How Do Casinos Make Money? House Edge, Volume, and Non-Gaming Revenue

Samantha Nguyen

Samantha Nguyen

Casinos aren’t built on streaks of luck or chance encounters with a jackpot. Their revenue model relies on math, structure, and scale. Every game on the floor, every sportsbook line, and even the hotel rooms above the casino are designed with a predictable return in mind.  The concept of house edge anchors the system, ensuring […]

Casinos aren’t built on streaks of luck or chance encounters with a jackpot. Their revenue model relies on math, structure, and scale. Every game on the floor, every sportsbook line, and even the hotel rooms above the casino are designed with a predictable return in mind. 

The concept of house edge anchors the system, ensuring that across thousands of wagers, the numbers favor the operator. Still, edge alone doesn’t explain the entire business. Bet volume and non-gaming income, such as resort fees, dining, and entertainment in land-based casinos, are equally important.

Understanding these mechanics reveals why casinos grow steadily, regardless of short-term swings on the floor.

Core Casino Economics Explained

Casinos track performance through a mix of financial terms that describe how games produce revenue. Some apply mainly to slots, others to table games, but together they paint the picture of how casinos convert wagers into consistent earnings.

It doesn’t matter if you’re playing in a casino or wagering in sportsbooks and esports betting sites - you will see these concepts everywhere. The basics are easy to understand once they’re broken down.

  • House Edge: The built-in advantage for the casino in any game. It’s expressed as a percentage of each wager. For example, if a game has a 5% house edge, the casino expects to hold $5 out of every $100 bet over the long term.
  • RTP/Payback: “Return to Player” is the inverse of house edge. A slot with a 96% RTP means players can expect to get back $96 of every $100 over time, while the casino keeps $4. It reflects long-term averages, not short-term results.
  • Hold Percentage: The actual percentage of wagers retained by the casino. This number can differ slightly from the theoretical edge, depending on short-term variance and player behavior.
  • Drop/Handle: Drop refers to the cash players exchange for chips at table games. Handle is the total amount wagered, including money that cycles back into play. The handle is always larger than the drop because chips can be bet many times.
  • Theoretical Win: A projection of what the casino expects to earn from a player or game, based on house edge, volume, and betting patterns. This figure often guides loyalty program rewards and comp calculations.

How Slots Generate Revenue

Slot machines are often the biggest revenue driver in a casino. Unlike table games, which depend on dealers and player skill, slots work on predictable math tied to spin volume and programmed payback settings. The foundation is simple: the more spins players make, the closer the results align with the built-in edge.

The revenue formula for slots is usually expressed as:

Coin-in × Hold % = Theoretical Win

Coin-in is the total amount wagered, including recycled credits. Hold percentage represents the slice of each wager the casino expects to keep. Multiply these figures, and you get the casino’s projected revenue. 

Behind the scenes, manufacturers provide casinos with PAR (Probability Accounting Reports) sheets. These outline payout settings, showing how each version of a machine is expected to perform. 

Some slots also contribute a fraction of every bet to progressive jackpots. This contribution slightly reduces the base game’s RTP, but it funds headline-grabbing prizes that draw players in.

How Table Games Earn

Unlike slots, table games rely on interaction, speed of play, and rules that give the house a small but steady advantage. The formula is straightforward:

Average Bet × Decisions per Hour × Hours Played × House Edge = Theoretical Win

This calculation explains why even a slight edge multiplied across thousands of decisions generates reliable revenue.

House Edge in Table Games

Each game carries its own built-in edge. For blackjack, it depends heavily on rules—3:2 payouts for naturals, whether the dealer hits or stands on soft 17, and whether doubling is restricted. 

Roulette changes based on wheel type: European wheels with a single zero are more favorable for players than American wheels with two zeros. Rule tweaks, such as side bets, usually increase the edge and improve profitability for the house.

Skill Factor

Unlike slots, skill plays a role in outcomes. A blackjack player using basic strategy narrows the house edge to less than 1%, while casual players often give back several extra percentage points by making poor decisions. 

In games like poker-based table variants, house rules on qualifying hands or bonus bets also push the edge higher.

Sportsbook Revenue Models

Sports betting looks like a contest between gamblers and odds, but the real money lies in the margin baked into every wager. Sportsbooks don’t need to predict outcomes better than players; they only need to balance action and rely on their structured pricing.

  • Vigorish (vig): Also called juice or margin, this is the built-in fee included in betting lines. For example, a typical NFL spread might require a $110 bet to win $100. That extra $10 is the sportsbook’s cushion, ensuring profit over time if action balances.
  • Parlays: Combining multiple bets into one ticket increases the hold percentage dramatically. While payouts are higher, the difficulty of hitting every leg makes parlays a significant revenue source for sportsbooks.
  • Live Betting: In-game wagers expand betting volume by offering hundreds of rapid-fire markets during a single match. This increases total handle and magnifies the impact of vig across more decisions.

