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What Is an Online Casino?
I�ve been working on a series of posts about �what gambling is,� and this latest post is the first one that specifically addresses online gambling.
The other posts touch on internet gambling as it pertains to topics like sports betting, but this is the first one where the online aspect of gambling is the central question.
Online casinos are probably the most common type of internet gambling you�ll find. Online poker and sports betting are both also popular, although poker�s popularity on the internet has now been on the decline for years.
A traditional, or brick and mortar casino, is just a business where you can go place bets on various casino games. These might include slot machines and video poker machines, but they usually include table games like blackjack, craps, and roulette.
An online casino offers internet-based versions of these same gambling games. They generally offer the same odds and probabilities as you�d find in a traditional casino, but sometimes the odds are even better.
Many online casinos publish information about their payback percentages, but I�m always skeptical of such numbers, and you probably should be too.
Most online casinos use software to power their games. Some also use live dealers and webcams, but even these casinos use software packages to facilitate this action.
This post contains everything you need to know about online casinos if you�re thinking about trying gambling at one.
I don�t think there�s anything wrong with playing at an online casino as long as you understand what you�re getting into from the beginning.
The 2 Main Kinds of Online Casinos
You can find all kinds of categorization schemes for online casinos, but at the end of the day, you�re really just looking at 2 different kinds of online casinos:
- Casinos that rely on software
- Casinos with live dealers
The casinos relying on software use random number generator programs to generate their results. When you�re dealing with slot machine games, this means that online casinos work almost exactly the same way as brick and mortar casinos.
The slot machines in these traditional casinos also use computer programs called random number generators to determine their results.
Table games, on the other hand, are another matter. Most legitimate online casinos program their random number generators to mirror the same probabilities you�d see playing such a game in a casino.
For example, an online blackjack game is just a video game where the RNG (random number generator) has just been programmed to determine numbers just like it would if you were using a 52-card deck of cards.
An online roulette game has 38 possible outcomes, so the probability of winning a single number bet is still 37 to 1.
Online craps games roll 2 virtual dice and give you a total based on the same bell curve that you�d find if you were using real dice.
Live dealer casinos, though, use actual dealers and real casino equipment to generate their table game results. Their slot machines are the same as other online casinos, though.
This means there�s an actual person at the other end of the webcam dealing and shuffling the cards, or rolling the dice, or spinning the roulette wheel.
Many gamblers prefer this kind of experience, although some don�t care either way.
The software packages that power the former kinds of casinos look about like you�d expect a good quality casino-based video game to look like.
Some of these casinos use different rules for their games than you might find at a real casino.
But for the most part, internet casinos offer fair games with the same kinds of odds you�d find at a traditional brick and mortar casino.
Online Casino Signup Bonuses and Promotions
The biggest marketing tactic that most online casinos use to attract new real-money casino players is the casino signup bonus. This is an amount of money that gets credited to your account when you make your first deposit.
These bonuses come with restrictions, though, and as you�re going to see, they�re not a guaranteed path to riches at all.
An online casino bonus is usually offered as a matching percentage of your first deposit, or sometimes your first few deposits. For example, a casino might offer a 100% matching bonus of your first deposit of up to $1000.
This means if you deposit $200, you get an extra $200 added to your account. If you deposit $500, you get $500. Deposit $1000, and you get $1000.
Deposit more than $1000, and you still only get the $1000 deposit bonus.
Let�s say you have a budget for trying out a new casino, and you take advantage of one of these offers. You deposit your $1000, and the casino credits you $1000.
Now you have $2000 in your account.
What�s to prevent you from playing a couple of spins on a slot machine and a few hands of blackjack and cashing out with a big guaranteed profit?
That�s the catch.
Online casinos are wise to this line of thinking, and they now have wagering requirements. Often these wagering requirements take the form of a multiple of your deposit plus bonus that you must wager before being allowed to cash out.
Let�s assume that in the example above, you must wager 35 times your deposit plus bonus before cashing out. This means you�d need to make $70,000 in wagers before cashing out.
This could be 1000 bets of $70 each, or 10,000 bets of $7 each, or 1400 bets of $50 each, or any other combination you�d like. Since you�ll win some of those bets, you can make a lot of bets before losing all your money.
But is it possible to wind up with a profit after meeting your wagering requirements?
It�s possible, but to do so, you have to beat the odds.
Here�s why:
Most online casinos only count wagering on slot machines toward these wagering requirements. As most people already know, the slots have the highest house edge in most online casinos.
Calculating your expected loss on a wagering requirement is easy, too. You just multiply the house edge by the amount of money wagered.
Let�s assume you�re playing at a casino with an extremely generous payback percentage on their slot machines�we�ll call it 96%. This means the house edge is 4%. (The house edge added to the payback percentage always totals 100%.)
Your expected loss on $70,000 in action with a 4% house edge is $2800.
Since your bankroll only has $2000 in it (including the bonus), the expected value in this situation is -$800.
But now think about other casino games which have a lower house edge. Blackjack has a notoriously low edge�just 0.5% when you play with perfect strategy.
Wager $70,000 at the blackjack tables, and your expected loss is only $350.
That leaves you with $1650.
Here�s another catch that the online casino doesn�t make obvious. Blackjack bets don�t count toward your wagering requirement.
In the rare instances where they do count it, they only count 1/10 of it, which means you�d need to make $70,000 in wagers.
Now your expected loss is $3500, which is considerably more than the $2000 you started with.
This holds true for every game in the casino. If the odds are good enough that the bonus would make for a positive expectation, you don�t get to play the game. If you are allowed to play the game, the wagering on such games is discounted to prevent you from getting an edge.
Casinos, in general, don�t like advantage players. This applies to online casinos just as much as it does to brick and mortar casinos.
In the early days of online casinos, you could go bonus hunting and make a little money.
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