Would a site with a slightly negative house edge still be profitible?

[jackg]

I'm currently thinking that if someone made a dice site and had it to have a -1% house edge it could still be profitible.

When people gamble, they're either aggressive gamblers or gamblers for fun (a few botters but not so many). If there was a -1% house edge, this would attract people to your casino and they would usually get addicted to it or they'd not deposit more than they could lose. Things like the martingale strategy would still have a similar likelihood of failing too.

Am I confusing something here or is this correct?

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[NeuroticFish]

I'm currently thinking that if someone made a dice site and had it to have a -1% house edge it could still be profitible.

In theory such endeavor holds a great risk.

Usually, with a 0 edge, the overall wins should cover the overall loses and the site loses nothing (we talk about chances or infinite bets here).
If the edge is < 0 there's a chance the house will have to come with money from home.

And the house doesn't rely on luck in order to win. That would be .. strange...

[Barcode_]

There is still a chance for a casino to be profitable with a -1% house edge if most of the gamblers that plays on that casino are extremely unlucky with their huge bets, but I do not think it would make any sense for a casino owner to open a casino with a -1% house edge, since he would need to pay the expenses for the servers and he would also need to maintain the security of the site, if he is hiring a few developers to assist him on technical issues for the site, he would also need to pay those developers a salary too. If there is someone who is planning to start a casino with a -1% house edge, his chances to lose money would be obviously much more higher than earning profits from the site in the long run.

[jackg]

And the house doesn't rely on luck in order to win. That would be .. strange...

Generally the house relise on greed, in this new system, the house still also relies on greed.

There is still a chance for a casino to be profitable with a -1% house edge if most of the gamblers that plays on that casino are extremely unlucky with their huge bets, but I do not think it would make any sense for a casino owner to open a casino with a -1% house edge, since he would need to pay the expenses for the servers and he would also need to maintain the security of the site, if he is hiring a few developers to assist him on technical issues for the site, he would also need to pay those developers a salary too. If there is someone who is planning to start a casino with a -1% house edge, his chances to lose money would be obviously much more higher than earning profits from the site in the long run.

Yes but with the idea that gamblers generally get greedy and try to max out the amount that they can take from the site and doing what I suggest might make it profit from the aggressive whales we see on a lot of gambling sites already.

[SyGambler]

I'm currently thinking that if someone made a dice site and had it to have a -1% house edge it could still be profitible.

When people gamble, they're either aggressive gamblers or gamblers for fun (a few botters but not so many). If there was a -1% house edge, this would attract people to your casino and they would usually get addicted to it or they'd not deposit more than they could lose. Things like the martingale strategy would still have a similar likelihood of failing too.

Am I confusing something here or is this correct?

no it's impossible for the site to win this way
having -1% HE means that gamblers should profit 1% of what they total wagered long run
for example I can deoposit 1 BTC and run autobet at x2 betting 10K sats a bet , it's kinda impossible to bust this amount and I can easily make 10000 bets a day which should easily generate me an average of 0.01 BTC

unless gamblers tended to martingale where there is a very good chance that they will bust everything chasing what they lost , but there will be no point at all in martingaling when you already know that you have the edge and can simply just let the auto bet run

there are many smart gamblers here in the forums and you can see them competing when they see +EV promotion for example , they will kill the site with few hours ( assuming someone launched it   )

[crwth]

In my opinion, if you have a site that has a negative value of edge, making the chances of players winning higher, it would still be profitable.

We could never really test that theory, only if you have that site who has -1% edge or you could make it if you want if you are just going to test the waters. It lessens your profitability but the chances of people going to lose is almost the same. They would think that they can win more and that's their problem. If they can control their emotions, probably they can beat the site.

[jackg]

In my opinion, if you have a site that has a negative value of edge, making the chances of players winning higher, it would still be profitable.

We could never really test that theory, only if you have that site who has -1% edge or you could make it if you want if you are just going to test the waters. It lessens your profitability but the chances of people going to lose is almost the same. They would think that they can win more and that's their problem. If they can control their emotions, probably they can beat the site.

This was my thoruhgts exactly.

With the person who suggested they could make 0.01BTC from 1BTC per day, it would get a bit boring wouldn't it. And you can just imagine "Oh look dear, I've just won 0.05BTC on a gambling site..." (few days later) "Oh no, I've lost all of my 1.2BTC to this site trying to be greedy" - my imagination's no good today but you get the point.

[SyGambler]

In my opinion, if you have a site that has a negative value of edge, making the chances of players winning higher, it would still be profitable.

We could never really test that theory, only if you have that site who has -1% edge or you could make it if you want if you are just going to test the waters. It lessens your profitability but the chances of people going to lose is almost the same. They would think that they can win more and that's their problem. If they can control their emotions, probably they can beat the site.

This was my thoruhgts exactly.

