Let’s fight against lower paybacks on blackjack

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For the last couple of years, I’ve received the American Gaming Association’s SmartBrief daily newsletter. I don’t get a chance to read it fully every day, but I try to skim the headlines to see if there is anything of particular interest.

Much of the news has to do with casino/gaming legislation, casino construction and casino management. Sometimes, there is something more game related, which is what caught my eye today.

The main headline blurted out “South Dakota gaming commission OKs lower blackjack payouts.” This was too compelling of a title to pass up.

Over the years, in the Midwest gaming commissions had to be convinced to increase paybacks. If you go back 15 or 20 years, the payback on video poker machines in the Midwest was atrocious. With Las Vegas offering 99.5%-and-up paybacks and most of the rest of the country far less, it was what led my father to call Las Vegas “Video Poker Heaven.”

Over the years, these other jurisdictions came to realize they can make a lot more money by giving the players a fighting chance. So, a headline that declared a Midwest gaming commission was lowering paybacks seemed odd.

It also seemed rather odd because while most states do have some minimum payback that must be offered on all games, blackjack is not usually one that comes anywhere near that. Generally known for being one of the best paying games in the casino, I simply had to read further to find out what was going on.

As it turns out, South Dakota had approved lowering the payback for a blackjack to 6 to 5 (from the customary 3 to 2) on single-deck games in Deadwood. I was surprised to find out that before this it was not allowed at a regulatory level, but this was hardly huge news given a sizeable number of blackjack tables in Las Vegas have been paying 6 to 5 for years.

What I found most interesting was the reaction, according to the article, of two of the area casinos and two players to this news. One casino, which apparently requested the change, stated they needed it due to declining profits and revenues. Their players had been asking for single-deck games.

For those who know blackjack, single-deck games offer the slimmest of house advantages to the player who knows the right strategy. On the other side of things, the second casino said that they would never do this to their patrons, not even on single-deck games and that they would continue to offer 3 to 2 blackjack.

Apparently, these casinos are pretty close to one other (I claim no expertise in South Dakota geography). My initial reaction was to wonder how do I short the first casino’s stock and buy the second casino’s stock. After all, if two casinos are that close and one is offering 6 to 5 blackjack and the other is offering 3 to 2, who in their right mind is going to play 6 to 5?

In the simplest of terms, a blackjack occurs about once in 21 hands. This means on average you should be getting about 1.5 to 2 of them per hour. So, if you’re a $5 player, this means instead of winning $7.50 per blackjack, you only get $6. The casino will keep an extra $2.25 to $3 of your money per hour. Assuming, you play properly, you would normally lose only about 70 cents an hour playing $5 single-deck blackjack. That just increased fourfold due to this rule change.

One of the ironies about a change like this is that casinos claim to make it because they fear Experts playing single-deck blackjack at “full-pay,” which can be about 99.75% or so (depending on the exact rule set). So, they increase the house advantage about 1.4% by paying only 6 to 5.

This makes the game pay about 98.35% and pretty much chases away all the experts they were scared of in the first place. While strong blackjack players love to play single-deck blackjack because of its high payback, they would rather play 6-deck blackjack paying 3 to 2 than single-deck paying 6 to 5.

Given this, it would seem to be absolutely crazy for one casino to pay 6 to 5 for single-deck while there are any 3 to 2 single-deck games anywhere in the area. Or is it? The article goes on to cite one player who said he fully understands the impact of the lower payout but wouldn’t go searching casinos for the best payout. Obviously, this player has never read any of my columns!

If players are going to have this attitude, then who can blame a casino for lowering the paybacks of their games? I don’t like the fact casinos do this. I think in the long run it will not benefit them. But, then again, if players are just going to sit there and take it, instead of taking their business across the street, or across town, who wouldn’t do what the casinos are doing? If a movie theater could double the price of their tickets without losing any customers, who would fault them?

The only way to stop the casinos from lowering paybacks is to stop playing games with the lower paybacks. It worked 15 years ago and turned most of the country into Video Poker Heaven.

Don’t let complacency allow the casinos to turn back the clock.

Elliot Frome is a second generation gaming analyst and author. His math credits include Ultimate Texas Hold’em, Mississippi Stud, House Money and many other games. His website is www.gambatria.com. Contact Elliot at [email protected].

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About the Author

Elliot Frome

Elliot Frome’s roots run deep into gaming theory and analysis. His father, Lenny, was a pioneer in developing video poker strategy in the 1980s and is credited with raising its popularity to dizzying heights. Elliot is a second generation gaming author and analyst with nearly 20 years of programming experience.

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