How Do Online Casinos Make Money?
Affiliates understand how to make money from online casinos, but do they understand how their depositing players create casino transactions that helped to drive revenue in the first place? Casinos have marketing and advertising schemes of their own to help land the whales who make money for their operation.
House Edge Hustle
Every casino transaction in which a customer wagers money on a game makes the casino money. Regardless of the outcome of any individual roll of the dice or turn of the cards, casinos want customers who are putting money in play. This is because casino games are designed with a “house edge” in mind that drives revenue into the pocket of the operator.
How Does House Edge Work?
House edge is a built-in mathematical edge the casino has over the player. Despite the beliefs of many foolhardy gamblers, it is impossible to gain a long-term advantage over a casino. If a player wins, it’s because they were lucky. Any player who played long enough and often enough is ensured by the laws of probability to eventually be a loser.
Casino games have varying degrees of mathematical advantage being given to the house. Some games, like craps and blackjack, can have a rather low statistical advantage for the casino. Other games like keno, slot-machines and American roulette are effectively money printing presses for the house.
For example, the house edge on a single-number bet on an American roulette wheel (two green zeros) is 5.26%. This means that for every $1 wagered the player can expect to receive $0.9474 back. So if a player made one-million $1 bets on numbers on a roulette wheel, they would receive back an amount extremely close to $947,400 for a total profit of $52,600 for the casino. Given a sample size of a sufficient number of repetitions, it is impossible from a probability standpoint for a casino to lose.
Play, Play, Play
So as you can see, from a casino’s standpoint, the more money being put into play, the better. Casinos generally have two types of marketing strategies:
- those targeting the recreational masses (fish)
- those targeting high-rollers (whales)
To a casino, 100 people betting $10 a hand at blackjack is roughly just as good as one guy betting $1,000 a hand. They are going to have to spend more or less the same amount of marketing and advertising effort at attracting each total amount wagered on the blackjack tables.
Casinos market to fish primarily through generic advertising methods like billboards and TV commercials. Online casinos utilize affiliates who can drive traffic through banner ads and email marketing promotions.
Attracting whales is a little harder. Since high-rollers are worth so much to a casino, they usually have to go to greater lengths to keep these customers happy. Casinos will commonly award lavish “comps” on high-rollers such as free hotel rooms, food, show tickets, and shopping credits.
In online poker, there is the direct player compensation model of “rakeback”. Casinos effectively give their customers a refund on the house edge they’ve given up through free drinks and other complimentary value items. Whales simply receive more of a kick-back since, after all, they’re giving up far more to the casino than your average Joe Q. Patron.
While the best online casino affiliate programs won’t always fully disclose how their casinos work, they should be trustworthy and have a stellar reputation.