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Why Do Casino Side Bets Feature Such High House Edges?

why-do-casino-side-bets-feature-such-high-house-edges?

Side bets are a good way to add more excitement to table games. They offer large payouts that can sometimes be worth thousands of times more than your bet.

The big catch to side wagers, though, is that they feature really high house edges. In some cases, you’ll be facing over a 15% house advantage!

Any wager that falls near this figure is no doubt a sucker bet. So why do casinos offer bets this bad to begin with?

As you can read below, casinos have several reasons for attaching high house edges to side bets. You’ll also find out if there are any times when side wagers are actually worthwhile.

Common House Edges on Side Bets

Many different table games feature side wagers. Therefore, the house advantage on these bets can vary quite a bit from one game to the next.

I’ll go through a few of the popular side bets and come up with a consensus on the general house edge. Here’s a look at various side wagers along with their figures:

  • Hi-Lo (blackjack) = 2.08% house edge
  • Pai Gow fixed jackpot = 2.21%
  • Lucky Bonus (baccarat) = 2.34%
  • Dragon Bonus (baccarat) player hand = 2.65%
  • Royal Match (blackjack w/ one deck) = 3.78%
  • 21+3 (blackjack) = 4.14%
  • Fortune Bonus (Pai Gow) = 5.69%
  • Perfect Pairs (blackjack) = 5.79%
  • Under 13 (blackjack) = 6.55%
  • Dragon Bonus (baccarat) banker hand = 9.37%
  • Over 13 (blackjack) = 10.07%
  • Panda 8 (baccarat) = 10.18%
  • High Streak (blackjack) = 16.74%
  • Matching Dragon (baccarat) = 16.99%
  • Lucky Ladies (blackjack) = 17.60%

Taking the average of these wagers, you’ll be facing a 7.75% house edge with the average side bet. These bets don’t fare well compared to the average casino game’s house advantage.

Of course, the bets listed above don’t form a complete picture on every side wager in existence. However, they collectively provide an idea on what you’re up against.

Reasons Why Side Wagers Are So Unfavorable

You can see that side bets aren’t the greatest long-term propositions. Here are the main reasons why these wagers are so much worse than common casino bets.

Many Players Are Unaware of the House Edge

A big reason why casinos can get away with featuring such unfavorable wagers is because the average player doesn’t even realize it’s happening.

Gamblers often get into casino games like baccarat or blackjack because they love the basic gameplay. After a while, though, they might feel like experimenting with any available side bets.

The only problem is that the average gambler doesn’t do any research on these wagers. They simply place a side bet because it’s cheap and something new.

Jackpot Effect

Slot machines are of the few games in the casino that can feature house edges as high as side bets. Unlike with the latter, many players fully realize that slots can quickly take their bankrolls.

They spin the reels anyways in search of a jackpot. They’re willing to bet dollar after dollar in hopes that they’ll get lucky and win thousands or even millions of dollars.

Not too many side bets offer jackpots worth $1 million—although it can happen. But many of them offer large payouts that, to table-game players, feel like jackpots.

If a gambler sees that they stand to win $5,000 for every dollar wagered, they’re less likely to worry about the house advantage.

Operator Licensing Fees

Some side bets been developed and patented by third parties. In certain cases, inventors/companies own the rights to entire casino games, such as Caribbean stud or Let It Ride.

In any case, casinos need to pay licensing fees to the owners of relevant side bets/games. These fears make it harder to pull in profits.

Therefore, the house needs a larger edge to ensure that the given games are profitable. After seeding a jackpot in Caribbean stud, for example, the casino may have up to a 30% advantage or more.

Whatever the situation, gambling establishments need to take all costs into consideration. They may need over a 5% house edge to make money with a certain bet/game.

When Are Side Bets Worthwhile?

You don’t always have to overlook side wagers. In fact, they can even be worth placing in the following scenarios.

The House Edge Is Low

Most side bets feature too high of a house advantage for them to be worthwhile. A select few wagers, though, don’t carry very high house edges.

Here’s a recap of some of the best side bets:

  • Hi-Lo bet (blackjack) = 2.08% house edge
  • Pai Gow fixed jackpot = 2.21%
  • Lucky Bonus (baccarat) = 2.34%
  • Dragon Bonus (baccarat) player hand = 2.65%
  • Royal Match (blackjack w/ one deck) = 3.78%
  • 21+3 (blackjack) = 4.14%

The Jackpot Is Offering High EV

Jackpot side bets can feature really high house edges in the beginning. This is the point when casinos seed the progressive jackpot and need to ensure that they recoup their contribution.

However, progressive jackpots offer more expected value (EV) as they grow. Gamblers contribute to the growing jackpots and, thus, improve the theoretical value.

Given that the odds behind each table game are fully known—unlike with slot machines—you can actually calculate the point at which jackpots will offer positive EV.

Here’s a look at the jackpot breakeven points for different table games:

  • Caribbean stud (Real Time Gaming) = $201,245
  • Poker Ride (Microgaming) = $218,047
  • Jackpot Deuces (Microgaming) = $53,982
  • Progressive Blackjack (WGS) = $285,951
  • Let’em Ride (Real Time Gaming) = $201,245
  • Progressive Baccarat (Playtech) = $537,032
  • Roulette Royale (Microgaming) = $760,501

Of course, you don’t necessarily need to wait until the breakeven point or beyond. But you should at least play for jackpots that have grown somewhat so that you’re getting more theoretical value.

You Only Occasionally Place Side Bets

Deciding on whether or not to place a side wager isn’t life-threatening. If you find that making side bets adds to your experience gambling in a casino, then you should by all means go for it.

You might especially do so when taking a disciplined approach to the matter. Assuming you only place a side bet here and there, you won’t face as much risk over time.

A good plan might be to only place side wagers once every 3-5 hands. You’ll be able to carry out this plan cheaply if the side bets are only $1.

Should You Make Side Bets?

Side wagers aren’t always the worst things in gaming. They’re especially not so bad when the house edge is reasonable.

You can place a baccarat Lucky Bonus or Dragon Bonus with confidence because they feature 2.34% and 2.65% house advantages, respectively.

You might also consider looking for progressive jackpots that have gained considerably in EV. While you may not actually hit a big jackpot, you’ll at least be playing for more valuable-prizes in case you do win.

Of course, there are many situations where side bets aren’t worth your time or money. The vast majority of these wagers carry ugly house edges. You never want to place a bet that features a 10% house advantage or higher.

That said, you should research any side bet before placing it. This way, you’ll know the house advantage ahead of time and if the wager is worth making.

In the case of jackpot side bets, you should know the breakeven mark and how close a progressive prize is to reaching that point.

Conclusion

Casinos have various reasons for offering unfavorable side bets. Most notably, they need to pay licensing fees on some of these wagers or even entire games.

Of course, gaming establishments have also found that they can get away with featuring higher house edges in some cases. The average player isn’t paying attention and will make these bets anyways.

If you’re paying attention, though, then you can avoid falling into this trap. With a little knowledge, you can even place the most-favorable side beds and enjoy high RTP while chasing big prizes.

Michael Stevens

Michael Stevens has been researching and writing topics involving the gambling industry for well over a decade now and is considered an expert on all things casino and sports betting. Michael has been writing for GamblingSites.org since early 2016. …

View all posts by Michael Stevens

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