Online, Internet Casinos Survive Only by Cheating the Gamblers
By Ion Saliu, Founder of Gambling Mathematics
Posted on June 21, 2001.
In Reply to: Gamblers report fraud in Internet gambling, online casinos - posted by Scroodge on June 21, 2001.
Online, Internet casinos employ sophisticated schemes to cheat unassuming internet gamblers. Online casinos cannot survive without cheating, fraud, rip-offs.
Lately, there is clear indication that my opinion on Internet gambling should have been expressed in grosser terms. You should know that I have received business offers from several online casinos. The offers have a common feature. I am offered at least 10% of a player for his/her lifetime! No, it is not a new form of slavery! If I refer a player to an online casino, I receive 10% of what a player gambles for as long as that player gambles at that particular casino!
There are losing streaks and there are winning streaks that's mathematics. The online casinos, however, grossly disregard probability theory. They established a law that assures very long losing streaks for the player but never for the Internet gambling establishment. If there is honesty, things should closely resemble the calculations of my probability software Streaks.
Let's take a mathematical look at the infamous 10% referral fee. Let's say a player gambles $100 at a casino. If I referred the player, I get $10. But how much does the casino expect to gain from the same player? The quick answer is over 11% of the player's betting. But why would the online casino settle for just 1% in profit, while giving an outsider 10 times as much? Maybe the casino expects to get at least 20% of a player's bankroll. That figure makes more sense. They would split the profit margin with me. Maybe they expect more than 20% in takeout, perhaps something in the neighborhood of 30%.
In fact, those outrageous bonus percentages kept skyrocketing! The bonus incentive reached 145% in 2009! It might as well go up to 200%! The gambler starts with $1000 and the online casino gives the player $2000 extra to start gambling! Read more details: Cheating or Lack of Fairness in Online, Internet Gambling, Casinos.
Now, a serious question arises automatically. What games can online casinos implement that yield 30% or just 20% in percentage advantage? The state lotteries charge an abominable 50% in house edge (HA). The lotteries are run, however, by governments. The governments are permitted many things that not permitted to mere mortals. The cyber casinos are not run by the governments. They can only offer more attractive games, as far as the percentage advantage is concerned. Those who gamble online are mostly attracted to games such as blackjack, roulette, craps, baccarat, and sports betting. The house edge at blackjack is (wrongfully considered to be) less than 1% if the player knows the so-called basic strategy. Even if a dumb player would mimic the dealer, the house edge would not be higher than 10%. The house edge at the American roulette (worse than the single-zero European roulette) is just above 5%.
Even the worst possible bet at the American roulette (the 5 number bet) is still under 8% as percentage disadvantage (to the player).
Then, when the bulk of an Internet casino business is blackjack and roulette, how can the casinos offer 10% referral incentives? The answer is obvious now. The house advantage or the percentage advantage applies to fairly random drawings. In a physical casino, the roulette spins are the result of fair randomness. The blackjack hands are the results of fair randomness. (We are not talking here of extremely rare cases of slight of hand or roulette ball manipulations.) Fair randomness may be the rule of the physical casino. It appears clearly that fair randomness is not the rule in cyber gambling space.
Who can verify fairness? Nobody, right now. Third parties may verify the software creates random number generators. The random generators may prove to be fair. Problem is, the random number generators can be and are widely used by the business software in a manner that assures profits for the casino. I wrote about it on the Lottery Gambling Analysis, Mathematics, Odds, House Edge, Fraud page; also, other posts on the 2nd BBS index page: Forum 2: Attacks, hostility from gambling authors, casinos. I also stated that even the physical casinos use crooked software at the blackjack slot machines.
I have written probably the best random number generators. I even offer the source code of the basic program: Random Numbers.
I am also aware that there are real winners at the cyber casinos. No doubt about it! The business software knows exactly how many players are playing at any given moment. The business software has an exact account of the overall profit. It must be somewhere over 20% of all money gambled. If Player X bets real big, cut him down! Find a decent player who does not try to break the house and make him a winner! Let one or two players win every day, as long as our profit margin is guaranteed (every day, or, say, every week).
Only sport betting can be fair in cyber space. The online casinos take out at least 10% no matter what. No casino can influence a game result. Of course, a problem still remains. You win, but the cyber casino will never pay you! There are such cases, but I understand they are rare (percentage-wise). I noticed something else, however. I think it happened after I released SPORTS, BELLBET, BETUS. Online bookies decreased the payouts for parlay betting. I remember the payout for an 8-team parlay was something like 150 to 1. The odds for an 8-team parlay win are 256-to-1. The house edge becomes 41.4% (150/256 = 58.6%; 100% - 58% = 41.4%). I've seen online bookies paying now 70-to-1 for an 8-team parlay! The house edge jumps to 72.7%! Stay away from such lice!
I know, there is underground sports betting everywhere in the world. Why the governments don't regulate sports betting is anybody's guessing. The governments use the prohibition policy more often than not. People will gamble illegally anyway. Actually, illegal gambling grows at a higher rate than the respective national gross product!
They have been trying recently to prohibit Internet gambling in the USA. There was another prohibition era in the U.S. history (banning alcohol). It didn't work, it caused a lot of bloodshed, now people may drink and the society still prospers. Prohibition failed. Communism prohibited just about everything. The individual had just a few non-prohibitions, such as working and making children for the society.
Communism collapsed after the Stalin generation of politicians died or retired. The Internet was prohibited to most individuals even in the most open societies. Only a few government agencies and universities were permitted access to the Internet. The generation of politicians who prohibited the Internet access to all individuals died or retired. The Internet access became a human right (although not inscribed in any constitution). The politicians who currently prohibit Internet gambling are humans. They too will die or retire. If a large group of individuals want something, they will get it. It's only a matter of time. Or retirement to warm places such as Florida or Arizona. I discovered this social law: Prohibition is caused by rheumatism.
"I received a phone call
From one who claimed was tall.
Then, he cursed me even worse
For my gambling on the horse."
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