Maryland casinos allowed to boost their advantage by lowering blackjack payouts

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Kasey Thomas, a tables games dealer, uses a continuous shuffling machine, which speeds up blackjack games and makes it impossible for card counters to keep track of cards.

Some gamblers who streamed to the gleaming new MGM National Harbor casino and resort, which opened this month to capacity crowds, left frustrated.

At many of the tables, instead of paying $37.50 to winners who hit blackjack on a $25 bet, the dealers paid out $30. At blackjack tables, where hardy players can bet on scores of hands an hour, that $7.50 can add up.


MGM National Harbor boosted the casino's advantage at those tables under a new regulatory regime that gives Maryland casinos more flexibility to determine their own rules governing such things as payouts and wagers for blackjack, roulette, poker and other table games.

State officials and casino executives said the new regulatory process cuts down on bureaucratic red tape and gives the casinos leeway to offer a wider range of products — the reduced payoffs are typically at tables with lower minimum bets that appeal to the more frugal gambler.


But regular players balk at any effort to shift odds or payouts in the casino's favor. After the opening of the $1.4 billion MGM casino in Prince George's County, blackjack gamblers flocked to online forums to complain.

Jake Rosenberg, 26, a Washington-area blackjack player who visited MGM twice the week it opened, said he refused to even sit down at a table with the lower, 6-5 payouts for a blackjack — when a player hits 21 with an ace and a 10 or face card. The payouts are displayed along with the minimum bet at each table.

"You've got to vote with your feet," Rosenberg said.

Some casinos said they wouldn't tweak the blackjack rules because they fear losing customers. Half of the state's six casinos — Maryland Live, Rocky Gap and Hollywood Casino Perryville — say they still exclusively offer the higher 3-2 payouts.

Each state with legalized gambling establishes its own regulatory framework, and the myriad rules for each table game — which can shift the odds and the advantage in favor of the player or casino — vary across the country.

"I personally think fiddling with the rules the way Maryland did was wrong," said Alan Woinski, president of Gaming USA Corp., which publishes industry newsletters. "Every state seems to change things and it creates problems. I truly believe it should be uniform."

Maryland regulators say they want to help casinos succeed while ensuring the games are fair to players.

The state received $510 million in revenue sharing from casinos in the last fiscal year, making it Maryland's fourth-largest source of revenue after income, sales and corporate taxes.


Gordon Medenica, director of the Maryland Lottery and Gaming Control Agency, projects that the arrival of MGM — expected to draw many gamblers from Virginia across the Potomac River — will mean hundreds of millions of dollars more in state tax revenue in the casino's first full year.

Table game rules used to be set in regulations, but the commission repealed most of them earlier this year. Casinos are now required to adopt "standard rules" for table games, and any changes only need approval from the agency's staff. Before, any changes would have been subject to legislative review or public comment periods, a process that usually took months.

Adding the 6-5 payout option was among the first changes made under the new rule-making procedure.

The process eliminates "unnecessary steps," said Charles LaBoy, the state agency's managing director of gaming. The agency said it wants to provide casinos with "tools to react to changes in the market."

"We are doing today every bit of due diligence that we did with these table games rules when they existed as a regulation," LaBoy said. "We look to the casinos really to serve as the experts on product offerings. What we're trying to do is make sure the casinos have enough flexibility to manage their offerings on the floor."

State officials said regulations to safeguard the security and integrity of casino games remain intact, and any changes are subject to the more rigorous review. Also, average annual payouts for slot machines are still set in Maryland regulations.


The new rule-making process for table games was proposed by the agency's staff and had the support of casinos.

Maryland's blackjack rules had been considered player-friendly. Until recently, all of the casinos paid players 3-2 for a blackjack, the best possible hand.

Outside of Las Vegas, there are relatively few 6-5 tables, said Tom Hyland, a longtime professional blackjack player from New Jersey. He said casinos typically offer the lower payouts on tables with the lowest minimum bets.

"So they're socking it to the smaller bettor," he said.

Most casual gamblers won't notice the difference, said James Karmel, a casino analyst and history professor at Harford Community College. "But the serious blackjack player is going to notice and may start scouting the casinos."

MGM National Harbor spokeswoman Kara Rutkin said casino officials declined to comment on blackjack payouts. The casino still offers 3-2 tables.


Horseshoe also has incorporated 6-5 payout tables on its casino floor. "This has enabled the casino to offer games with a wider range of minimum bets, thus appealing to a broader range of guests," Horseshoe officials said in a statement.

Ocean Downs, Maryland's sixth casino, does not have table games.

Maryland Live and Hollywood Casino Perryville officials said they aren't going with lower payouts that their regulars might shun.

Rob Norton, president of Maryland Live, noted that while the casino retains its advantage on the 3-2 blackjack tables, it's a "better deal" for the player.

"We're a local business," he said. "The vast majority of players are residents of the local tri-state area."

Lower-payout tables wouldn't be a good fit at Hollywood Casino Perryville because "as a smaller casino with a population that comes in on a daily basis, you would be alienating more folks than not," said general manager Matthew Heiskell.


Woinski, the industry expert, said MGM National Harbor can afford to keep the 6-5 tables. "They've got enough business now anyways, so that's not going to hurt them," he said.

MGM National Harbor drew about 170,000 people in its first week, the resort told regulators.

The state has taken other steps in recent years to provide casinos the regulatory leeway to increase their house advantage.

Casinos make much of their money because of a built-in advantage tied to the odds. A 3 percent edge, for example, means a casino pays $97 to winning players out of $100 wagered and keeps $3.

Last year, regulators reduced the required average annual payouts to players from slot machines and approved a request from casinos to allow blackjack dealers to draw a card on a hand known as a "soft 17."

In blackjack, players try to score higher than the dealer without going over 21. Until the rule was changed, dealers at Maryland casinos had to stand pat on all 17s. Now casinos have the option — although they don't all use it — of "hitting" on a soft 17, which is a hand adding up to 17 including an ace, which can be counted as a 1 or an 11.


The rule change came after casinos told the state the shift would "increase the house advantage, which will increase revenue, tax dollars and make us comparable with other markets," according to a memorandum obtained by The Baltimore Sun through a Maryland Public Information Act request.

The 6-5 payout adds about 1.4 percent to the house advantage, and permitting dealers to hit on a soft 17 raises it 0.2 percent, according to industry analysts.

The state said it had no estimate on how the 6-5 payout would affect casino revenue.

While casinos may have more options for game rules, gaming control agency spokeswoman Carole Gentry dismissed the notion that Maryland casinos have become less player-friendly.

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"It's up to each casino as to how it chooses to manage games for maximum player appeal," she said. "Obviously, if a casino offers options that don't prove to be popular among the majority of their players, it will make changes accordingly."

Slot machine payouts are an example, Gentry said. While the average annual payout for machines on a casino floor must be at least 87 percent, she said the latest quarterly floor average was about 4 percent over that minimum — at 91 percent — because casinos don't want to alienate guests with tight machines.


The combined revenue of Maryland's five casinos was up 7.8 percent through the first three quarters of the year compared to 2015. Through October, they've generated nearly $1 billion in revenue.

Karmel, the casino analyst, said Maryland has grown increasingly sophisticated over the years at helping the industry succeed. To ease the impact of MGM's arrival, he noted, Maryland reduced the state tax on slot machines at rival casinos to make up for the anticipated loss of market share.

"The more power they have over their own operations, the better for the casino," Karmel said. "We've seen this continuing trend toward a more casino-friendly environment."