The Casino Business Model


When most people think of casinos, they picture the glittering Las Vegas megaresorts whose lights and games beckon those who are willing to risk their hard-earned money. However, casinos come in all shapes and sizes. Some are small businesses defined more by the types of gambling they offer than by their glitz and glamour. Whether they are a full-fledged gaming facility or simply a card room in a bar or restaurant, successful casinos bring in billions of dollars each year for the companies, investors, Native American tribes and state governments that own them.

Casinos make their money by accepting bets on a variety of games of chance, as well as on some games that require some degree of skill, such as poker. Most of these games have mathematically determined odds that give the house a uniformly negative expected value, or “house edge.” A small percentage of bets are successful, and the casino makes its profit by taking in bets equal to or less than its house edge.

In order to maximize profits, casinos offer patrons a multitude of perks designed to encourage them to spend more money than they otherwise would. These incentives, commonly known as comps, are generally free of charge but may include discounted or even free hotel rooms, food and drinks while gambling, show tickets and other entertainment. Comps can be so abundant that they distort the true financial condition of a casino.

The success of a casino depends on the number of patrons it draws in and the amount of money they wager. High rollers, who bet tens of thousands of dollars at a time, are a major source of income for casinos. In order to attract these big bettors, many casinos have special rooms separate from the main floor where gamblers can enjoy privacy and personal attention.

Security is another key factor in a casino’s profitability. While the vast majority of employees are focused on their own tables and dealing with patrons, other staff members have a broader view of the casino and can spot cheating and other suspicious activity. In addition, elaborate surveillance systems with a high-tech “eye-in-the-sky” allow security personnel to monitor every table, window and doorway from a single control room.

While legitimate businessmen were initially wary of getting involved with casinos, which carried the stigma of organized crime and were illegal in most other states, mobsters saw an opportunity to make a fortune by financing these enterprises. They provided the money for construction, operation and renovation, and took over management of some casinos. In addition, they subsidized advertising to draw in gamblers. The mafia’s involvement in casinos eventually brought them under federal investigation and forced many to close. Nevertheless, by the end of the 20th century, most American states had amended their antigambling laws to permit casinos. Additionally, casinos were introduced on Indian reservations and in other countries.