Why and When You May Want to Sacrifice Edge to Bet Lower

13 September 2006

By Alan Krigman

Not everybody who goes to a casino with a modest gambling budget fantasizes about striking it rich. Some folks just want to be part of the action for a few hours, betting amounts with which they feel comfortable. And, hopefully, earning a nominal profit in the process. These days, that may preclude table play. Old standbys like blackjack and craps are now virtually nonexistent at the $2 level, and tables that book bets as low as $5 are rare.

Conventional wisdom attributes the preponderance of high table limits to greedy bosses using their edge to wipe players out as quickly as possible. While casino profits do rise with bet size in any given game, the phenomenon doesn't follow from bettors going belly-up faster. Rather, it results from the edge squeezing more juice out of a larger gross wager over a period of time.

The dearth of low table limits for the traditional games is due to something else. Their inability to generate enough revenue to cover casino operating costs. For instance, take blackjack with standard rules. A table with five active spots would get about 70 rounds per hour. Were everyone to bet $5, the gross hourly wager would be $5 x 70 x 5 or $1,750. Good players give up an average of half a percent of this handle, $8.75 per hour for the table. Weak players lift the yield to $10 or $12 per hour. Tables culling this little would run at a loss. Income doubles for $10 bets, making operation at least marginal.

Instead, envision $5 multi-deck blackjack where the common rules apply except that naturals pay 6-to-5, not the usual 3-to-2. This seemingly minor change boosts edge to 2 to 2.5 percent depending on player skill. The casino accordingly averages $35 to $43 per hour on a five-spot table, comparable to a $25 standard game.

Would you play 6-to-5 blackjack at 2 percent for $5 if the alternative were the 3-to-2 game at 0.5 percent at $10? For context, say you began with a $100 or $200 stake. Your objective is to enjoy a three- or four-hour stint, and you'll be more than happy quitting with a $50 profit. Further assume a table having five spots in action, where the session entails about 250 rounds.

In a 3-to-2 game following perfect Basic Strategy, a $10 bettor with a bankroll of $100 would have about 40 percent chance of completing 250 rounds; with a $200 stake, the likelihood of being in action this long rises to 72 percent. Independent of the time factor, the probability of reaching a $50 profit before busting out on $100 is 65 percent; on $200, it's 78 percent.

In a 6-to-5 game with flawless Basic Strategy, a $5 bettor would have 66 percent chance of staying in contention for 250 rounds on $100; prospects of longevity rise to 96 percent with $200. Ignoring how long it may take, chances of this player earning $50 before going broke are 55 percent on $100 and 65 percent on $200.

These figures show that the impact of edge should be neither under- nor overestimated. The outcome of a typical three- to four-hour session will be subject to the erosive influence of the edge. But edge may be swamped by the normal swings of the game, the volatility. And this factor is heavily affected by bet size.

With objectives like those posited, solid citizens betting less at the higher edge are more apt to survive on their bankrolls than those wagering more at a lower house advantage. They don't fare as well with respect to win goals as the criterion, but under the cited circumstances their chances remain above 50-50.

One last thing. Casinos earn more from $5 6-to-5 players than their $10 3-to-2 counterparts. This, despite the higher edge game offering a greater shot at enduring for 250 rounds. Showing that bosses who think outside the box can do well by being good to the sizeable group of gamblers who'd like an affordable game with decent prospects of a long session and a small profit. Reflecting this rumination of the renown rhymer, Sumner A Ingmark:

Equal and opposite aren't necessarily,
All that's involved in performing contrarily.
Those who presume that they are doubtless never,
Fathomed the principle ruling the lever.