Banker vs Player in Baccarat: Why the Math Favors One Bet and Why Most Players Pick the Other

This article examines a very interesting and mysterious facet of the casino card game baccarat:

Baccarat is probably the only game in which one of two main opposing bets offers better winning odds than the other, yet the majority of its players choose to ignore this fact as an inspirational factor in their betting strategies. Instead, they prefer to bet following other inherent realities in casino games: streaks, chops, superstitions, hunches, etc.

This cannot be likened to roulette or craps. In roulette, the opposing bets have an equal house edge, so there’s no betting issue there. In craps, the Don’t Pass bet has a slightly lower house edge than the Pass Line bet, yet less than 5% of all craps players play the Don’t Pass. This is because it’s considered a “dark side bet” that sides with the casino against people trying to win money at the craps table.

In baccarat, player reluctance to betting on Banker is a lot more intricate and multi-faceted than those craps players’ reluctance to betting Don’t Pass.

So, I will explain why baccarat players en masse choose to put their money on the side having a higher house edge that will cause them to lose more money over time than the opposite side, which on the surface seems non-sensical.

Why the Banker bet wins more often than the Player bet

The reasoning is somewhat similar to that in Blackjack. In that game, players must make their hand decisions before the dealer, which means that they’re subject to bust (go over 21 and lose) before the dealer has to take that chance. In Baccarat, after the initial deal that gives the Player and Banker two cards, the Banker often draws a third card but always after the Player does, so the Player hand is completed first, just like in blackjack.

The slight advantage to the Banker hand is not inherently due to the fact it draws last but rather to the third-card-draw rule, by which the Banker follows strict drawing rules like in blackjack. But whether or not it does draw that third card is dependent on what value card the Player drew before it. So, that predetermined order of the third-card draw is what gives the Banker hand a 50.68% chance of ending with a hand closer to the perfect total of 9, in contrast to a 49.32% chance for the Player to finish closer to 9.

To see that in play, imagine a scenario where the Player draws a high 3rd card in the range of 9 through king. Since a 9 in all cases, except when the Player’s initial two cards total 0, would reduce the value of the Player’s hand, and the 10-value cards counted as zero in baccarat would not improve the Player’s hand, the Banker would almost always stand on totals it would have drawn to had the Player drawn any of the mid-value cards. It’s this facet of the Banker’s conditioned third-card draw that gives it the advantage.

Looking at this in terms of expected negative value over an extended period of play, betting on Banker loses less per whatever time-frame you use than betting on the Player does.

Also note that when considering tie hands that occur around 9.5% of the time, the Banker actually wins only 45.86 % of the hands, compared to the Player winning 44.62%, which has no bearing on the previously stated Banker edge and why that edge is real.

House Edge Reference Table

Why is there a 5% commission on Banker Bets?

That’s a no brainer, and you may have already guessed it. Put simply, since the Banker hand has better than a 50% chance of winning when there’s no tie, and you get paid even money for each winning Banker bet, probability-wise, if you just flat-bet any unit every single hand on Banker, you’d have to win money in the long run. Even though that very small edge is quite a small percentage, if you have a large enough bankroll and can afford to sustain losing short-term sessions, you can bet high-stakes and earn a fortune before casinos knew what hit them!

But, of course, they’re not fools, and they’re never going to allow you to do that. Instead, they charge a 5% commission on Banker winning hands which takes you from an approximately 2% advantage to a 1% disadvantage, which is more or less the same house advantage you’re up against at blackjack and craps, if you don’t play those games foolishly and avoid proposition and side bets.

The 5% Commission – Mechanics, Psychology, and the No-Commission Variant

What the 5% commission does is lower the winning bank payout from even money to 0.95 to 1, so you’re only winning 95 cents for each dollar bet. This commission on Banker will always exist, even when it no longer does, as we shall see in the next paragraph. But for now, it straightens out the would-be problem of having a negative expected value for the casino, shifting that back to the players.

Even though this commission is not penalizing the player, some players I have observed take it just that way. A big part of the success of new variant baccarat games, such as EZ Baccarat, is due to the removal of the commission and the introduction of alternative ways to extract that 5% from the players, albeit with a less undesirable effect more digestible for the players.

EZ Baccarat started a chain of new and very successful baccarat games with the creation of its Dragon 7 and Panda 8 side bets. These are three-card total 7 and 8 winning hands on Banker and Player respectively that pay 40 to 1 and 25 to 1 as side bets but subtly offset that by making the main winning baccarat hand in these two instances a push instead of a win. In fact, EZ Baccarat is now more popular than standard baccarat in US casinos.

But still, the perception problem of the unholy commission remains on standard baccarat games. I have not only seen players at baccarat tables favoring betting on the Player side over Banker but have also actually heard them stating their preference to make a less intelligent bet just to evade paying commission, which they viewed as a penalty if not an outright deduction–a word that makes one think of taxes and unpleasant governmental fiscal agencies.

I have witnessed players carefully coordinate Banker bets to perceived streaks just to feel like they’re winning that commission back, mentally reimbursing themselves for previous commissions paid during prior baccarat sessions. Of course, these behavioral betting patterns seem ridiculous, but anyone who’s been around gamblers as long as I have understands that the only sane thing in baccarat is insanity!

Behavioral patterns in baccarat are by far the strongest of any table game. Perhaps slot machine play can rival it, but only in baccarat can I remember seeing highly extreme betting patterns with players haphazardly switching from streaks to chops to random hunches during a single shoe, which might qualify for its own psychological classification.

I am not exaggerating!

So, speaking of that psychology, live dealer studios know how to capitalize that as well. Many of them, in a gimmick similar to EZ Baccarat’s Dragon 7 and Panda 8 standoffs on the main Player and Banker bets, are making a Banker win with a total of six a “half win” on those Banker bets. Instead of paying even money, they’re paying 50% of the amount wagered, which shifts the casino edge on Banker from 1.06% in standard commission baccarat to 1.46% in no-commission baccarat, according to the Wizard of Odds website.

In this case, the Player bet with its house edge of 1.24% is actually a better bet than the Banker bet, but players across the live studio spectrum seem not to care. For them, the no-commission Banker bet is more favorable than the standard commission Banker bet despite the latter being the better true-value bet.

This is another prime example of how big a factor psychology plays in baccarat betting strategies. Simply, the baccarat variants are killing two birds with one stone: they’re speeding up the games with the riddance of commission and at the same time increasing the house advantage on the Banker bet. To boot, they’re winning over more baccarat players in general because the vast majority of them bet on both Player and Banker. So, what it comes down to is that casinos are selling “friction reduction” along with worse odds for the players, which is excused by the removal of that perception of commission games having a deduction or penalty as punishment for Banker bettors. Quite ingenious!