With the person who suggested they could make 0.01BTC from 1BTC per day, it would get a bit boring wouldn't it. And you can just imagine "Oh look dear, I've just won 0.05BTC on a gambling site..." (few days later) "Oh no, I've lost all of my 1.2BTC to this site trying to be greedy" - my imagination's no good today but you get the point.

man you seriously think that making 0.01 BTC from 1 BTC a day boring if so then I don't know what types of investments you know that makes you 1% a day and would love to hear about them
for me if a site offer -1% HE this would be the craziest investment ever , I gave the example of 0.01 BTC profit assuming player will only wager 10K bets a day but in theory you can let the bot run all day and this will bring insane profits

it's just not possible to have -1% HE , the site will go broke in the very first day of launch

[Kakmakr]

The only way this might work is if the site is generating massive profits from some other "service" on the site, which would cross subsidize the losses that would be occurred as a direct result of the negative house edge. A typical scenario would be using AD income to subsidize the gambling losses. <Hopefully enough traffic is generated to sustain the AD income for the site> 

Freebitco.in use cross subsidizing from mining operations and also deposits from users, to fund some of it's other services that are hosted on their site. 

[Barcode_]

The only way this might work is if the site is generating massive profits from some other "service" on the site, which would cross subsidize the losses that would be occurred as a direct result of the negative house edge. A typical scenario would be using AD income to subsidize the gambling losses. <Hopefully enough traffic is generated to sustain the AD income for the site> 

Freebitco.in use cross subsidizing from mining operations and also deposits from users, to fund some of it's other services that are hosted on their site. 

I think there are a huge number of gamblers who would prefer to avoid gambling on an online casino that have a lot of ads placed around the site, as the ads could be quite distracting to some players when they are playing on the site for a long time, so I guess placing ads around the site would not be a good option for online casinos to generate extra income.

[eternalgloom]

The only way this might work is if the site is generating massive profits from some other "service" on the site, which would cross subsidize the losses that would be occurred as a direct result of the negative house edge. A typical scenario would be using AD income to subsidize the gambling losses. <Hopefully enough traffic is generated to sustain the AD income for the site> 

Freebitco.in use cross subsidizing from mining operations and also deposits from users, to fund some of it's other services that are hosted on their site. 

Yeah but freebitco.in has one of the highest house-edges of all crypto gambling sites, so I'm not sure if their other services would even be able to support a negative HE dice game.
I doubt that on-site mining operations would even support a negative -1% House Edge, plus it would definitely turn a lot of users away.

A negative house edge would just not work in the long term and counting on the addiction of your players is just a crappy thought to begin with.

[shield132]

I'm currently thinking that if someone made a dice site and had it to have a -1% house edge it could still be profitible.

When people gamble, they're either aggressive gamblers or gamblers for fun (a few botters but not so many). If there was a -1% house edge, this would attract people to your casino and they would usually get addicted to it or they'd not deposit more than they could lose. Things like the martingale strategy would still have a similar likelihood of failing too.

Am I confusing something here or is this correct?

As you said -1% house edge would attract people and make addicted <- This proposal ruins everything, hope you know what I mean
Then there was one  or two casino as I remember with 0% house edge, they weren't able to continue their business. -1% house edge won't attract so much people as you think and in reality you'll end up very bad instead of any kind of profit. Don't try this, believe me. If you have a math knowledge, then you'll understand reasons.

[Cacingkemi]

In my opinion, if you have a site that has a negative value of edge, making the chances of players winning higher, it would still be profitable.

We could never really test that theory, only if you have that site who has -1% edge or you could make it if you want if you are just going to test the waters. It lessens your profitability but the chances of people going to lose is almost the same. They would think that they can win more and that's their problem. If they can control their emotions, probably they can beat the site.

This was my thoruhgts exactly.

With the person who suggested they could make 0.01BTC from 1BTC per day, it would get a bit boring wouldn't it. And you can just imagine "Oh look dear, I've just won 0.05BTC on a gambling site..." (few days later) "Oh no, I've lost all of my 1.2BTC to this site trying to be greedy" - my imagination's no good today but you get the point.

man you seriously think that making 0.01 BTC from 1 BTC a day boring if so then I don't know what types of investments you know that makes you 1% a day and would love to hear about them
for me if a site offer -1% HE this would be the craziest investment ever , I gave the example of 0.01 BTC profit assuming player will only wager 10K bets a day but in theory you can let the bot run all day and this will bring insane profits

it's just not possible to have -1% HE , the site will go broke in the very first day of launch

The site must have a large amount of money if want profits in each player's bet,I think not all players have good luck dude there must be those who lose every day and that is known to all the dev.well but I agree its impossible cause surely it will not be long that players use the Martiangle system right.

[Betwrong]

I'm currently thinking that if someone made a dice site and had it to have a -1% house edge it could still be profitible.

When people gamble, they're either aggressive gamblers or gamblers for fun (a few botters but not so many). If there was a -1% house edge, this would attract people to your casino and they would usually get addicted to it or they'd not deposit more than they could lose. Things like the martingale strategy would still have a similar likelihood of failing too.

Am I confusing something here or is this correct?

If there are only a few users of the site, anything can happen. You can win a lot or lose a lot depending on luck. But the more users you have, or rather the more money is wagered by various bettors on your site, the closer your profit to the established house edge, which is in your case negative and equals to -1%.

For example, over 100 BTC daily wagered on PrimeDice. So you can expect losing 1 BTC with the same amount of daily visitors.

