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 |

These cumulative totals demonstrate the volume dependence and demand matching elements of establishing appropriate limits for a business segment. Incorporating cash reserves and income streams (positive net cash flows) provides for a determination of whether or not the table maximums have been appropriately set. If, in the above scenarios, both companies had large cash reserves and net profit income streams from core business in excess of say $40 million per annum, then offering a $250,000 table limit is clearly the preferred option. On the other hand, if cash reserves are minimal and income streams from core business is only $4 million to $5 million per annum, then either the $50,000 table limit or not even entering the market would be preferred. Theoretical profit after all costs is only $0.47 million per annum as opposed to the substantial risk of totally eroding profit. Other factors such as whether or not the company is publicly listed and the effect of profit fluctuations on market valuation need also to be considered.

Once determined, however, the maximum limits should drive all other game limits within the casino, provided the maximum bet limits were based on these premises and the maximum loss points used, not the annualised projected figures. A high-limit scenario for the junket segment in conjunction with a low-limit grind philosophy for the core business is nonsensical. While management may segment business into grind, premium and junket for internal reporting, it would only sub-optimise the performance of the entire operation if, on the main gaming tables for example, limits were restricted to $5 to $200 bet spreads, while in the premium room bets of $250,000 per hand could be made. Of course this is still market driven, and if the $5 to $200 limit entirely meets market demands and no greater action could be derived by increasing the maximum limit then so be it, but if the opportunity existed to increase turnover, then the fact that a $250,000 table limit is provided elsewhere in the casino should drive the other maximum bet limits.

While these principles have been established here to act as a guide for setting Baccarat table limits for junkets, the same methodology can be used for any size or style of casino operation. Again, it is necessary to understand the company’s internal position and cash flows, the market demands, fixed and variable expenses, taxes, fees and game profiles. Armed with this information, it is possible to calculate the maximum bet levels which the company can reasonably be expected to accept, without sending the operation bankrupt. This may be more difficult than our “expert’s” strategy of setting limits in relation to double-up spreads, however, why use something simple if it is basically wrong, illogical and only enforces incorrect assertions? The only instance where bet spreads should be considered as relating both the lower and upper values, would be dependent trial games where a player may gain an advantage (ie. card counting at Blackjack.). In this case, depending on the rules and regulations in place, limiting bet spreads can negate the overall advantage of the player.

In fixed negative expectation games, however, consideration need only be given to the elements described previously.

Calculations such as the above should be a pre-requisite from any well-managed casino’s point of view, and should obviously be coupled with market research to determine whether the demand exists to reach the number of hands forecast at the maximum loss point within a reasonable time period.

Expansion of several of the issues raised above is provided for the more interested reader. These issues relate to the calculation of the maximum loss point, the effect of bet distributions, and how this theory may actually be applied in a casino that doesn’t market to high bet limit players.