
Most casino games have a house edge between 0%–5%. Slot machines have a house edge of 10%. Keno has a house edge of 27%. Playing games with a smaller house edge and learning correct strategy allows your dollars to last longer. This increases your chance of winning.
Estimating the loss
A player can estimate the loss before playing a particular game—if they know the house edge. For example, a player knows the house edge in blackjack is 0.6%. They can assume that for every $10 original wager they make, they would lose $0.06 on average. Most players aren’t going to know how much their average wager would be in games like blackjack—relative to the original wager. As a result, any statistic based on the average wager would be difficult to apply to real life scenarios.
Gambling addiction
With so many people gambling, the casino odds generate substantial profits for the casinos. Unfortunately, a need to keep playing the odds causes many people to develop a gambling addiction.
Major casino players like las vegas sands (LVS), MGM resorts (MGM), caesar entertainment (CZR), and pinnacle entertainment (PNK) attract millions of customers. This is one of the main reasons why casinos are such a profitable business. At times, there are big winners at the gaming tables. However, the only sure winner in a casino is the owner.
Exchange-traded funds (or etfs) like the consumer discretionary select sector SPDR fund (XLY) and the vaneck vectors gaming (or BJK) give investors exposure to the leisure industry.
To access our premium industry primers, company overviews and financial models, please email premium@marketrealist.Com. Specify the industry or company ticker(s) you are interested in and a representative will get in touch with you.
The most popular casino games
Casinos’ popularity is growing. This suggests that people like to gamble occasionally. Unfortunately, they don’t always win. For most of the people, the real fun is playing the game—not necessarily winning. Here’s a list of the top five most popular casino games.
Slots are machines that play a number of different games. Generally, a player inserts coins into the machine. Then they pull a handle or press a button. This causes the wheels to spin. When the wheels stop, the player gets paid based on the pattern of symbols.
Blackjack is a card game. It’s played between the house—also known as the dealer—and the player. The dealer deals out two cards to each player and keeps two cards. The dealer has one card face up and one down. The players take turns trying to get as close as they can to 21. The player calls “hit” to get a card and end their turn. A player can also call “double.” this doubles their bet. They can only get one card and their turn ends. If a player has two identically numbered cards, they can split.
In roulette, the player places their chips on the table to wager them. The table has numbers 0-36 and 00. It has additional betting for even-odd, red-black, low 18-high 18, low/middle/high 12 and for the first/second/third columns. The dealer spins the wheel clockwise. Then, they roll a ball counter-clockwise. The ball lands in a numbered slot on the wheel. All bets that correspond with the number win.
Poker is a card game. It’s based on a five card hand. Hands are ranked from lowest to highest. The order of hands is high card, pair, two pair, three of a kind, straight, flush, full house, four of a kind, straight flush, and royal flush. The player with the best hand wins.
Craps is a dice game. The players make wagers on the outcome of the roll, or a series of rolls, of a pair of dice. If a seven or 11 turn up on the first roll of the dice, the shooter wins whatever they bet. If the shooter rolls two, three, or 12 on the first roll, they loose the money, but not the dice. When the person rolls a four, five, six, eight, nine, or ten that number becomes their “point.” the shooter keeps rolling until their “point” turns up again for a win or until the person throws a seven and loses the money and the dice.
Major casinos that offer the above mentioned games include las vegas sands (LVS), melco crown entertainment (MPEL), caesar entertainment (CZR), and pinnacle entertainment (PNK). Investors who would like to get exposure to the sector may invest in exchange-traded funds (or etfs) like the vaneck vectors gaming (BJK). It tracks casino companies.
The evolution of casino industry
A banked game is a game of chance. The participating players don’t determine the prizes. A casino offers banked games. The commercial casino industry in the U.S. Has changed over the last two decades. An increased emphasis has been placed on a wide range of entertainment and recreational activities.
The above chart shows different types of casinos in the U.S. It shows that land-based casinos are widespread. Racetrack casinos are popular in the eastern U.S. Tribal casinos are the native american casinos. They’re the gambling operations on indian reservations. Tribal casinos are widespread across the U.S. They aren’t always run by the tribe itself. The casinos can be run by an outside management company. Other commercial gaming venues include excursion—mobile—and dockside—permanently moored—riverboats and card rooms.
Until the recession started at then end of 2007, the U.S. Casino industry was thought to be recession-proof—especially in las vegas. However, the industry experienced a steady decline in revenue during 2008 and 2009.
The casino industry’s expansion depends on voters. It also depends on hosting government jurisdictions. Governments enjoy the potential tax revenues that casinos offer. However, they have concerns about potential social costs and other problems that casinos may bring. The uncertainty has caused extreme volatility in the industry’s stock prices.
Key stocks and exchange-traded funds (or etfs)
Key players in the casino industry include las vegas sands (LVS), MGM resorts (MGM), caesar entertainment (CZR), and melco crown entertainment (MPEL). Exchange-traded funds (or etfs) like the vaneck vectors gaming (or BJK) and the consumer discretionary select sector SPDR fund (XLY) give investors exposure to the leisure industry.
To access our premium industry primers, company overviews and financial models, please email premium@marketrealist.Com. Specify the industry or company ticker(s) you are interested in and a representative will get in touch with you.
Leverage’s positive impact on share price
The casino business model entails a significant amount of leverage use, in which the effects could be magnified to have a positive impact on equity. Land-based casinos are inherently highly leverage businesses that usually need to build properties, whether they’re tribal casinos in oklahoma or multipurpose complexes in macau. Casinos also have high fixed costs to pay for maintenance, labor, utilities, and licenses.
The above chart shows the share price performance of highly leveraged casino stocks since january 2013. It shows that in the past, boyd gaming’s (BYD) share price has doubled. Boyd gaming has a net debt of over $4.1 billion and a market capitalization of about $1.2 billion.
MGM resorts (MGM) had a 60% leverage in its capital structure but surged over 100%.
