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From Chapter 4: Earlier we said that casinos can increase the Expected Hold on their live games by hiring proficient dealers and by making sure that players are treated hospitably. Another way that casinos can increase the Expected Hold on their live games is by making rule changes that increase the House Advantage. However, casinos that increase their House Advantage run the risk of fewer players and fewer wagers. This can happen when players realize that the cost of playing has just increased, because their bets are at a new and greater disadvantage.
Indeed, a casino that increases its House Advantage could be compared to a department store that increases the price of its products. The store that increases prices will achieve greater earnings on the products it sells. However, the store is likely to sell fewer products, as customers hunt elsewhere for better deals. Similarly, the casino that raises its House Advantage will achieve greater earnings on the bets that players make, but is likely to get fewer bets. Greater earnings on each bet means that a casino's Expected Hold will increase, but fewer bets mean that a casino's Drop will decline. Thus, an increase in the House Advantage should result in a greater Expected Hold for a casino, but a smaller Drop, while a decrease in the House Advantage should produce a smaller Expected Hold, but a larger Drop. Casinos that change their House Advantage do so in an attempt to achieve the best balance between the Drop and Expected Hold to maximize profitability. An example of this occurs in the game of craps...
Indeed, a casino that increases its House Advantage could be compared to a department store that increases the price of its products. The store that increases prices will achieve greater earnings on the products it sells. However, the store is likely to sell fewer products, as customers hunt elsewhere for better deals. Similarly, the casino that raises its House Advantage will achieve greater earnings on the bets that players make, but is likely to get fewer bets. Greater earnings on each bet means that a casino's Expected Hold will increase, but fewer bets mean that a casino's Drop will decline. Thus, an increase in the House Advantage should result in a greater Expected Hold for a casino, but a smaller Drop, while a decrease in the House Advantage should produce a smaller Expected Hold, but a larger Drop. Casinos that change their House Advantage do so in an attempt to achieve the best balance between the Drop and Expected Hold to maximize profitability. An example of this occurs in the game of craps...
