Two Casinos Just Made A Tiny Rule That Massively Hurts Blackjack Players

An apparently tiny rule change at two casinos in Las Vegas will have pretty serious negative consequences for gamblers. reported that the Las Vegas Sands company just changed their payout rules for blackjack at the Venetian and Palazzo casinos in a way that greatly hurts players’ chances of coming out ahead.

In blackjack, players receive two cards and then decide if they want to hit and get more cards, or stand and use the cards they already have. The goal is to get a higher score than the dealer, based on the values of the cards, without going over 21. Should you do this, you get a payout of 1 to 1 — you win as much money as you bet.

A special situation happens when the first two cards dealt are a 10 and an ace valued at 11, adding up to 21 right away, a situation called a natural blackjack. In this case, the standard payout, and the old rule at the Venetian and Palazzo, is 3 to 2. This means that if someone bets $US10, they will win $US15 when getting a blackjack.

Now, at blackjack tables at the Venetian and Palazzo, the payout for a blackjack has been reduced to 6 to 5 — that ten dollar bet now just wins $US12 instead of the standard $US15.

This seems like a small change, but it has a pretty serious impact on the game. Natural blackjacks are not completely uncommon — about one in twenty hands will come up with a natural 21. The rule change means that the casinos will be paying out quite a bit less money.

In the terms of the industry, the rule change greatly increases the “house edge”. This is how casinos make their money — games are set up to be slightly unfair to players in the long run, paying out a little bit less in total than what they take in.

The house edge is usually expressed as a percentage — a house edge of 2% for a game means that, on average, for every $US100 in bets made by players on that game, the house will pay out $US98 to winners and keep $US2.

Using this handy blackjack house edge calculator from gambling analysis site Wizard of Odds, we can see what will happen to players at the Venetian and Palazzo with the new rules.

Here is the output from the calculator using a fairly standard set of Las Vegas blackjack rules, using the standard 3 to 2 natural blackjack payout:

Note that in this case the house edge, if a player is following the strategy that maximizes her chances of winning, is just 0.403%, and in a more realistic case where a player makes a few mistakes, the edge is 0.426%. For every thousand dollars wagered, the casino will take about $US4.

Now, we use the same set of rules, but with the 6 to 5 payout:

This is dramatically worse for the players. The house edge with a perfectly playing gambler is now 1.76%, with a realistic house edge of 1.79%. Now for every thousand dollars wagered, the house is taking almost $US18 — more than four times as much as with the standard blackjack payout.

This makes playing blackjack at the Palazzo and the Venetian a far less attractive proposition — players have much worse chances of coming out ahead at the end of the day. Fortunately, gamblers in Las Vegas will still be able to find ample casinos that still have the standard payout for a natural blackjack, making the cost of playing far lower.

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