Most importantly, caesars entertainment’s (CZR) share price increased in excess of 350%, despite some $24 billion in debt. It’s also important to note that caesars entertainment’s leverage is greater than 100%, signifying that it has negative shareholders’ equity or shareholders’ deficit in its balance sheet.
However, las vegas sands (LVS) and melco crown (MPEL)—with leverage of around 50% and 36%, respectively—have also seen a rise in their share prices.
Investors who’d like to get exposure to the industry can invest in exchange-traded funds (or etfs) like vaneck vectors gaming (BJK) and consumer discretionary select sector SPDR fund (XLY).
Unlocking hidden value
Major casino players have been looking into online gaming as a way to increase their market share and reach consumers who might not be willing to physically come to casinos.
In august 2009, harrah’s interactive entertainment, now known as caesars entertainment (CZR), signed a long-term deal with dragonfish, the business-to-business (or B2B) technology arm of the gaming site 888 holdings, to power harrah’s website.
From the above table, it can be seen that industry consolidation is an important step, as it usually profits the players by unlocking the hidden potential value. Each of these acquisitions in some way expand company offerings horizontally in the gaming space. The consolidation in gaming may actually benefit customers, provided that online gaming is approved nationwide.
The share prices for bally technologies (BYI), scientific games (SGMS), and pinnacle entertainment (PNK) surged immediately after announcing the deal.
Investors can get exposure to the leisure industry through exchange-traded funds (or etfs) like vaneck vectors gaming (BJK) and consumer discretionary select sector SPDR fund (XLY).
Online gaming growth rates have been driving market consolidation, as larger players in the gaming sector are looking to fill out their capabilities or to reach new markets. For example, in 2008, international game technology (IGT) purchased million-2-1, a developer of mobile or cell phone gaming technology.
Million-2-1 also has a consumer-facing internet games portal—kerching—that offers online casino, poker, bingo, and SMS games and cell phone java slots games in legal territories.
In september 2009, bwin purchased one of italy’s largest online poker sites, gioco digitale.
So merger and acquisition activity is likely for traditional gaming companies that are reaching into virtual markets and for existing virtual leaders that are taking over smaller niche competitors.
A look into immediate future performance
Enterprise value (or EV) divided by earnings before interest, tax, depreciation, and amortization (or EBITDA) is a significant financial metric used in valuing comparable companies. This multiple’s capital structure is neutral, meaning it takes both the debt and shareholders perspective, unlike price divided by earnings (or PE) which takes only the shareholders perspective.
Generally, the lower the ratio, the more undervalued the company is believed to be. Since the casino operators are experiencing both organic and inorganic growth, EV divided by the trailing twelve months (or TTM) EBITDA would be less meaningful due to the failure to take into account the consolidated or expanded future performance of the casino operators.
So EV divided by the next twelve month (or NTM) EBITDA is a suitable measure for valuing the companies since it takes into account the immediate future performance of the company, incorporating the organic and inorganic growth factors into EBITDA.
The above chart shows that both genting malaysia and SJM holdings are undervalued relative to its peers since both of these companies have significant net cash positions, which reduce the firms’ EV.
Companies like caesars entertainment (CZR), boyd gaming (BYD), MGM resorts (MGM), and penn national gaming (PENN) have seen a rise in their share prices. A good way to get exposure to these companies is to invest in exchange-traded funds (or etfs) like vaneck vectors gaming (BJK).
Buyer’s perspective
Buyers are more interested in ensuring their purchase price is reasonable against the next twelve months’ performance. It’s the future performance that would ultimately support the price paid by the buyer. In stable or mature industries, the last twelve months’ performance can serve as a good proxy for the next twelve months.
However, for companies in growth industries, like technology, or rapidly growing markets, the last twelve months would be less relevant. So buyers would focus on the reasonability of the NTM EV-to-EBITDA ratio and ensure that the multiple paid is within its tolerance level and industry benchmarks.
To know more about the casino gaming market performance, click here.
It’s more than just a casino
Does the traditional casino company that offers multiple services and products to its customers maximize its shareholder value? Or does a focused casino facility that specializes primarily in casinos maximize shareholder value? Or is it something in-between?
Rapid expansion of casino resorts, rather than casinos alone, suggests that diversifying amenities is profit-maximizing. Modern casinos offer a wide range of activities besides gambling, and adult visitors of all ages take advantage of these amenities.
The above chart shows that eating at a fine dining restaurant and seeing a show or concert are the most popular among all casino-goers, with 69% and 55% participating in such activities respectively. Young adult casino visitors are more likely to participate in all of the activities mentioned in the above chart.
Dominating non-casino activities
The market returns for a casino will be directly related to the casino’s ability to cross-promote its products and services to a diverse customer base. Moreover, the casino’s ability to tailor a variety of new products and services to its existing customers is expected to result in increased sales and shareholder value.
The casino industry has followed this path since non-casino revenues are now contributing significantly to the total revenues at many destination resort casinos, especially in large casino companies like las vegas sands (LVS).
Attract and retain more customers
The above chart shows the diversified revenue streams of a casino operator. This diverse casino management strategy that moves away from casinos and moves towards other sources of revenue significantly impacts the value of casino companies.
With the expansion of casinos into new jurisdictions, competition has increased significantly. This competition gives rise to questioning which casino amenities are most important to offer casino patrons to drive profitability.
Other casino operators like boyd gaming (BYD), melco crown (MPEL), and penn national gaming (PENN) have to find a niche to place themselves in a unique position in the market due to this competition. So amenities other than the casino have started to have a significant impact on the overall performance of the firm.
Exchange-traded funds (or etfs) like vaneck vectors gaming (BJK) and consumer discretionary select sector SPDR fund (XLY) track companies in the leisure industry.
The benefit of a fixed cost business model
Let’s say ABC is a casino operator with revenue and costs of $110 million and $100 million respectively, and its revenue increases by 10% in the following year, which causes modest increase in labor costs, maintenance expenditures, and fixed license fees.