Like some posters have noted, such a site theoretically can be profitable if some big advertisers will place their ads on your site and will pay accordingly. It's not that big companies skimp on their ads. For example, Coca-Cola spends $2.7 billion a year on advertising and $5 billion on marketing and promotion outside the US. But still I can't imagine someone paying over $6.5k daily for placing an ad on a gambling site.

[avikz]

Having a negative house edge is wrong business decision. Every gambling website relies on different methods to remain profitable and house edge is one of them - even though not a major one! They can get advertisers to monetize their site traffic,  they can rely on the their algorithm to make them profitable from the games and they can do lot of other stuffs to remain profitable other than house edge.

But where house edge is one of the permissible method of earning money, why would a website loose that opportunity??

[LoyceMobile]

Please make such a site, so I can turn on a bot: 0.002 Bitcoin at any multiplier for 60 million bets.
In short: the house will lose.

[STT]

^^  That might work with a big enough bank roll to test the odds out.     I've heard of people trying to break the bank or basically clear the casino out of money on a certain game because they have a system to turn the odds in their favour.   Read a very good court case in London for this where the gamblers were arrested and lost their winnings but eventually get everything returned to them because they in theory just garnered a fair advantage, those in the business no doubt study these things like a bible because its so dangerous if a house loses its edge and even worse has no cap or limit in force.

However its slightly possible a house could compromise and maybe run adverts or some kind of other profit running enterprise.   Quite a few tech companies run a loss for years on end, the balance being they gain alot in market share and markets even support this behaviour in funding and valuation for the company and its debt while doing so.   Problem is gambling is a select market not expandable to all

[RHavar]

You have a fundamental misunderstanding of how casinos work:

Generally the house relise on greed, in this new system, the house still also relies on greed.

Casinos do *not* rely on greed, they rely on maths. With a 1% house edge, for every 100 BTC wagered on the site -- the site has an expected 1 BTC of profit. It makes absolutely no difference if people are being greedy or cautious or are bill gates, the expected value is identical.

It is simply mathematically impossible for a casino to have any expected profit *regardless* how people bet if it has a house edge of less than or equal to 0.

---

By the way, it's extremely easy to simulate being a -1% house edge casino. Just deposit your money on a dice site with a 1% edge  (e.g. primedice, bustadice, etc.)  and then treat your "balance" as your "bankroll" and simulate how your players would bet against you by placing a bet. It's exactly the same odds as running a -1% house edge casino, and will lead to the same outcome.  

[Kakmakr]

The only way this might work is if the site is generating massive profits from some other "service" on the site, which would cross subsidize the losses that would be occurred as a direct result of the negative house edge. A typical scenario would be using AD income to subsidize the gambling losses. <Hopefully enough traffic is generated to sustain the AD income for the site> 

Freebitco.in use cross subsidizing from mining operations and also deposits from users, to fund some of it's other services that are hosted on their site. 

I think there are a huge number of gamblers who would prefer to avoid gambling on an online casino that have a lot of ads placed around the site, as the ads could be quite distracting to some players when they are playing on the site for a long time, so I guess placing ads around the site would not be a good option for online casinos to generate extra income.

A lot of gamblers are not worried about the experience, because they want to win more and a negative house edge will be more important to them, than having to deal with ads. 

The only way this might work is if the site is generating massive profits from some other "service" on the site, which would cross subsidize the losses that would be occurred as a direct result of the negative house edge. A typical scenario would be using AD income to subsidize the gambling losses. <Hopefully enough traffic is generated to sustain the AD income for the site> 

Freebitco.in use cross subsidizing from mining operations and also deposits from users, to fund some of it's other services that are hosted on their site. 

Yeah but freebitco.in has one of the highest house-edges of all crypto gambling sites, so I'm not sure if their other services would even be able to support a negative HE dice game.
I doubt that on-site mining operations would even support a negative -1% House Edge, plus it would definitely turn a lot of users away.

A negative house edge would just not work in the long term and counting on the addiction of your players is just a crappy thought to begin with.

Freebitco.in is just greedy, because they could have reduced the house edge from 5% to something much lower, but they are saying that the gambling income is subsidizing the other services. I personally think a lot of the interest that are paid on the deposits are not coming from the so-called mining operation, but rather from the higher than average house edge on the site. 

A variable house edge, might be a better solution. Example : High on weekends and lower in the week. <This will draw more people into gambling during the week, when things are less busy and weekends will subsidize the lower house edge during the week> 

[LoyceV]

You have a fundamental misunderstanding of how casinos work

Over the years, I've noticed many times that the house edge remains a mystery to many gamblers. How about this as an explanation:
Imagine 1000 people all betting 1 Bitcoin once. At 1% house edge, the casino is expected to make 10 Bitcoin profit. If players are lucky, the casino will profit less, if players are unlucky, the casino profits more. On average (and that's the only thing that matters for the casino) the house wins 1% of the wagered amount.
Now imagine the same with a negative house edge: the casino loses 10 Bitcoin on average. It doesn't matter that almost half of the 1000 people lost their Bitcoin, because more than half of the users won another Bitcoin!