What Is House Edge?
Anytime you play at a gambling venue, such as an online casino, you are pitted against the house. The house edge, also referred to as the house advantage, represents the mathematical advantage that the house (casino) has over you, over time, and reflects the difference between the true odds of winning and the casino’s payouts for winning bets. Expressed as a percentage, the house edge signifies the assured return to the casino over time and, in turn, the percentage of your bets you can expect to lose in the long run.
“The house always wins” is a proverb that is grounded in truth — all casino games are designed so that the house always nets a profit, regardless of the successes of its patrons. In other words, every single game — be it poker, blackjack or your favourite online slot — has an inbuilt mechanism that swings the odds in favour of the house. Despite the apparent disadvantages, players who have a solid understanding of the house edge, standard deviation and probability are better equipped to make responsible gambling decisions and, in some cases, drastically reduce the house advantage!
Odds And Casino Advantage
Before we take a gander at the intricacies of the casino’s advantage, it’s important to distinguish why this advantage exists. At first glance, it may seem unfair to the player — after all, why should the house always win? Don’t forget that the house edge also serves to cover the costs of running the gambling establishment. Even if you play online and strictly for fun (as you should), someone has to provide the games, pay the staff, offer round-the-clock support and maintain the platform. Casinos, just like any entertainment venue, provide a service — and the costs of running that service are far from insignificant.
So, how does the edge work? Let’s take the single-zero roulette wheel as an example. There are 36 numbers on the wheel, in addition to the single zero. As the wheel spins, the ball can only land in one of the 37 pockets, giving us true odds of 1 in 37. The highest payout in roulette is a Straight Up wager on a single number, which pays 35:1. The expected value on a €1 bet is −€0.027; thus, the roulette house edge is 2.70%. The expected value is calculated as follows: (−1 × 36⁄37) + (35 × 1⁄37) = −0.027.
On the other hand, the American wheel has an additional, double-zero pocket (00) which means that you are less likely to win. If you wager on 0 or 00 on the American wheel, we can calculate the expected bet value using the same formula and adjusted odds. This gives us a value of −€0.0526 on a €1 wager which, in turn, translates to a 5.26% edge.
The type of bet you place does not affect the house edge! While the probability of hitting the bet changes, the house edge will always remain the same. However, how you place your bets and the moves you make during gameplay may significantly impact the house edge, particularly in games like blackjack and roulette. If you decide to cover every possible outcome and place a Straight Up €1 wager on every single-zero roulette number, you are guaranteed to win. Yet the payout you receive will be €36 (€35 for the Straight Up payout + your original wager). This means that, no matter how often you win in a fool-proof scenario — you will always be €1 behind. That’s precisely why you’ll never see a player cover all 37 outcomes! In fact, it is far more advantageous to utilise a betting system, like the James Bond method, to hedge high-risk wagers with even-money bets.
House Edge On Slot Machines
Casino slots operate slightly differently. The house edge on online slot games is expressed as an RTP percentage. This percentage is the theoretical Return To Player for every €100 wagered over time. While these popular casino games also have predetermined payouts, the win/loss distribution relies entirely on RNG (Random Number Generator). The RNG is set to award, on average, a predetermined number of wins and losses — but does so in a truly randomised fashion. Typically, slots have an RTP of 95% or greater. This means that, on average, players can expect a return of 95% or more of their total wagers over time.
A whopping 95% sounds great, doesn’t it? Let’s flip it around and look at it this way: an RTP of 95% is a house edge of 5%. That is on par with the double-zero American wheel, which has one of the highest house advantages in the industry! If your bankroll is €100 and you wager on a casino game with an RTP of 95%, you can expect to finish the session with around €95. What happens then? Now, you’re playing with €95, and 95% of that is €90.25. Then €85.70, then €81.40…see where we’re going? The house may not always win — but it will definitely do so over time.
When playing online slots, there are other factors to keep in mind:
- Volatility, or variance, will significantly impact the frequency (and size) of wins.
- Casino games with bonus features will have a varied RTP.
- If players can adjust the number of paylines in a slot, anything lower than the game’s maximum number of paylines increases the house edge. The more paylines the game has, the greater the impact on the house edge.
House Edge On Table Games
While players are expected to lose over time, there are two important things that the house edge tells:
- How much a game will pay out, on average, over its lifespan.
- Which games offer the best returns, over time, on bets placed.
Games with a high house edge will pay out less, on average, compared to those with a lower house edge. New casino players assume that games like roulette, blackjack and baccarat are only for the pros. They couldn’t be more wrong! A table game like blackjack and video poker games (Jacks or Better) have the lowest house edge, where perfect strategy can reduce the advantage even further. However, the most important thing is to learn as much as you can about the game before you wager any real cash. Nothing is better for a casino than a player who doesn’t know what they’re doing.
No matter which game you choose to play, don’t forget that the house edge is a product of the game — not the house. While some casinos may have variations of betting rules and payouts, information about the house edge will always be readily available. Do your research, play responsibly, have fun and good luck!