ABC’s overall costs increase by say 5%, and instead of making $10 million in profits, it’s now making $16 million in profits ($121 million in revenue and $105 million in costs.) in other words, a 10% increase in revenue results in a 60% increase in profits. Assuming that the earnings before interest, tax, depreciation, and amortization (or EBITDA) multiple remains unchanged, this results in an increase to the share price.
The above chart shows the firm—which is generating $110 million in revenue, with $100 million in costs—is initially valued at say 10x EBITDA, or $100 million, with $70 million in debt and $30 million in equity. Now since revenue and costs rose by 10% and 5% respectively, owing to the fixed cost nature of the casino business, ABC’s EBITDA will rise to $16 million.
The total value of the firm at the same 10x EBITDA multiple will rise to $160 million. But the debt remains unchanged at $70 million. So equity will rise from $30 million to $90 million, or by 200%, as a result of the 10% increase in revenue.
This shows that when a company with high fixed costs touches breakeven, each additional customer becomes massively profitable. At this point, profit grows exponentially since each additional customer who comes in is at a minimal cost to the operator.
The pessimistic view
Let say ABC’s revenue drops by 5% to $104.5 million, but its costs decrease by say 2.5% to $97.5 million since state governments don’t lower license fees. ABC now experiences EBITDA of $7 million annually. Based on the same 10x EBITDA multiple, the firm is now valued at $70 million.
Remember that its debt is $70 million, which signifies that a 5% decline in revenue has entirely wiped its shareholder value, as shown by the above chart. This is the risk in high-debt casino stocks like MGM resorts (MGM), boyd gaming (BYD), and caesars entertainment (CZR). This also explains why gambling stocks are more volatile than other stocks.
However, to avoid the risk of investing in such stocks individually, investors can invest in exchange-traded funds (or etfs) like vaneck vectors gaming (BJK) and consumer discretionary select sector SPDR fund (XLY) that give exposure to the industry.
Must-know: the most popular casino games
Leakage effect
Casinos can impact the society where they’re located. The size of the effect depends on how many visitors the casino draws from outside the area. It also depends on the number of jobs the casino generates within the area.
Casino revenues that support jobs and purchases are generated by casino visitors’ spending. The jobs and purchases generate funds. These funds are diffused into the community. The funds have secondary or multiplier effects in subsequent rounds of spending. There’s a second category of direct and secondary effects. They include the non-casino expenditures generated from visitors outside the area. These non-casino expenditures include purchases in local stores or meals in local restaurants.
A variety of factors impact the degree of the direct and secondary effects experienced outside the local area. This occurs when a casino purchases supplies from an out-of-area vendor. It also occurs when a casino hires a worker who commutes to the casino from outside the community. The individual takes the income they made at the casino and spends it outside the local area. This is a phenomenon known as “leakage.”
Displacement effect
The positive economic impact is offset by other local economic activity. It’s negatively affected by the casino. The casino could cause a loss of a business in the existing local economy. For example, an existing restaurant could lose business to a restaurant that’s located inside the casino. Also, local residents could take money that they would spend for other purposes and redirect the funds to the casino. This is referred to as “displacement.” casino-related spending displaces or substitutes other forms of spending.
Social cost
Social costs impact major players including las vega sands (LVS), MGM resorts, wynn resorts (WYNN), and caesar entertainment (CZR). Social cost includes is the increase in corruption or organized crime. Casinos offer gambling for entertainment. However, they also have financial activities that are similar to financial institutions. These activities put casinos at risk for money laundering. This could be controlled through careful regulations.
Exchange-traded funds (or etfs) like the vaneck vectors gaming (BJK) and the consumer discretionary select sector SPDR fund (XLY) track leisure companies.
To know more about the casino gaming market performance click here.
To access our premium industry primers, company overviews and financial models, please email premium@marketrealist.Com. Specify the industry or company ticker(s) you are interested in and a representative will get in touch with you.
Discretionary consumer spending effect
The casino business is sensitive to reduced consumer spending. Reduced spending can be caused by economic downturns. Consumer demand for hotels, casino resorts, and luxury amenities is also impacted by the state of the economy.
This could impact major casino players like las vegas sands (LVS), MGM resorts (MGM), melco crown entertainment (MPEL), and caesar entertainment (CZR). Exchange-traded funds (or etfs) like the vaneck vectors gaming (or BJK) and the consumer discretionary select sector SPDR fund (XLY) track the performance of leisure companies. The etfs could also be impacted by an economic downturn.
The above chart shows that in 2012, consumers spent more at commercial casinos than they did on movies, craft beer, and outdoor equipment combined. However, consumers spent less on casino gambling than what they spent on full-service restaurants or consumer electronics.
Changes in discretionary consumer spending could be caused by many factors. These factors include:
- Weaknesses in the job or housing market
- Additional credit market disruptions
- High energy costs
- Fuel and food costs
- Increased travel costs
- The potential for bank failures
- Recession fears
- Changes in consumer confidence in the economy
- Fears war and terrorism
These factors could reduce consumer demand for luxury amenities and leisure activities.
Political effect
The casino business is prone to extensive regulations. The compliance costs—or the cost of not complying with regulations—may have a negative impact on the business, financial conditions, operations, or cash flows.
The casino business is sensitive to customers’ willingness to travel. As a result, acts of terrorism, regional political events, and conflicts in other countries could disrupt air travel. This would reduce the number of casino visitors. Fewer visitors could hurt the casino’s financial conditions, operations, or cash flows.
The business is also subject to taxation and regulation by various government agencies—primarily in macao, singapore, and the U.S. The government agencies include the federal, state, and local levels. U.S. Federal, state, local, and foreign governments change tax rules. Changing rules could result in higher taxes than existing tax laws. Changes in tax laws and regulations could have a severe impact on the business’ financial condition and operations.
How does it work?
The right location has to be selected before a casino is built. The local zoning laws have to be checked to make sure they will allow a casino in the area. The casino has to register with the city and state. It also has to get the required licenses and employer identification number (or EIN).
