STRATEGY

House Edge – How the Casino Always Wins In the End

While going to the casino can be a fun way to spend your time, the fact is that many people that go to win money wind up losing it all. Even if you have years of experience and talent, the house always wins. But why is that? Obviously, the casino has to make money somehow, but how come the games always seem stacked against the player? The reason is called the House Edge, and it essentially all but guarantees that the casino will come out a winner every time on every table.

But how does it work? Is there a way to get around it? To help you understand this key component of gambling, we’ve broken down the fundamentals of the House Edge so that you can see what it is and know how it affects your gameplay.

Understanding House Edge

House Edge

What Does ‘House Edge’ Mean?

Whenever a casino decides to open a new game, they first have to determine if it will be profitable. As we mentioned, the house has to make money off the game; otherwise, there would be no financial incentive to keep it open. On the flip side, however, they can’t make the game too hard to win because then players will avoid it and the house will lose money. Thus, the casino has to determine the “House Edge.”

What this amounts to is a calculation that determines the mathematical advantage that the house has for hosting the game. The advantage is listed out as a percentage return over time so that the casino knows how much to expect regarding profit. For example, a House Edge could be a five percent return for every hour of gameplay. That means that no matter how much money is played at a given time, five percent of the money on the table will go back to the house.

How Does it Work?

The way that the House Edge manifests itself will differ depending on the game. In some instances, like Blackjack, the edge is the fact that the casino takes all losing money. This happens regardless of if the dealer lost as well. For example, if the dealer is playing against players and four of them bust, the house collects all of their money. Even if the dealer busts and “loses” to the fifth hand. This game has a significant house edge – the player has to beat the dealer to win money.

Blackjack Insurance

The other way that the House Edge is determined is that sometimes the casino will pay out odds that are less than what is mathematically possible. For example, in Roulette, because there are thirty-seven numbers on the board, the real odds would be thirty-six to one that the ball will hit any given number. However, the casino only pays thirty-five to one, giving them a slight edge. In this case, it’s calculated as 2.7% net return over time.

What it Means for You

The thing to remember about the House Edge is the longer you play, the more susceptible you are to it. What that means is that if you play for an hour, you may be up against a smaller loss percentage. If you played at the same table for eight hours, you’d stand to lose more in that time. That means that the casino wants you to stay put for longer periods. It will increase their edge percentage, meaning they will take more of your money.

How to Calculate the House Edge

Unless you have a degree in statistics and probability, you most likely will not be able to calculate the House Edge yourself or understand how the casino does it. Fortunately, however, there is a handy chart that already has the edge listed for different games. All you have to remember is that the edge is based upon the initial bet, not the average bet. Because the average bet can vary depending on the player as well as how long he or she is at the table, the edge can only be calculated on the original wager. When you look at the chart and see the percentages, note it is based on your first bet.

Games of Skill vs. Games of Luck

Another thing to keep in mind with House Edge calculations is that comparing different percentages is not the whole story. Blackjack, as a game of skill, can turn in favor of the players because the order of the cards coming out shifts constantly. Thus, comparing that percentage to another fixed game with a similar edge is not seeing the whole story. Roulette, conversely, is a game of luck. It has a fixed edge because there are always thirty-seven (or thirty-eight) numbers on the board, and each hand is not affected by the last.

Roulette House Edge

Finally, the percentage of the House Edge is determined in relation to the actual odds. What that means is that if the actual odds are one number, and the payout is a different number, the House Edge is the percentage difference. So if you play a game with 50/50 odds (good for the Martingale Strategy) and you win, you should get paid one to one, which will be the actual odds. However, if the house only pays you 95%, then the difference will be the House Edge percentage.

House Edge in Casino Games

With that in mind, let’s look at the House Edge percentages for some of the most popular table games. While this list is far from complete, it should give you an idea of what to expect.

House Edge Percentages
As you can see, the House Edge varies widely depending on the game. For example, with Roulette, you can see that the edge percentage doubles based on the number of zeroes. The reason that Double Zero Roulette has a higher edge is that the payout is the same (35:1) while there are more numbers, thus increasing the actual odds (38:1).

Again, keep in mind that games of skill have less of a House Edge (like video poker and Blackjack). Games of chance have a higher percentage. Electronic games like slots have a House Edge programmed in, which means that you are all but guaranteed to lose the longer you sit at a machine.

Which Games Have the Best Odds for the Player?

Ultimately, you have much better odds when you can use your skills to your advantage. In these games, the house doesn’t have a built-in edge. Thus, games like Craps, Blackjack, and Video Poker have the best odds for the player as you can minimize the House Edge.

Looking at the chart, we can determine that bets with a higher payout have worse odds for the player. For example, in Baccarat the house pays one to one for player bets and eight to one for tie bets. Even though the tie pays more, it hits less often, which is why it has a house edge of 14.36%. The same goes for bonus bets in Craps, such as hard six or eight.  Overall, games that pay one to one have a smaller house edge, as well as games where you can affect the outcome based on how you play.

Keep in Mind

Craps

Knowing about the House Edge should not preclude you from playing. If anything, you should accept it as a cost of playing. If anything, it should be reassuring, as it shows that the casino is not trying to cheat you. The way that they make their money is by calculating and implementing a House Edge, rather than rigging the games. With that being said, here are some things to keep in mind when you go to the casino.

  • One to one usually gives better odds than bonus bets
  • Be aware of games with a fixed edge (like Roulette)
  • Games of skill have better overall odds for the player
  • Machine games have fixed house edges programmed in
  • Don’t try to “beat” the house by switching up your strategy

In short, just understand that some games have better odds than others, and it will be up to you to determine if the “entertainment factor” is enough to play. For example, if a game has worse odds but pays out more, then you can decide that the prospect of a big payout is worth the higher loss percentage.

Don’t Forget

Before we finish up, we do have to mention the Gambler’s Fallacy – as true for stock trading as it is for gambling. This is an important tool to remember as it is part of the reason that casinos even exist. This fallacy exists when a player feels that the odds of something happening are affected by past performance, even if there is no direct correlation.

The best way to illustrate this is with a coin toss. If you toss a coin and it comes up heads twelve times in a row, you may be thinking that the odds of tails coming up are higher, because it is “due.” However, each toss is independent of the others, meaning that it could conceivably continue to flip heads forever. The fallacy is usually measured in how long it has been since something has hit. The same thing happens in games like Roulette or Craps.

In the end, you’ll need to remind yourself that in games where hands are unaffected by past performance that you are betting on each round as if it’s your first. This, of course, does not apply to games like Blackjack where your actions will change the order of the cards and can swing the odds in your favor.

House Edge Conclusion

House Edge Conclusion

So what have we learned then? Ultimately, you have to factor in the House Edge to your gameplay and understand that certain games are better than others. If you go into a casino trying to make money, then you want to pay attention to which tables have a higher edge percentage. However, if you’re just trying to have fun, then don’t pay attention to it.

This knowledge should allow you to accurately account for any losses you make in the casino.  You may like to look at it as your playing fee. Either way, understand that the house will always make money in the long run. You can only do your best to grab your winnings when the odds swing in your favor.  That’s all for this time, leave us a comment below with your thoughts. We hope you enjoyed reading about the House Edge, and wish you luck!


I am a poker enthusiast who also enjoys sailing, rugby, and gaming. A relative newcomer to the world of online poker, I will be putting our strategy guides to the test as I start the Bankroll Challenge: how far can I get without depositing a single penny? Keep an eye out for updates.


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