How Baccarat Makes Casino Revenue Volatile

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One of the reasons Baccarat is so popular with players is because of its extremely low volatility. However, when it comes to revenue, baccarat is one of the most volatile casino games.

The game itself is beautifully simple, with straightforward rules and limited decisions, but the high stakes involved and the player profile associated with baccarat make it very unpredictable from a casino’s perspective. As a result, each month, baccarat revenue can swing dramatically and have a huge impact on casino earnings.

The Relationship Between Baccarat and High Rollers

Today, players of any sized budget can also enjoy the online baccarat version, but traditionally, the game is very closely associated with high rollers, probably due to its association with European aristocracy. It is still the game of choice for many high-stakes gamblers.

Casinos in Las Vegas, Macau, Monte Carlo and other top gambling destinations have capitalized on this association and tailored their baccarat offering to high-end players. According to Michael Lawton, a senior economic analyst for the Nevada Gaming Control Board, baccarat’s influence on casino revenue is a direct result of this, as there simply aren’t that many high-roller players:

“The bottom line is high-end baccarat is played at only a handful of properties and the number of players who play at the high end that move the needle every month is a very small group and does not represent the masses of customers that visit the Strip every month.”

Compared to games such as blackjack, which are available at nearly all casinos and attract a wide range of players, baccarat tables are fewer in number and often confined to exclusive areas of casinos. This exclusivity, combined with the large bets, contributes to its volatility. In Nevada, baccarat tables are far outnumbered by blackjack tables. Yet, the sums wagered on the casino game are far higher on average, which, as Lawton explained, has a direct impact on volatility.

“As a result, the game becomes volatile due to the fact that you don’t have hundreds of thousands of people playing the game during any given month. You might have a couple hundred and if one or two of those players were to lose a large amount or win a large amount, the swings can be drastic.”

It is not uncommon for baccarat players to place six-figure bets on a single hand, making baccarat one of the highest-stakes games in a casino. As Lawton explained, with such large sums at stake, even a few wins or losses can lead to substantial swings in casino revenue.

Historical Revenue Swings

A look at recent figures shows just how much baccarat revenue can change from year to year. Over the past two decades, the casino win percentage for baccarat in Las Vegas has ranged from 10.7% in 2008 to as high as 21.9% in 2002. In contrast, blackjack, which has a larger player base and lower average bets, has much smaller swings in win percentage, typically staying within a range of about 10.7% to 14.8% over the same period.

The largest amount bet on baccarat in Vegas was in 2014 when a record-breaking $12 billion was bet and casinos won around $1.5 billion that year, close to the all-time high of $1.6 billion in 2013. The largest amount bet on blackjack in Vegas was in 2007, when players bet $11.5 billion. That year, casinos won $1.4 billion.

The number of baccarat tables has also increased, which will have created greater revenue volatility for casinos. In 2002, there were less than 100 tables in Vegas, and by 2023, there were close to 400. In contrast, the number of blackjack tables has dropped from over 3,200 in 2005 to just under 2,000 in 2023.

The increase of tables for baccarat shows that the volatility is clearly an acceptable risk for the casinos. Ultimately, this makes sense. While baccarat has a very small house edge, it still has one, so in the long run, the casinos will come out on top, even if they have a few dips in revenue along the way.