Casino House Edge Explained
House Edge Explained Before we go any further, it is important to point out that two games—video poker and blackjack—do not have any house edge built into them. The best way to simplify house edge is to explain things in terms of a simple coin toss. However, some casino games are different to Roulette when it comes to house edge. As you can see above, the house edge for Blackjack is set at a default of 0.5%. Although, this can be even higher if you are playing without knowledge of the game or a specific strategy, something that catches out novice gamblers.
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I’ve heard it described many ways. Some people say it’s “A place to have fun” others say its “Disneyland for adults”. No matter what you think a casino is, keep this in mind. A casino is a business. BIG BUSINESS!! Bob Stupak, the former owner of Vegas World Casino, told US and World Report, “Its our duty to extract as much money from the customer as we can and send them home with a smile on their face.”
So, how does the casino go about extracting money from you? Do they Cheat you?
NO!
They don’t have to cheat because except for Blackjack and Video Poker, every Casino game has a built-in profit on every bet. This is known as the House Edge or Casino Advantage.
Every bet you make has a certain probability of winning or losing. If you bet on the flip of a coin, the probability of heads or tails is 50-50. This would be an even money bet. If you bet a dollar and was paid a dollar when you won, you would be paid TRUE ODDS. However, if the casino only paid you 95 cents every time you won instead of a dollar the House edge would be 2.5%. Simply put, The house edge is the difference between the true odds and the odds that the casino pays you when you win.
Look at this It shows the Casino’s advantage for different casino games. All are fixed except for Blackjack and Video Poker. These two games actually can have a positive payback depending on the skill of the player and the rules or payback table.
Look at the game of Roulette. You will see that the house edge is 5.26% for the double zero game. This is how we figure the edge. In the game, there are 36 numbers plus the 0 and 00. The odds of you winning is one in 38 or 37 to 1. If you win the casino pays you 35 for your dollar bet. You keep your original dollar and are paid an additional $35 returning $36. The difference is two dollars (38 minus 36). Divide the $2 by 38 which is the true odds and you come up with the house edge of 5.26%. So you could actually cover all the numbers on the layout and still lose money. These are great odds for the house but not for you. Games like Roulette, Craps, Big Six a have a fixed percentage because one roll or spin will never change the outcome. There will always be 38 numbers on a roulette layout and 12 numbers on a pair of dice.
Blackjack is in a different category because every time a card comes out of the shoe, it changes the makeup of the cards remaining. The advantage can shift from player to house depending on which cards have been played and the Skill in which you play your cards. Video Poker also is based on skill. If you play the perfect strategy, there are actually some games that have a positive return based on their pay table.
From the above chart, you can see why a casino does not have to cheat to make money. Does that mean you will lose every time? No of course not. If you did you wouldn't keep coming back. However, in the long run, the casino will win on negative expectation games.
Until Next time remember:
Luck comes and goes.....Knowledge Stays Forever.
Unless you’re walking through life wearing pink glasses 24/7, you’ll be aware of the fact that house always wins. That is, overall and long-term. The reason why casino inevitably comes out a winner in the long run, is that every game has a built-in mathematical edge. Let’s have a look at the math side of things as this is something you need to understand in order to grasp what house edge is and how it works.
It’s All About Mathematics
We’re in fact talking about the law of probability. If you flip a coin, there are two possible outcomes – either heads or tails, each with 50% chance. When flipping 2 coins simultaneously, there are 4 potential outcomes – they either both land on heads (1), or they both land on tails (2), or first lands on heads & the other on tails (3) and the other way around (4). Each outcome is equally likely, so there’s a 25% chance for any of the above happening.
When tossing a dice, you’ve got 1 in 6 chance (16.7%) to guess the number correctly. If you’re looking to get one of two numbers, let’s say either 3 or 4, the probability is a sum of each of the individual ones, namely 1/6 + 1/6 = 2/6 (33.3%). How about throwing 2 dice at the same time? In this case, and always when different outcomes can happen as the result of different actions , the probability is the number of ways to get the targeted outcome divided by the total number of possible combinations. For example, two dice can produce the result of 2 in only one way (1+1), so probability is 1/36 = 2.78%, and the same goes for a total of 12. A total of 7, however, can be achieved in 6 different ways, meaning it has a much higher probability of happening.
Now, when a casino game developer creates a game, they will set up bet payouts at odds which are lower than your odds of winning. In the example with our game of double dice roll, result of 2 could come with 2.5% payout, and a total of 7 with 15% payout (vs 16.7% odds of actually getting this outcome). This difference is, simply put, the house edge.
House Edge in Casino Games
House edge is casino’s way to cover their costs and create profit. If a game has 10% edge, the house expects it will pay 90% of the money wagered by players over longer period of time, meaning it will earn the house 10% profit. It does not mean that every player will lose 10% of their cash on each occasion. If that was the case, given that there’s no game with zero or negative house edge, nobody would be interested in playing. It’s simply a long-term average. Obviously, casino goers can and do win, both online and offline, while playing slots, poker, blackjack, and basically any other casino game under the sun. However, not all games were created equal and some offer much better winning chances than others. What’s more, skillful players applying correct strategy can further improve odds in their favor.
Blackjack is a casino game with many different variants featuring below 1% edge, and is considered to be your best bet. For example, Single Deck Classic Blackjack from Microgaming comes with a house edge as low as 0.13%, and Playtech’s Blackjack Switch with only 0.16%. NetEnt’s Jacks or Better video poker features a high payout percentage of 99.56%, while All Aces from Microgaming come with a huge 99.92% payout. The don’t pass/don’t come bets in Craps have a house edge of around 1.4%, and in Baccarat, edge is 1.06% on Banker bets and 1.24% on Player bets. Roulette games with a single zero start at 2.7% edge. Slot machines normally feature a wide range of 2% to 8% house edge, though they tend to go higher when playing in land-based casinos.
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