How Does a Casino Make Money?

Flashing Lights
Slot machines are known as the one-armed bandits. They seem like such fun devices that can cost you as little as a penny to play, although most are at least a quarter per pull. The ringing buzzers, the flashing lights, the large jackpot flashing on top--they can be so alluring. The next thing you know, you still haven't hit that jackpot but you've burned $25 in quarters in less than 30 minutes. It's no wonder that casinos can make money at that rate!
Casino Attractions
One thing about Las Vegas is that if you don't like Las Vegas you can turn the corner and be in an entirely different city or country. Paris. New York. Italy. Casinos sometimes take on a specific theme to attract visitors. The MGM Grand boasts having a large part of its lobby devoted to housing live lions. As you gaze in amazement that there are real lions looking at you, you can hear the bells go off in a nearby slot machine room. The Bellagio Casino spouts an awe-inspiring outdoor fountain show every few minutes all day and all night. By having such large and diverse attractions, casinos can rake in gamblers by the thousands. It must work because according to a Christiansen Capitol Advisers study, casinos raked in $31 billion in 2005.
Comforts of Home
Speaking of gamblers, they tend to not want to go very far to take care of basic necessities such as sleeping and eating. If a gambler can get something cheaper and keep more money in his pocket, he'll find a way. Casinos are hip to this. They offer special membership cards that can give you "free" room and board if you win certain amounts of money at their tables. Or they offer buffets so grand and inexpensive that you can have virtually whatever you want in one stop. And why find a corner to bet on a closed-circuit boxing match when you can watch it live at the Mandalay Bay?
But casinos know that in the long run, the math is in their favor. It's no problem to offer the chance of winning a free $89 room for a night to a gambler who has probably spent $4,000 getting to that point, or a $15 buffet that would be worth $35 somewhere else if the gambler will eat quickly and get back to those $5 blackjack hands for the next 2 hours.
Back to the Basics
But the main way a casino makes money is through gambling itself. Many gambling states have enormous tax rates that compensate for all the manpower spent in providing energy and security to casinos. But casinos rake in more than enough as long as there are significantly more losers than winners. Casinos need a few winners to make more people think they can join them; instead, most gamblers succumb to the true odds of casino games that heavily favor the house, like slot machines and roulette. Casinos refer to this as "the edge." If you play on a $1 slot machine, the house will take in, on the average, 8 percent of all pulls. If there are 200,000 pulls on all the $1 machines, the house makes $16,000. That's a lot of money for one game. You would think that the nickel slot machine would be in your favor, but the house edge on that is 15 percent!
As long as there are people who like to gamble for long periods of time and in great numbers, the casinos will stand to make money.