The capital that the casino raises could be invested to get gaming equipment like slot machines, video poker machines, roulette tables, poker tables, blackjack tables, craps tables, baccarat tables, chips, cards, and card shoes.
Advertisement is important for a casino. Television and radio commercials draw attention to the casino. Internet advertisements also increase tourism and recreation.
The above chart shows how an accurate business plan and enough funding make sure that a casino is established correctly. Generated revenue is used to meet business costs—like license fees, capital expenditures, and wages. The revenue is also used to distribute the free cash flow to the shareholders—through dividends and share buybacks. If there’s any remaining free cash flow, the business keeps it. The business uses it to provide for more growth. It can also use it to meet any contingent liability.
Licensing requirements
Three types of licenses are required to run a casino:
- Operating license – this is required to run a casino or offer casino games—for example, running a website that offers poker, roulette, and blackjack.
- Personal license – there are two kinds of personal licenses—the personal management license (or PML) and personal functional license (or PFL). PML is for individuals who are responsible for specific areas in the organisation. Casino employees would have to apply for PFL if they are involved in gaming or handling gambling money.
- Premises license – this is required to run small or large casino. It’s also required to run an existing casino. It’s issued by the local licensing authority.
Key stocks and exchange-traded funds (or etfs)
Key players in the casino industry include las vegas sands (LVS), MGM resorts (MGM), penn national gaming (PENN), and melco crown entertainment (MPEL). Exchange-traded funds (or etfs) like the consumer discretionary select sector SPDR fund (XLY) and the vaneck vectors gaming (or BJK) track leisure companies.
To access our premium industry primers, company overviews and financial models, please email premium@marketrealist.Com. Specify the industry or company ticker(s) you are interested in and a representative will get in touch with you.
Casino visitors’ demographics
The commercial casino industry plays a vital role in the overall U.S. Travel and tourism industry. Roughly a quarter of the U.S. Adult population visits a casino at least once a year. Casinos attract a substantial number of overseas visitors.
Today’s casinos—including las vegas sands (LVS), MGM resorts (MGM), caesar entertainment (CZR), and pinnacle entertainment (PNK)—provide top-notch entertainment experiences that go beyond gaming. Exchange-traded funds (or etfs) like the vaneck vectors gaming (or BJK) and the consumer discretionary select sector SPDR fund (XLY) track the leisure companies.
Modern casinos have diverse amenities. The amenities attract a variety of tourists. The tourists also visit neighboring attractions. This stimulates the local economy.
The above chart shows that young people aged between 21–35 visit casinos the most. Nearly four out of ten individuals in the age group went to a casino in 2012. However, this visitation rate is only slightly higher than respondents aged between 50–64 at 36% and those aged between 36–49 at 34%. Only a quarter of older americans aged 65 and over visited a casino during 2012.
What’s your total household income?
The above chart shows that casino visitors have similar household incomes compared to national survey respondents. Casino visitor households make slightly more. Nearly 50% of all casino visitors’ households make more than $60,000 per year. Only 34% of households in the overall national sample have the same annual income. Household incomes for young adult casino visitors are almost in line with the broader population of casino visitors.
Casino gambling is an activity that adults aged 21 and over enjoy every day across the U.S. However, there are underlying differences. Young adult casino visitors, as a group, have distinct gambling habits that could shape casinos in the future. Also, young adult casino visitors are more likely to participate in other forms of gambling—like casual betting with friends, playing poker, or gambling on the internet.
It’s the “house edge”
Casino games have a built-in advantage for the operator. It’s known as the “house edge.” the house edge is the difference between the true odds and the odds—or probability—that the casino pays you when you win. This is known as the casino odds. The likelihood of rolling a particular number is known as the true odds.
The more combinations possible, the higher the odds. For example, you’re more likely to roll a seven than a two or a 12. However, since casinos take a portion of the winnings as a result of the house edge, the winner gets true odds less the difference between true odds and the casino odds.
Depending on the game and player, the house edge may be larger than what the above data suggests. As you can see from the chart above, there are different house edges for blackjack. The stats are based on three types of games. The games are played with a particular basic strategy. In those games, the house edge can be lessened by learning advanced strategy. Also, the house edge can grow based on rule changes.
Most casino games have a house edge between 0%–5%. Slot machines have a house edge of 10%. Keno has a house edge of 27%. Playing games with a smaller house edge and learning correct strategy allows your dollars to last longer. This increases your chance of winning.
Estimating the loss
A player can estimate the loss before playing a particular game—if they know the house edge. For example, a player knows the house edge in blackjack is 0.6%. They can assume that for every $10 original wager they make, they would lose $0.06 on average. Most players aren’t going to know how much their average wager would be in games like blackjack—relative to the original wager. As a result, any statistic based on the average wager would be difficult to apply to real life scenarios.
Gambling addiction
With so many people gambling, the casino odds generate substantial profits for the casinos. Unfortunately, a need to keep playing the odds causes many people to develop a gambling addiction.
Major casino players like las vegas sands (LVS), MGM resorts (MGM), caesar entertainment (CZR), and pinnacle entertainment (PNK) attract millions of customers. This is one of the main reasons why casinos are such a profitable business. At times, there are big winners at the gaming tables. However, the only sure winner in a casino is the owner.
Exchange-traded funds (or etfs) like the consumer discretionary select sector SPDR fund (XLY) and the vaneck vectors gaming (or BJK) give investors exposure to the leisure industry.
To access our premium industry primers, company overviews and financial models, please email premium@marketrealist.Com. Specify the industry or company ticker(s) you are interested in and a representative will get in touch with you.
The most popular casino games
Casinos’ popularity is growing. This suggests that people like to gamble occasionally. Unfortunately, they don’t always win. For most of the people, the real fun is playing the game—not necessarily winning. Here’s a list of the top five most popular casino games.
Slots are machines that play a number of different games. Generally, a player inserts coins into the machine. Then they pull a handle or press a button. This causes the wheels to spin. When the wheels stop, the player gets paid based on the pattern of symbols.