Poker Room Monetization

Poker, whether it’s land-based or in online poker rooms, stands apart from other casino games because players compete against one another rather than the house. Yet casinos still generate steady revenue by taking a slice of the action. 

The most common method is the rake, which is a small percentage collected from each pot, typically capped at a set dollar amount. Over hundreds of hands per day, rake builds into a consistent revenue stream.

Some rooms also charge time fees, where players pay a fixed amount for every half hour or hour of table time. In tournaments, casinos collect entry fees on top of the prize pool buy-in, often 10% or more. 

Even though poker is framed as a peer-to-peer contest, the casino always benefits from volume. More players, more hands, and more events translate into more rake, fees, and seat charges, all without relying on house edge.

Non-Gaming Revenue Streams in Land-Based Casinos

Casinos may be built around gambling, but a large share of their earnings comes from outside the pit and slot floor:

  • Rooms and Resort Fees: Hotel stays bring steady income, and mandatory resort fees add to the bottom line. These charges cover amenities like Wi-Fi or pool access, but they’re also a reliable revenue source regardless of gambling activity.
  • Food and Beverage: From buffets to fine dining, restaurants and bars generate consistent sales. High-margin drinks and signature dining experiences often rival casino wins in profitability.
  • Entertainment and Retail: Concerts, clubs, and shopping areas attract visitors who may or may not gamble. Retail partnerships and ticketed shows diversify revenue streams while boosting overall foot traffic.
  • MICE (Meetings, Incentives, Conferences, Exhibitions): Convention centers and event spaces keep resorts busy year-round. These gatherings fill hotel rooms, drive restaurant use, and bring in visitors who contribute to both gaming and non-gaming revenue.

Loyalty Programs & Comps

Casinos build loyalty through programs that reward repeat visits, but the rewards are never random. Every perk is tied to careful calculations of expected losses. 

The system revolves around metrics like Average Daily Theoretical, often shortened to ADT, which estimates how much a player is likely to lose in a single day based on average bet, game speed, and the house edge. 

From this projection, the casino determines a player’s theoretical loss, sometimes called “theo,” which becomes the foundation for comps.

Reinvestment is the next step. Casinos typically return between 20 and 30 percent of a player’s theoretical loss in rewards, striking a balance between generosity and profitability. These comps may take the form of free meals, hotel stays, show tickets, or cashback offers. 

Controls Against Advantage Play

Skilled players sometimes look for ways to tilt the math in their favor. Techniques such as card counting in blackjack or exploiting promotional offers are known as advantage play. While not illegal, these practices cut into revenue and can lead casinos to adjust their rules.

One common response is tightening blackjack conditions. Shifting from a 3:2 payout on naturals to 6:5, requiring dealers to hit on soft 17, or limiting doubles and re-splits all increase the house edge. 

Side bets, often with much higher margins, are another tool to offset potential losses from skilled play. On the promotional side, casinos add terms and conditions to free play or bonus offers to prevent repeated exploitation by advantage players.

Transparency & Safety

Casinos rely on player trust to keep games running smoothly, and regulators require operators to provide transparency around returns and fairness. Beyond the numbers, modern casinos offer responsible gambling tools, which balance entertainment with safeguards.

Return Disclosures

Slot machines are programmed with specific RTP settings, and many jurisdictions mandate public disclosure of these figures. In some regions, players can view average payback percentages for each casino, offering insight into how much money is returned to bettors over the long run.

Casino Safety and Player Protections

Security on the floor and in digital spaces protects both the operator and the gambler. Surveillance, licensing, and independent audits verify that games function as intended. Online, certifications from testing agencies confirm that random number generators operate fairly.

Why Systems Can’t Beat the House Edge

No betting system can overturn the structural math built into games. Strategies like Martingale or “hot streak” chasing create the illusion of control, but over time, the house edge reasserts itself. Responsible gambling education helps players understand this reality and play within safe limits.

The Predictable Math Behind Casino Profits

Casinos may look like places of chance, but their business runs on certainty. From house edges on the floor to resort fees in hotel towers, every revenue stream is carefully structured to deliver reliable returns over time. Rules, pace of play, and reinvested comps all feed into a system where math outweighs luck.

The lesson is simple: casinos thrive not because every spin or hand favors them, but because across millions of decisions, small advantages add up. Players might walk away winners on any given night, yet the overall model always favors the house. 

Understanding how these mechanisms work doesn’t remove the edge, but it does give players insight into why casinos stand as some of the most durable businesses in entertainment.