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Licensing fees factor into side bet profitability

Licensing fees factor into side bet profitability

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A shuffle through the Gaming mailbag:

Q. I was playing video blackjack and the machine offered three side bets: 21 + 3, Lucky Ladies and Lucky Lucky. I'd seen 21 + 3 and Lucky Ladies before, but didn't know Lucky Lucky.

Later, I was playing at a live blackjack table, and there were no side bets offered. I got into a conversation with the dealer and asked why the bets weren't at the table. She said those decisions were above her pay grade. They sometimes had side bets, and she said 21 + 3 was there for some time. But on that day, they didn't have any working.

Do you have any idea why they wouldn't have side bets? It seems like there's a chance for the player to win a bigger payoff than on blackjack while giving the house more action and presumably more profit.

A. Older games such as blackjack, craps, roulette and baccarat are in the public domain, but casinos must pay licensing fees to put side bets on their tables.

The side bets must earn their keep. If they don't make enough money to pay the licensing fee and give the house a profit, they won't last. Further, the revenue they earn must come from attracting extra wagers. If a blackjack table with a $20 average wager adds a side bet and the average remains at $20, now divided between blackjack and side bet, casino operators will be disappointed.

Side bets invariably have higher house edges than the main game, so many blackjack regulars will steer clear of the extra wager. Those who play eventually notice the side bets are draining bankrolls faster than sticking to the main game, so they stop playing.

That leaves game developers walking a tightrope between offering a house edge small enough to keep players coming back for more and high enough to give operators the return they want.

The 21 + 3 wager seems to have hit a sweet spot with a 3.24 percent edge that's lower than most side bets but attracted enough action to keep the bet on tables a long time. Lucky Ladies also has been popular but is available in several pay tables with edges ranging from 5.19 to a whopping 30.05 percent. Lucky Lucky's edge was only 2.56 percent in its original pay table, but others are available with edges ranging up to 12.60 percent.

Q. Why do you have to pay a commission when you win on banker in baccarat? Is it because you're betting with the house? Why don't you have to pay a commission on player?

A. There is no house hand in baccarat, and there is no betting on the same side as the house. Both banker and player are options designed for bettors. You could call them "Hand A" and "Hand B" just as easily. The house wants an edge on both0

However, the hit and stand rules are set up so they will lead to the banker hand winning a majority of decisions. With no commission, banker would be a profitable option for bettors and a drain on house resources.

Per 100 hands, banker wins 45.86, player wins 44.62 and ties win 9.51. If you bet $10 banker on each hand, the average result for 100 hands -- a $1,000 risk -- is that you'd keep $95.10 by pushing on ties, and keep $458.60 and win $458.60 on winning banker bets. Your total is $1,012.30, a $12.30 profit.

Rather than offer a bet with a built-in bettor edge, the house charges a commission on winning banker bets.

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