Setting Table Maximum Betting Limits

Introduction | Key Principles | Setting Limits | Mathematics | Effective Maximum Bet Limits | Variable Betting | Volume Dependence | Maximum Loss Point | Variable Bet Distribution | Non High-End Casino Operation | Analysis of Results | Conclusion |

Of course not all bets occur at the maximum limit and therefore some degree of judgement needs to be made as to the average bet size or preferably the forecast distribution of bet sizes. Thus a $100,000 table maximum may equate to average bets of $75,000 or a range of bets from $1 to $100,000 with the same average but a different variance. But these are only estimates and the increased accuracy produced by estimating bet distributions is easily lost. In most cases, it is more appropriate to keep it simple, however, for those interested this will be expanded later.

In the above, what has been shown, is a thinly-disguised evaluation of how to calculate what table maximums should be provided for high level junket players. With limited cash reserves and low turnover volumes, a strategy of offering $250,000 table maximums would be suicidal, or the casino would be gambling, if one also includes the other expense considerations. Even if the casino could generate 10,500 hands per annum, all at this level, then while turnover would be $2.625 billion, there would exist a one in twenty chance that prior to fixed expenses and fees, the casino would lose $26.6 million. Further, the maximum loss point would occur at 34,500 hands or $8.625 billion in turnover, with a one in twenty chance of losing $32.275 million or more. If a single visit produced 1,000 hands, then turnover would be $250 million and a one in twenty chance of losing $10.1 million or more would exist. Clearly, extremes at this level of business exist, which suggest the need for large capital reserves, and major shareholders who understand the complexity of the issues, and their long term vision of growth. The other issue, implicit in this calculation is market demand, as while a $250,000 table maximum does impart high risk, a lesser maximum limit may produce less short-term risk but higher long-term risk after all costs are included, as well as depriving the company of market penetration and growth. If, in the above example, hands played were increased to 20,500, yet with a $50,000 table maximum, only 5,500 hands could be anticipated, then the following ten year scenario is of interest (after fixed expenses and fees.)

Table 2
90% Probability interval lower limits.