Blackjack is a card game. It’s played between the house—also known as the dealer—and the player. The dealer deals out two cards to each player and keeps two cards. The dealer has one card face up and one down. The players take turns trying to get as close as they can to 21. The player calls “hit” to get a card and end their turn. A player can also call “double.” this doubles their bet. They can only get one card and their turn ends. If a player has two identically numbered cards, they can split.
In roulette, the player places their chips on the table to wager them. The table has numbers 0-36 and 00. It has additional betting for even-odd, red-black, low 18-high 18, low/middle/high 12 and for the first/second/third columns. The dealer spins the wheel clockwise. Then, they roll a ball counter-clockwise. The ball lands in a numbered slot on the wheel. All bets that correspond with the number win.
Poker is a card game. It’s based on a five card hand. Hands are ranked from lowest to highest. The order of hands is high card, pair, two pair, three of a kind, straight, flush, full house, four of a kind, straight flush, and royal flush. The player with the best hand wins.
Craps is a dice game. The players make wagers on the outcome of the roll, or a series of rolls, of a pair of dice. If a seven or 11 turn up on the first roll of the dice, the shooter wins whatever they bet. If the shooter rolls two, three, or 12 on the first roll, they loose the money, but not the dice. When the person rolls a four, five, six, eight, nine, or ten that number becomes their “point.” the shooter keeps rolling until their “point” turns up again for a win or until the person throws a seven and loses the money and the dice.
Major casinos that offer the above mentioned games include las vegas sands (LVS), melco crown entertainment (MPEL), caesar entertainment (CZR), and pinnacle entertainment (PNK). Investors who would like to get exposure to the sector may invest in exchange-traded funds (or etfs) like the vaneck vectors gaming (BJK). It tracks casino companies.
The evolution of casino industry
A banked game is a game of chance. The participating players don’t determine the prizes. A casino offers banked games. The commercial casino industry in the U.S. Has changed over the last two decades. An increased emphasis has been placed on a wide range of entertainment and recreational activities.
The above chart shows different types of casinos in the U.S. It shows that land-based casinos are widespread. Racetrack casinos are popular in the eastern U.S. Tribal casinos are the native american casinos. They’re the gambling operations on indian reservations. Tribal casinos are widespread across the U.S. They aren’t always run by the tribe itself. The casinos can be run by an outside management company. Other commercial gaming venues include excursion—mobile—and dockside—permanently moored—riverboats and card rooms.
Until the recession started at then end of 2007, the U.S. Casino industry was thought to be recession-proof—especially in las vegas. However, the industry experienced a steady decline in revenue during 2008 and 2009.
The casino industry’s expansion depends on voters. It also depends on hosting government jurisdictions. Governments enjoy the potential tax revenues that casinos offer. However, they have concerns about potential social costs and other problems that casinos may bring. The uncertainty has caused extreme volatility in the industry’s stock prices.
Key stocks and exchange-traded funds (or etfs)
Key players in the casino industry include las vegas sands (LVS), MGM resorts (MGM), caesar entertainment (CZR), and melco crown entertainment (MPEL). Exchange-traded funds (or etfs) like the vaneck vectors gaming (or BJK) and the consumer discretionary select sector SPDR fund (XLY) give investors exposure to the leisure industry.
To access our premium industry primers, company overviews and financial models, please email premium@marketrealist.Com. Specify the industry or company ticker(s) you are interested in and a representative will get in touch with you.
Leverage’s positive impact on share price
The casino business model entails a significant amount of leverage use, in which the effects could be magnified to have a positive impact on equity. Land-based casinos are inherently highly leverage businesses that usually need to build properties, whether they’re tribal casinos in oklahoma or multipurpose complexes in macau. Casinos also have high fixed costs to pay for maintenance, labor, utilities, and licenses.
The above chart shows the share price performance of highly leveraged casino stocks since january 2013. It shows that in the past, boyd gaming’s (BYD) share price has doubled. Boyd gaming has a net debt of over $4.1 billion and a market capitalization of about $1.2 billion.
MGM resorts (MGM) had a 60% leverage in its capital structure but surged over 100%.
Most importantly, caesars entertainment’s (CZR) share price increased in excess of 350%, despite some $24 billion in debt. It’s also important to note that caesars entertainment’s leverage is greater than 100%, signifying that it has negative shareholders’ equity or shareholders’ deficit in its balance sheet.
However, las vegas sands (LVS) and melco crown (MPEL)—with leverage of around 50% and 36%, respectively—have also seen a rise in their share prices.
Investors who’d like to get exposure to the industry can invest in exchange-traded funds (or etfs) like vaneck vectors gaming (BJK) and consumer discretionary select sector SPDR fund (XLY).
Unlocking hidden value
Major casino players have been looking into online gaming as a way to increase their market share and reach consumers who might not be willing to physically come to casinos.
In august 2009, harrah’s interactive entertainment, now known as caesars entertainment (CZR), signed a long-term deal with dragonfish, the business-to-business (or B2B) technology arm of the gaming site 888 holdings, to power harrah’s website.
From the above table, it can be seen that industry consolidation is an important step, as it usually profits the players by unlocking the hidden potential value. Each of these acquisitions in some way expand company offerings horizontally in the gaming space. The consolidation in gaming may actually benefit customers, provided that online gaming is approved nationwide.
The share prices for bally technologies (BYI), scientific games (SGMS), and pinnacle entertainment (PNK) surged immediately after announcing the deal.
Investors can get exposure to the leisure industry through exchange-traded funds (or etfs) like vaneck vectors gaming (BJK) and consumer discretionary select sector SPDR fund (XLY).
Online gaming growth rates have been driving market consolidation, as larger players in the gaming sector are looking to fill out their capabilities or to reach new markets. For example, in 2008, international game technology (IGT) purchased million-2-1, a developer of mobile or cell phone gaming technology.
Million-2-1 also has a consumer-facing internet games portal—kerching—that offers online casino, poker, bingo, and SMS games and cell phone java slots games in legal territories.
