What Is an Online Casino?

I’ve been working on a series of posts about “what gambling is,” and this latest post is the first one that specifically addresses online gambling.

The other posts touch on internet gambling as it pertains to topics like sports betting, but this is the first one where the online aspect of gambling is the central question.

A traditional, or brick and mortar casino, is just a business where you can go place bets on various casino games. These might include slot machines and video poker machines, but they usually include table games like blackjack, craps, and roulette.

An online casino offers internet-based versions of these same gambling games. They generally offer the same odds and probabilities as you’d find in a traditional casino, but sometimes the odds are even better.

Many online casinos publish information about their payback percentages, but I’m always skeptical of such numbers, and you probably should be too.

Most online casinos use software to power their games. Some also use live dealers and webcams, but even these casinos use software packages to facilitate this action.

This post contains everything you need to know about online casinos if you’re thinking about trying gambling at one.

I don’t think there’s anything wrong with playing at an online casino as long as you understand what you’re getting into from the beginning.

You can find all kinds of categorization schemes for online casinos, but at the end of the day, you’re really just looking at 2 different kinds of online casinos:

• Casinos that rely on software
• Casinos with live dealers

The casinos relying on software use random number generator programs to generate their results. When you’re dealing with slot machine games, this means that online casinos work almost exactly the same way as brick and mortar casinos.

The slot machines in these traditional casinos also use computer programs called random number generators to determine their results.

Table games, on the other hand, are another matter. Most legitimate online casinos program their random number generators to mirror the same probabilities you’d see playing such a game in a casino.

An online roulette game has 38 possible outcomes, so the probability of winning a single number bet is still 37 to 1.

Online craps games roll 2 virtual dice and give you a total based on the same bell curve that you’d find if you were using real dice.

Live dealer casinos, though, use actual dealers and real casino equipment to generate their table game results. Their slot machines are the same as other online casinos, though.

This means there’s an actual person at the other end of the webcam dealing and shuffling the cards, or rolling the dice, or spinning the roulette wheel.

Many gamblers prefer this kind of experience, although some don’t care either way.

The software packages that power the former kinds of casinos look about like you’d expect a good quality casino-based video game to look like.

Some of these casinos use different rules for their games than you might find at a real casino.

But for the most part, internet casinos offer fair games with the same kinds of odds you’d find at a traditional brick and mortar casino.

The biggest marketing tactic that most online casinos use to attract new real-money casino players is the casino signup bonus. This is an amount of money that gets credited to your account when you make your first deposit.

These bonuses come with restrictions, though, and as you’re going to see, they’re not a guaranteed path to riches at all.

An online casino bonus is usually offered as a matching percentage of your first deposit, or sometimes your first few deposits. For example, a casino might offer a 100% matching bonus of your first deposit of up to $1000.

This means if you deposit $200, you get an extra $200 added to your account. If you deposit $500, you get $500. Deposit $1000, and you get $1000.

Deposit more than $1000, and you still only get the $1000 deposit bonus.

Let’s say you have a budget for trying out a new casino, and you take advantage of one of these offers. You deposit your $1000, and the casino credits you $1000.

Now you have $2000 in your account.

What’s to prevent you from playing a couple of spins on a slot machine and a few hands of blackjack and cashing out with a big guaranteed profit?

That’s the catch.

Let’s assume that in the example above, you must wager 35 times your deposit plus bonus before cashing out. This means you’d need to make $70,000 in wagers before cashing out.

This could be 1000 bets of $70 each, or 10,000 bets of $7 each, or 1400 bets of $50 each, or any other combination you’d like. Since you’ll win some of those bets, you can make a lot of bets before losing all your money.

But is it possible to wind up with a profit after meeting your wagering requirements?
It’s possible, but to do so, you have to beat the odds.

Here’s why:

Most online casinos only count wagering on slot machines toward these wagering requirements. As most people already know, the slots have the highest house edge in most online casinos.

Calculating your expected loss on a wagering requirement is easy, too. You just multiply the house edge by the amount of money wagered.

Let’s assume you’re playing at a casino with an extremely generous payback percentage on their slot machines—we’ll call it 96%. This means the house edge is 4%. (The house edge added to the payback percentage always totals 100%.)

Your expected loss on $70,000 in action with a 4% house edge is $2800.

Since your bankroll only has $2000 in it (including the bonus), the expected value in this situation is -$800.

But now think about other casino games which have a lower house edge. Blackjack has a notoriously low edge—just 0.5% when you play with perfect strategy.

Wager $70,000 at the blackjack tables, and your expected loss is only $350.

That leaves you with $1650.

Here’s another catch that the online casino doesn’t make obvious. Blackjack bets don’t count toward your wagering requirement.

In the rare instances where they do count it, they only count 1/10 of it, which means you’d need to make $70,000 in wagers.

Now your expected loss is $3500, which is considerably more than the $2000 you started with.

Casinos, in general, don’t like advantage players. This applies to online casinos just as much as it does to brick and mortar casinos.

In the early days of online casinos, you could go bonus hunting and make a little money.

For the most part, online casino games and their brick and mortar counterparts are almost exactly the same. You will find some differences, though, which I’ll cover below:

Online blackjack is almost exactly the same, although some differences warrant mentioning.

Most online casinos offer several versions of the game, which means you need to be able to discern which options are better and worse for the players.

Also, all online casinos shuffle the deck after every deal, so it’s impossible to count cards in online blackjack.

This is even true for live dealer blackjack. They use a continuous shuffling machine to randomize the deck.

