A couple of weeks ago I discussed methods used by game
developers to create a house advantage.
I realized that I left off two common one. They are somewhat related as the second one
was created in attempt to get rid of the first.
The first method is called taking a commission, which I've generally
thought of as a misnomer, because it only applies to winning bets. In the games of Pai Gow Poker and Baccarat,
certain wagers pay a 5% commission when they win. Another way of looking at this is that the
Player is paid 19 to 20 for a winning wager, which I think is more
accurate. Commissions, to me, are paid
on a wager, not on a winning wager. If
you pay a commission to a real estate agent, you don't pay it if you get a good
deal or only on your profit, you pay it when your house sells - on the gross
sales price.
If you wager $20 and you lose, you lose $20. If the wager pushes, you get your full $20
back. If you win, you get $39 - your $20
plus the $19 you win. So, in reality,
you're simply making a wager that pays a little less than even money. In Pai Gow Poker, this applies to the base
wager. A mechanism such as this must be
used because the only other advantage that the House has is that it wins hands
that are copies. But, with a 2-card hand
and a 5-card hand, ties are not that common.
While this provides some advantage to the house, it simply isn't enough. So, they pay 19 to 20 for winning hands. At first glance, this might seem to create a
2.5% house advantage because the Player and Dealer win nearly the same number
of hands. However, since it is paid
only only wins and about 42% of all hands finish as pushes, we find that it
really only generates a little under a 1.5% house edge. When combined with the house edge generated
by the house winning copies and the overall house edge is about 2.73%. This is offset somewhat if the Player chooses
to act as the banker which provide an edge for the Player. But, I'll save that for another day.
In Baccarat, the Player has the option to wager on either
the Player or the Banker hand. In
reality, it is more like Hand 1 and Hand 2 because no hand really belongs to
the Player if you can wager on the other hand.
Based on the drawing rules used in Baccarat, the Banker hand has a small
advantage. Because the Player can wager
on this hand, this translates to an advantage to the Player. To offset this, the House again takes a
commission on winning wagers on the Banker Hand. Again, winning wagers on the Banker Hand pay
19 to 20. The net impact is that the
Banker Hand wager has a 1.06% house edge, which is actually LOWER than the
Player Hand Wager without a commission.
The problem with paying commissions is not that it costs
the Player money. Every casino game costs
the Player money. The real question is
not what mechanism is used to generate the house edge, but how much of a house
edge it generates. In the case of these
two games, it generates a relatively normal sized edge. Pai Gow's edge is a little on the high side
and Baccarat's is on the lower side.
But, nothing incredibly unusual about either. The issue is that the commission is slow and
messy. Players don't always wager in
multiples of $20. In these cases, the
casino might use some method to accrue the commission and then take it when the
amount adds up to a round amount.
Calculating a 19 to 20 payback is also not a simple thing for the
Dealer. Sure, a $100 wager pays $95 which
is easy enough, but still messier than paying $100. But, what about when the Player wagers $75?
These issues led to a desire to do away with the
commissions in these games. In both
cases, a similar mechanism was used. In
the case of Pai Gow, a hand that is normally a sure loser for the House is
turned into a Push. In one common
version of 'commission free' Pai Gow, if the Dealer has a Queen High Pai Gow
hand, then the hand is automatically a Push.
This creates a house advantage nearly identical to the commission. Now all wins can pay even money and the game
is cleaner and simpler. Only in the
occasional situation where the Dealer has this hand is the normal flow
interrupted at all, and the impact is relatively minimal to game speed.
In Baccarat, one of the common mechanisms is to take a
sure winner for the Banker hand and turn it into a Push. The most common hand is a Banker 3-card 7
which wins. The impact, like in Pai Gow
is a virtually identical payback but with the messy commission removed. Now all wagers can pay even money and the
only impact is that special Banker Hand and even when that happens it simply
becomes a push.
In order to be an Expert Player, a Player needs to
understand that all casino games are built with a House edge. The edge comes from a variety of
mechanisms. The specific mechanism is
not important to the end financial result.
It can impact the feel of the game and a Player may prefer one mechanism
vs. another. However, that House edge
will be there no matter what. If you
play a no-commission version of Baccarat or Pai Gow, mathematically you're
playing a nearly identical version of the game.
If you like the simplicity of the no-commission version, play that. If you get annoyed and pushing hands you
should win, then maybe these versions aren't for you. At the end of the night, you'll probably be a
nearly similar financial situation.
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