Where are the $2 tables?

Apr 30, 2002 3:18 AM

You come to a casino with $200, maybe $300. You’ve read books and have gained great insights from this column over the years. You know how to play whatever game you choose. You’re ready to roar.

There’s only one problem. You can’t find a table that will accept wagers under $15. And you know your bankroll can’t sustain bets this high unless you start lucky and stay lucky. Very lucky.

Why are $2 and $5 tables relics of history? Some cynics contend that the house edge will crush most players anyway, so high thresholds run more grist through the mill by busting patrons quickly and making room for fresh money. Others plot to KO unwary suckers early, tempting them to sneak over to the cash advance or credit card terminals and draw out more funds.

The real reason is more straightforward. Unlikely as it may seem, casinos can’t cover their operating expenses on low limit tables. It’s easy to misjudge a joint’s earning power by picturing the solid citizens who lose their entire stakes, while forgetting that a few win big, and a moderately large number quit with modest gains. Casino profits are actually driven by small statistical edges in the games. Multiply edge by the amount bet over a period of time to get gross proceeds, then deduct the cost of doing business to determine the net. The figures fall smoothly into place.

Here’s how this works for blackjack. Say a casino has a $5 table. It will almost always be crowded, making it look like a gold mine. But look closer. With six players, the dealer should spread 60 rounds per hour. Assume that some players bet $5, others more, so the average is $10. This is $60 per round or $3,600 per hour. If everyone played good Basic Strategy, the edge would be under 0.5 percent. Nowadays, hardly anybody plays worse than 1 percent, so 0.75 percent is a reasonable norm. At this level, the house expects to gross 0.75 percent of $3,600 or $27 per hour.

Of course, gamblers want free drinks at the table. And they think $200 buy-ins entitle them to at least the all-you-can-eat buffet. Such amenities are typically worth a third of the take, dropping the net to $18. Dealers have to be paid, as does everyone from porters through pit and shift bosses, all the way to the top. Then there’s a share of the utility bills, amortization of space occupied by the game, and taxes. If you knew how to cover all this for under $18 per hour, you wouldn’t be trying to find $5 tables; you would be running the place that had ’em.

Most table games have a higher edge than blackjack. So a casino could conceivably eke out a profit at $5 with offerings like Caribbean Stud, Let It Ride, and Three-Card Poker. In these games, however, a $5 minimum requires players to start with or be prepared to wager $15 per round. And a $100 or $200 gambling budget is too small to absorb the normal downswings.

  Roulette is another candidate for $5 action. But it’s slow, 30 or 40 decisions per hour, which suppresses a casino’s gross per unit time. Further, few players have the patience to keep betting $5 on even-money propositions because they can’t usually earn enough to be satisfied. An alternative is to make five $1 "inside" bets, say on five or 10 numbers. Hits then pay more, but are less apt to occur, and a run of misses can steadily dissipate reserves.

  Is there a solution to the dilemma? Rule variations could give casinos a higher return multiple and make it feasible for them to offer low-limit games. Blackjacks paying 6-to-5 or even-money instead of 3-to-2, for example, would raise the edge against a typical player from 0.75 to over 2 or 3 percent, respectively. Would you trade higher edge for a game at a lower limit? How about tables with no free drinks or comps? You might accept this ignominy if you were a winner. But if you played for a few hours at $5 and lost your $200, wouldn’t you feel the casino owed you supper? The puzzle is no less perplexing for the casino bosses than for you.