Online craps is different, but it has more to do with the feel of the game than anything else. What makes traditional craps fun in a casino is rooting for the shooter with the other players. This is what gives the game its adrenaline and excitement.

Live dealer craps gets closer to the experience of craps in a land-based casino, but it still falls pretty short. After all, you still don’t get to roll the dice yourself.

Someone else is rolling them for you by proxy. And sure, you can enjoy some camaraderie via the chat functionality, but it’s still not the same.

Online roulette isn’t too different, but most online casinos offer both European and American wheels. Why they do this, I don’t understand. I suspect they just want to remove money from the people who don’t understand the difference that much faster.

If you’re playing roulette online, always go with the European version—the one with a single zero instead of the one with a zero and a double zero. The house edge for the American version of the game is 5.26%, contrasted with the house edge for European roulette of 2.70%.

Online slot machines tend to work almost exactly like their brick and mortar counterparts. At the end of the day, they both use random number generator programs to determine their results.

They’re programmed to have a specific probability for each symbol combination of coming up, and the payouts are set so that over the long run, they’ll have a specific payback percentage.

Many of the slot machine games you enjoy at traditional casinos are now available online, especially if you’re gambling from outside the United States. You’ll also find plenty of slot machine games that are exclusively available on the internet.

Online video poker games are also almost exactly like their traditional counterparts. They use the same kinds of random number generators, and, for the most part, they use the same probabilities you’d see if you were dealing from a deck of 52 cards.

You’d think that full pay video poker pay tables would be available and common at online casinos, but they’re harder to find than you think. Still, it’s worth shopping around for good pay tables. Try to find games which offer at least a 98% payback percentage.

Other online casino games exist, too. I just listed the most popular games in the United States, but if you’re a baccarat fan, most online casinos offer that game, too. Sic bo is available at some online casinos but not at others.

Before signing up and playing for real money at an online casino, you should browse their game selection to make sure they offer the games you want to play.

Probably the biggest misconception about online casinos is that they’re all rigged and that they all cheat.

Yes, some online casinos rig their software and cheat.

But for the most part, this kind of behavior isn’t necessary on the part of the casinos.

Here’s how they’re rigged:

Each bet you make has a certain odds of winning.

The payout odds are always lower than the odds of winning.

This doesn’t mean the results aren’t completely random. It just means that over time, if you win as often as the probability says you should, you’ll still end up a loser.

Roulette is the classic example. When you bet on a single number on an American roulette wheel, your odds of winning that bet are 37 to 1.

You have 37 ways to lose and only 1 way to win. And each of those outcomes is equally likely.
But that bet only pays off at 35 to 1.

Is it still hard to understand how the casino makes a profit?

Think about a theoretically perfect set of 38 spins. Assume you bet $100 each spin. You lose 37 of those spins, which results in losses of $3700. You win 1 of those spins, which results in a win of $3500.

That’s a net loss of $200 over 38 spins, which is an average loss per spin of $5.26. That’s 5.26% of your action.

That’s called the house edge, and that’s where the casino makes its profit.

You’ll occasionally see reports of a casino that blatantly cheats. I read a report once of a player who had tracked hundreds of video poker hands and saw no winnings of any kind.

On most video poker games, you’ll win something about half the time, even if it’s only a 1 for 1 payout.

Those kinds of casinos are the exception, not the rule. Avoiding them is easy, too. Just avoid any casino that doesn’t look legit.

It’s easy to say that you should look for an online casino that looks legit.
But what does that mean?

Some things to look for on any website to indicate that the company is trustworthy include the following:

Contact information– You should easily be able to find a way to contact the business you’re dealing with. In fact, you should have at least 2 different ways to contact them—preferably more.

I like to deal with casinos which offer live chat or a toll free number. If the only way to contact them is a form which you submit to them, I think they’re too inaccessible to deal with.

Age requirements– You should easily be able to find a notification on the homepage and probably every other page of the site about the age requirements for the casino. In fact, when you sign up at an online casino, they’ll usually want some documentation from you—including your identification.

They’re trying to demonstrate that you’re legally old enough to play there. Most of them aren’t out to steal your identity. There are easier ways to commit identity theft than setting up an online casino, I promise.

About us page– You should also easily be able to find an about us page. The more robust the information on the about us page is, the better.

You probably won’t see the name, address, phone number, and head shot of the owner of an online casino company on the about page. They don’t want to make it that easy for them to get arrested by Interpol or whatever.

Licensing details– Online casinos, even those offshore casinos accepting players from the United States, are licensed and regulated somewhere.

You should easily be able to see which government is overseeing their activities. If you can’t find that information, you should think twice before signing up at such a casino.

Terms and conditions– Obviously, all online casinos have a set of rules you must agree to when you want to play games on their site.

These are especially applicable to how their signup bonuses work and what kind of wagering requirements they have. Legitimate online casinos make it easy to find such details. If those details are hard to find, think twice before signing up at such a casino.

If you spend some time on some gambling forums where online casino players hang out, you’ll learn quickly that the biggest complaint has to do with processing payouts. Shady online casinos hate paying winners. They’ll delay it with a variety of excuses.

Look for these kinds of complaints in forums when you’re considering an online casino. If you see a lot of these kinds of complaints about a casino you’re thinking about joining, skip it and move on to another casino which doesn’t generate these kinds of complaints.

An online casino is just a digital version of a traditional gambling business that you’ve probably done business with multiple times in the past. Most of them are legitimate businesses, but not all of them.

I’ve included some tips for telling the bad guys from the good guys in the post above.
For the most part, you’ll face the same odds at an online casino as you would at a traditional brick and mortar casino.

Have you ever played at an online casino? What kind of experience did you have there?