In september 2009, bwin purchased one of italy’s largest online poker sites, gioco digitale.
So merger and acquisition activity is likely for traditional gaming companies that are reaching into virtual markets and for existing virtual leaders that are taking over smaller niche competitors.
A look into immediate future performance
Enterprise value (or EV) divided by earnings before interest, tax, depreciation, and amortization (or EBITDA) is a significant financial metric used in valuing comparable companies. This multiple’s capital structure is neutral, meaning it takes both the debt and shareholders perspective, unlike price divided by earnings (or PE) which takes only the shareholders perspective.
Generally, the lower the ratio, the more undervalued the company is believed to be. Since the casino operators are experiencing both organic and inorganic growth, EV divided by the trailing twelve months (or TTM) EBITDA would be less meaningful due to the failure to take into account the consolidated or expanded future performance of the casino operators.
So EV divided by the next twelve month (or NTM) EBITDA is a suitable measure for valuing the companies since it takes into account the immediate future performance of the company, incorporating the organic and inorganic growth factors into EBITDA.
The above chart shows that both genting malaysia and SJM holdings are undervalued relative to its peers since both of these companies have significant net cash positions, which reduce the firms’ EV.
Companies like caesars entertainment (CZR), boyd gaming (BYD), MGM resorts (MGM), and penn national gaming (PENN) have seen a rise in their share prices. A good way to get exposure to these companies is to invest in exchange-traded funds (or etfs) like vaneck vectors gaming (BJK).
Buyer’s perspective
Buyers are more interested in ensuring their purchase price is reasonable against the next twelve months’ performance. It’s the future performance that would ultimately support the price paid by the buyer. In stable or mature industries, the last twelve months’ performance can serve as a good proxy for the next twelve months.
However, for companies in growth industries, like technology, or rapidly growing markets, the last twelve months would be less relevant. So buyers would focus on the reasonability of the NTM EV-to-EBITDA ratio and ensure that the multiple paid is within its tolerance level and industry benchmarks.
To know more about the casino gaming market performance, click here.
It’s more than just a casino
Does the traditional casino company that offers multiple services and products to its customers maximize its shareholder value? Or does a focused casino facility that specializes primarily in casinos maximize shareholder value? Or is it something in-between?
Rapid expansion of casino resorts, rather than casinos alone, suggests that diversifying amenities is profit-maximizing. Modern casinos offer a wide range of activities besides gambling, and adult visitors of all ages take advantage of these amenities.
The above chart shows that eating at a fine dining restaurant and seeing a show or concert are the most popular among all casino-goers, with 69% and 55% participating in such activities respectively. Young adult casino visitors are more likely to participate in all of the activities mentioned in the above chart.
Dominating non-casino activities
The market returns for a casino will be directly related to the casino’s ability to cross-promote its products and services to a diverse customer base. Moreover, the casino’s ability to tailor a variety of new products and services to its existing customers is expected to result in increased sales and shareholder value.
The casino industry has followed this path since non-casino revenues are now contributing significantly to the total revenues at many destination resort casinos, especially in large casino companies like las vegas sands (LVS).
Attract and retain more customers
The above chart shows the diversified revenue streams of a casino operator. This diverse casino management strategy that moves away from casinos and moves towards other sources of revenue significantly impacts the value of casino companies.
With the expansion of casinos into new jurisdictions, competition has increased significantly. This competition gives rise to questioning which casino amenities are most important to offer casino patrons to drive profitability.
Other casino operators like boyd gaming (BYD), melco crown (MPEL), and penn national gaming (PENN) have to find a niche to place themselves in a unique position in the market due to this competition. So amenities other than the casino have started to have a significant impact on the overall performance of the firm.
Exchange-traded funds (or etfs) like vaneck vectors gaming (BJK) and consumer discretionary select sector SPDR fund (XLY) track companies in the leisure industry.
The benefit of a fixed cost business model
Let’s say ABC is a casino operator with revenue and costs of $110 million and $100 million respectively, and its revenue increases by 10% in the following year, which causes modest increase in labor costs, maintenance expenditures, and fixed license fees.
ABC’s overall costs increase by say 5%, and instead of making $10 million in profits, it’s now making $16 million in profits ($121 million in revenue and $105 million in costs.) in other words, a 10% increase in revenue results in a 60% increase in profits. Assuming that the earnings before interest, tax, depreciation, and amortization (or EBITDA) multiple remains unchanged, this results in an increase to the share price.
The above chart shows the firm—which is generating $110 million in revenue, with $100 million in costs—is initially valued at say 10x EBITDA, or $100 million, with $70 million in debt and $30 million in equity. Now since revenue and costs rose by 10% and 5% respectively, owing to the fixed cost nature of the casino business, ABC’s EBITDA will rise to $16 million.
The total value of the firm at the same 10x EBITDA multiple will rise to $160 million. But the debt remains unchanged at $70 million. So equity will rise from $30 million to $90 million, or by 200%, as a result of the 10% increase in revenue.
This shows that when a company with high fixed costs touches breakeven, each additional customer becomes massively profitable. At this point, profit grows exponentially since each additional customer who comes in is at a minimal cost to the operator.
The pessimistic view
Let say ABC’s revenue drops by 5% to $104.5 million, but its costs decrease by say 2.5% to $97.5 million since state governments don’t lower license fees. ABC now experiences EBITDA of $7 million annually. Based on the same 10x EBITDA multiple, the firm is now valued at $70 million.
Remember that its debt is $70 million, which signifies that a 5% decline in revenue has entirely wiped its shareholder value, as shown by the above chart. This is the risk in high-debt casino stocks like MGM resorts (MGM), boyd gaming (BYD), and caesars entertainment (CZR). This also explains why gambling stocks are more volatile than other stocks.
However, to avoid the risk of investing in such stocks individually, investors can invest in exchange-traded funds (or etfs) like vaneck vectors gaming (BJK) and consumer discretionary select sector SPDR fund (XLY) that give exposure to the industry.
