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How online casinos make money from you: what you need to know

how do online casinos make money from you

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This short guide outlines how online casinos make money from you, even when they are offering massive jackpots and bonus cash deals.

A question that will surely concern many players: How do online casinos actually make their money? After all, high sums of money are often paid out. We bring a little light into the darkness. It is impossible to say how many online casinos are available to gamblers these days. To say there are “a lot” of them sounds like an understatement, as we’re talking about thousands of options around the world for players to choose from. The competition shows that it is a hard-fought market with so many contenders, which even the casual web surfers who don’t even gamble notice when they are looking at other things on the interneet.

How it is possible, despite strong competition, that secure online casinos will generate income in 2021 and more and more startups in this industry too. A very large income, in fact. With the amount of welcome bonuses designed to attract new players with little or no wagering, it seems like online casinos are really generous with their customers. Then how do they manage to make a profit? So, how do these online casinos make their money? We shed some light on the matter…

How online casinos make money

Log on to any online casino, and you will find tempting sign up bonuses, incentives to play, and promises of bonus cash and large jackpots.  If gambling online can be so lucrative for your bank account, are the casinos making anything?  Don’t be fooled.  While it appears that online casinos are generously handing out money to their customers (and some of them truly are), they are still turning a healthy profit.  Things may not be all that they seem.

Free isn’t really “free.”

As a rule, to withdraw your winnings from an online casino, you are required to sign up with the casino and meet their minimum betting requirements.  This usually means putting up a set amount of money on your bet or wagering on a set number of games before you can claim your winnings.

Let’s face it – you’re not going to win all the time.  No matter how much skill you have, this is still gambling, and the games all hold a house edge.  The old adage of “the house always wins” applies.  Over time, gamblers lose money, and casinos win it.

So why all the “free” bonuses?  Bonus offers and sign-up rewards are bait designed to increase the number of players.  Gambling is fun and exciting, and first-time players will continue to play long after they’ve received their bonuses.  Each time the casino gains a player, they generate income.

The house edge

As mentioned above, every single casino, whether online or in-person, operates on the basis of the house edge.  The odds of games and the prices to play are built around this concept; that the casino always has an advantage.

In simple terms, the house edge is the percentage of player bets that the casino can expect to retain long-term, assuming players are skilled and succeed whenever possible.  Given that all players are not skilled and don’t always employ successful gambling strategies, the house edge is actually higher than what is stated.

House edge is based on long-term profitability.  Casinos depend on the fact that you will keep playing to try and win again.  This is what earns them a profit.

Commissions

Certain casino games, like poker, collect what’s called a “rake” at the beginning of each round.  This commission is usually a percentage of the bets placed, or sometimes a flat fee for each hand.  Profit-generation through this method can be especially lucrative for online casino operators.

Jackpots and winnings

Every online casino in Canada makes money by offering large prizes and jackpots.  We’ve all seen the million-dollar jackpots, so how do casinos profit off these payouts?  It’s all based on human psychology.  The bigger the payouts, the greater the temptation, and the more times you are likely to place a bet for a chance at winning. 

Players succumb to the lure and buy in to try their luck and win. And since the number of such players is incredibly high, a casino can easily afford to pay out the prize to a winner and still make a profit from the rest of the accumulated funds. So online casinos still earn even when large amounts of winnings are called up. It is a clear “no-lose situation” for an operator.

The entertainment factor

Aside from the casino algorithms that players don’t stand a chance against, we also have to consider a slightly more human factor. The thrill of gambling is probably one of the biggest drivers for players getting involved in casino activity. The big “unknown” is what we are looking for. For some it may be an escape from repetitive, boring everyday reality, for others it is a dose of much-needed excitement.

So the greatest driver of profits in the online casino industry is a human one.  Gambling is a thrill for most players—a chance at winning big.  And let’s be honest, it’s an escape from the repetitiveness of our daily routine.

Online casino operators know this and market their products accordingly.  While it seems deceptive, they don’t need to lie to attract gamblers.  Sometimes, losing is an inevitable part of the gambling experience.

If we gamble knowing we’re at a disadvantage, it’s hard to blame casino operators for taking our money.  The process is quite transparent.

Final thoughts

Despite knowing that the house always wins and online casinos are profit-driven, people are still signing up to online gambling sites in record numbers.  The industry is growing at a rapid pace, with new games and new casinos showing up regularly.  What once was a novelty in the casino industry has now become a unique enterprise in its own right.  We can expect more on the horizon.  Online casinos know how to hold their aces.