The House Edge

Find out how casinos use odds to maintain their profitability…

…because you need to figure out how the “Game” works first!

A small house on the edge of the cliff.

No matter what game you choose to play, the odds of the casino winning your money are greater than the odds of you winning the casino’s money.

Being a business, Casinos have always studied every possible method to keep profitability.
The games themselves (all of them) are designed to provide the house with a built-in edge, diminishing the chances and the size of potential payouts.

Let’s make an example: in roulette, maybe you already know thatthe highest payout for a single number bet is 36 to 1. However, things are not so simple. There are some modification to the classic rules and roulette wheels, besides having the numbers 1 to 36, in virtually every casino they have included also a 0 and sometimes a 00 (yes, a double zero) as well (we explain this specific game in our dedicated page…)
The final result is that true odds of winning are different: with those specific “roulette wheels” they are 37 to 1 or 38 to 1, not the 36 to 1!!!

That is why the house edge, the odds advantage in its favor, represents the average gross profit the casino can expect to make from each game. Casinos tends to diversify this Edge for each and every games they offer. With the lowest house edge (and so the smallest advantage), a casino might only be generating about a 1% to 2% profit. On other games, it may make profits of up to 15 %to 25% or more. This edge is carefully studied because it makes the difference between staying afloat or close the business.

From a math/statistics point of view, the house edge on a 00 roulette wheel (the so called American roulette) is 5.26%. That means that for every $1 million that’s bet at the american roulette tables in a casino, the management expects to pocket a profit of slightly more than $50,000. Of course the other approximately $950,000 is returned to the players. And that is the point: in the long run, the players walk out with a little less money than they came in with, leaving the difference in the casino’s pocket.

The “Extra” House Edge

Do you know why traditional Casinos lacks clocks and windows? Because the longer you play, the greater the odds are that the result of your play will match up with the house edge.

They need you to stay as much as possible inside because, in the short term, a player may be of course be kissed by luck and win money. But the more you play, the greater the chances of losing your starting capital because the house edge will ultimately reduce you to a loss.

If you are unaware of the passage of time, more likely you will bet over and over again… First-time players are pleasantly surprised at being offered free drinks by the management. Those complimentary “free snacks and drinks” will cost you, a lot. Drinking too much alchool doesn’t usually improve your judgment when it comes to betting.

The Great Misunderstanding: Why You Lose More Than You Expect

Even if you “study at home” and so you are perfectly aware about the house edge, you still don’t really understand the real implication of the math.

The common thought is that you expect to sit at the table, start with 100$, gamble for a few hours and then, at the end of bets, you will lose around 5$ because the odds and the Edge House on that roulette is slightly more than 5%.

WRONG. You need to understand that the house edge doesn’t apply to the initial capital, but to the total amount you wager.

Is it complicated? No worries, we are here to make things simple. Let’s make an example.

Let’s assume the same person of the previuos paragraph is making $10 bets on every spin of the roulette wheel, and the wheel spins 30 times an hour. While the person betting may be winning some bets and losing some bets, he is wagering $300 an hour. As we have already mentioned, ON THE LONG RUN, at the end of four hours of play, the player lose $60, or 5% of $1200—an amount which is greater than what he had expected initially. The difference in what he expected to lose is pretty big, isn’t it?

So Why Online Casino Are Better?

Because the possibility of being distracted by drinks, losing track of time or simply being too tired is much lower.

Unless you like to drink too much anyway, playing your favorite game from the comfort of your home or just on your way to work is absolutely straightforward and easy. On the sofa in your living room you are certainly much more comfortable and extremely concentrated if, for example, you are playing Blackjack (21) or Poker.

Furthermore, the number of games is simply not comparable to a land-based casino. Some online casinos offer hundreds of slots, games of chance, live tables, live tournaments. And everything can be chosen with the tip of the finger.

But beware out there: always choose a reputable casino with an official license issued by a national regulatory agency. If so, you are 100% sure that your money will go directly to your account and that the games are checked for RTP (return to players) and RNG (Random Number Generator, the algorithm that randomly chooses how to display numbers on the game of your choice) is tested by third-party companies who can reassure you about the fairness of the game.

FAQs

Gross profit is the profit a company makes after deducting the costs associated with making and selling its products, or the costs associated with providing its services.
Ratio of the probability that an event will happen to the probability that it will not happen.

In gambling, the ratio between the amounts staked by the parties to a bet, based on the expected probability either way