6 games you can win at the casino
- During seminars and general interactions I am constantly being asked how to win at the casino what are the casino games that can be beaten.
- Believe it or not, the answer is that every game can be vulnerable to a skilled practitioner of advantage play.
- Here we are going to take a look at 6 games and how you can attack them in a way that will give you the best chance to acctually win at the casino. They are:
The casino games that any player can beat are:
- Blackjack
- Craps
- Roulette
- Big six wheel
- Carnival card table games
- Slots
In order to win at the casino, I am going to take the games one at a time and give a big picture overview on the governing principle that each method of advantage play adheres too for the given game.
Note: though the ideas presented here are easy to understand the execution is complex and takes several months of intense training to implement them correctly. Reading just one article won't make you a winning player. Some of the tips are also applied for online casino games.
BLACKJACK
Why will you want to play blackjack? Because this is the first and most widely publicized game you beat the casino with, and for that matter you should learn how to play it in order to understand how to win it.
Card counting was introduced by professor edward thorp in 1962 in his classic book "beat the dealer". Card counting keeps track of the low to high card ratio of cards that remain in the deck and subsequently determines the advantage the player has over the house or vice versa. It’s a reliable method but also easily detectable by casino personal.
There are additional methods that have been used by players in the past and some are still applicable in today’s gaming environment while others have become sparse in their relevance. Shuffle tracking was popular in the mid 1990s but has countered by casinos with increasingly complex shuffles. Key card sequencing was a method used to predict when an ace would come out. This opportunity has also been reduced because of complexity of shuffles.
The last opportunity in blackjack is the rarest form and is hole carding. This is the technical art of determining of what the dealers down card is. I say this is a rare because it’s only found in approximately 1 in 80 dealers. And it’s not something that card cannot be determined every hand. Further complicating things is that you are not determining exactly what the card is. Often times you only get a glance at the pips of the cards. You then have to determine a strategy that is optimal by the narrowing of the card. Is the card a 10 value or not is a popular strategy. Is the card an 8 or a 9 are a few more examples. The strategy determination often requires computer simulations.
CRAPS
Craps is another game that can be attacked for profit. But as in blackjack, it requires a substantial time investment as well as a large financial investment in a full size craps table, and for that matter you have to learn how to play craps and practice.
What the aspiring craps AP practices is floating the dice to bank the back wall, and land how you want them to. This is most often in a way that limits the number of times a combination of dice that adds up to 7. Another way is to throw a dice in a way that the spins the dice on the horizontally that takes 5 numbers out of play on one dice. The player then bets accordingly. Steve fortes video series on gambling does a great job of showing how this is done, but like blackjack it takes substantial practice to pull off.
Another way to win at the casino at craps is to have a partner at the table and you bet pass line and your confederate bets the don’t pass line. The bets will offset each other 35 out of 36 rolls (on average). The betting portion is a negative expectation game but you more than make up for the loss with comp points.
ROULETTE
A player can beat roulette in a couple of different ways. The simplest way is similar to the offsetting bets that we discussed in craps. We will lose on average 2 of 36 spins, assuming the 2 players bet opposite one another in a red and black or 1-18 and 19-36 fashion. The proposition is a losing bet but similar to the craps bet we will make up for the losses in acquired comps.
Roulette prediction is another way to beat the wheel. It is tough, and like craps, you have to make a heavy investment in a roulette wheel. There are many intricacies that the successful player is going to have to account for but when you perfect the approach and you know what the roulette odds are, it is a very profitable game. The how to method is way beyond the scope of this article, but the best methodology found in the two book series by laurence scott.
BIG SIX WHEEL
The big six wheel is the large wheel where a pretty girl usually stands there and spins the wheel. The player hopes that the wheel of fortune like wheel lands on their bet to get the payout. To beat this game the player times the average spin of the wheel and then bets whatever of the two 40 to 1 long shots that the wheel is expected to stop closest too.
CARNIVAL CARD GAMES
To gain an advantage in these games you have to apply hole carding techniques. And similar to blackjack hole carding these are rare opportunities. And again like blackjack you have to develop a particular strategy. The best resource for finding determining the strategies is james grosjean’s book beyond counting exhibit CAA.
SLOT MACHINES
So, how can you win at slots? These are called the one arm bandits for a reason. It is because in almost all cases they take your money without apology. These games are high variance games, this means that 99% of the people lose and only 1% of the players will win money. But there are a couple ways to play that gives the player an advantage over the casino, and also this great article about slot tips.
The first is to play slots on triple point days. This is where the casino gives the player 3X the points that they would normally give. This will triples the comp value the player would earn.
The second method is to play with the casinos money. Every so often a casino will send a player $20, $50 or even $100 dollars in free play. The player then uses this money to play with and any money won during these free spins the player keeps.
To maximize the chance to win a player can log on to the gaming regulatory boards website of the jurisdiction and see what denomination slot machine has the loosest hold percentage, and play that machine.
SUMMARY
It is not an easy task to get the level where a player can be proficient enough to risk real dollars in order to win at the casino, but when the aspiring player puts forth the effort the rewards can be substantial. These broad brush strokes are meant to be a starting point for the aspiring player. A lot of hard work lies ahead. But be patient and work on your game and before you know it you will be there.
Casino games
Casino games online are getting much more attention because of the ability for people around the world to bet and win real cash online. Everything from virtual slot machines to table games gives people the opportunity to gamble without having to travel to las vegas or atlantic city.
Types of online casino games
There are many casino games online. While some casinos may offer just slot machines, others can offer a lot more.
Here is a list of the casino games that you can find online:
Bingo
This is like your typical bingo game where you have to cover numbers in a specific pattern in order to claim bingo. It is possible for there to be multiple winners in a single room so that jackpots are split. It is also possible for there to be one winner. Each player can buy multiple cards at once to increase the chances of winning.
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Baccarat
Baccarat is a card game involving six to eight decks of cards. The rules can be complicated, so it is best that you try a free game, if possible, before betting real money. This is a fun card game that requires some strategy. It is all about the numbers.
Read more about baccarat here
Blackjack
Blackjack is another card game that has a few rules, but it is all about getting a card combination that equals 21. If your combination doesnвђ™t equal 21, then you can win by having a number close to 21. This is considered one of the best casino games because it has a fast pace. You choose whether the dealer hits you with another card. If you go over 21, then you are bust, and that means you lose.
Play a game of blackjack today
Craps
Craps is a dice game where the players make a wager on the outcome of their roll or multiple rolls. Players wager against each other or the bank. All of the betting possibilities are outlined on the craps table. When playing online craps casino games, the craps table will be right there on your screen so you can see the possibilities.
Roll the dice and play craps now
Poker
Poker is a card game that most people are familiar with. You are dealt five cards, you can throw away your low cards and draw from the deck in hopes to get a high-ranking hand so you can win what you and everyone else wagered in the round.
Find the best poker bonuses and tactics here
Slot machines
Slot machines are among the best casino games because they are easy. In fact, most online casinos offer slot games that mimic those seen in vegas and other casinos around the world. All you do is make a wager, pull the virtual lever, and hope that you get a bonus or a row that has a high payout.
Claim up to 1000 free spins to popular slot games
Sic bo
Sic bo is an ancient chinese gambling game that uses a trio of dice. The sic bo table looks a little overwhelming, and there are some very specific rules, such as different types of bets and how the wagers you make with them affect your odds of winning.
Learn the rules of sic bo here
Roulette
Drop a ball in the spinning wheel and hope it lands on the color, number, or odd or even number that you called. This is truly a game of chance and one that is a lot of fun. It is one of the best casino games because, like slots, it is fast-paced and simple.
See the best casinos offering live roulette
Sports betting and live betting
Live sports betting has been increasing in popularity as smartphones have found their way into everyoneвђ™s pockets.
Nowadays, you can watch a game in the pub with friends, at home or live at the arena and at the same time bet on the results.
Free casino games
Some casinos will give you the opportunity to play for free.
You can even try some casino games for free so you can determine whether you want to pay real money. This is one of the best ways to make an informed decision. Some casinos may make certain games free, or they will make them all free.
No-deposit free spins are a great way to try popular slot games for free.
Mobile gaming
Mobile casinos are growing in popularity.
There are such a high number of people playing on their smartphones, and they are betting real money when they do so. Mobile casino games can be played no matter where a person is. As long as there is an internet connection, the ability to play is there.
The same authentication and security measures have been taken to ensure this method is safe. Playing casino games is as safe on your mobile as it is on your computer.
High roller casino games
There is a theory that high rollers make up a great deal of an online casinoвђ™s profit.
The truth is that they count for a small amount of casino revenue. Nonetheless, a person who makes high bets or bets a lot of money is considered a high roller. There may be table games and slots that are aimed at high rollers only, and they will usually specify this so that those not prepared to gamble large amounts of cash at once wonвђ™t enter the room.
Playing the casino games online that are right for you
As you can see, you have many options when it comes to casino games, how they are played, and how much you can bet. It is all about choosing what is right for you.
If you love table games, then you will choose an online casino that offers table games. If you want to keep it simple, then games like slots and roulette may be exactly what youвђ™re looking for. If anything, try some of the free games to see which casino games you like the most.
List of casino games with best odds
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Our top 10 casino games with the highest payouts
Hitting a jackpot can change your life, and the best way to do it is play casino games with best odds. Most people think of winning a casino game is purely a matter of luck. However, a casino game’s outcome is a purely based on statistics and probability.
You will have a better chance of winning any game that has a lower house edge, and therefore better odds, than one with a high house edge. It is with that in mind that we decided to review casino games with best odds. Read on to find which games give you a better chance of winning a golden jackpot.
So, what casino games offer the best odds?
1) blackjack – house edge from 1%
To many gamblers, blackjack is the best game to play at casino to win money, especially if you apply a basic winning blackjack strategy. This table game has a house edge, or advantage, of an average 1%, which gives the player a winning advantage of 99%. Without a strategy, an average player will face a house edge of 2% to 3%.
When using the basic playing strategy below, you must not alter based on any hunch that you have concerning the game’s outcome.
The only exception is if you are counting the cards. IBM’s julian braun was the first to put the basic strategy of card counting to test using computer simulations. This blackjack strategy predicts a particular outcome after millions of hand play.
| Your hand versus dealer’s up-card | |
| 8 | double on 5 to 6, else hit. |
| 9 | double on 2 to 6, else hit. |
| 10 | double on 2 to 9, else hit. |
| 11 | double. |
| 12 | stand on 4 to 6, else hit. |
| 13 to 16 | stand on 2 to 6, else hit. |
| 17 to 21 | stand. |
| A, 2 to A, 5 | double on 4 to 6, else hit. |
| A, 6 | double on 2 to 6, else hit. |
| A, 7 | stand on 2, 7, 8, or A, and double on 3 to 6, but hit on 9 or 10. |
| A, 8 | double on 6, else, stand. |
| A, 9 | stand. |
| A, A | split. |
| 2, 2 | split on 3 to 7, else hit. |
| 3, 3 | split on 4 to 7, else hit. |
| 4,4 | double on 5 to 6, else hit. |
| 5, 5 | double on 2 to 9, else hit. |
| 6, 6 | split on 2 to 6, else hit. |
| 7, 7 | split on 2 to 7, stand on 10, else hit. |
| 8, 8 | split. |
| 9, 9 | split on 2 to 9, but for 7, 10, or A, stand. |
| 10, 10 | stand. |
Blackjack is by far the most commonly played games among the high rollers and VIP casino players, due to what can be achieved with a basic strategy. Overall, blackjack is the best casino game to win money if you feel you have mastered some basic gaming skills.
So, let's see, what we have: casino games examples there is a variety of casino games to earn money that today with the emergence of technology and the internet we can also enjoy from home and have the option to find free at casino game examples
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