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What is a House Edge in Casino Games?

All casino games have an edge provided to the casino, assuming the player is not breaking the game rules, including card counting, marking cards, tampering with equipment etc. Casinos provide entertainment, but at the end of the day they also want to make a profit. They do this by having a house advantage on every game they provide. Even if the house edge is only 1.5%, this small advantage means the casino expects to take in more than it pays out at the end of the day.

House Edge on Popular Casino Games

house edge

Game House Edge Max Payout
Blackjack 0.50% 1.5 to 1
Craps 0.80% 2 to 1
Video Poker 0.5-5% 800 to 1
Baccarat 1.06% 1 to 1
Roulette 5.50% 35 to 1
Slot Machines 0-17% 5,000 to 1
Slot Machines 5-17% millions to 1
Keno 25%+ thousands to 1

A house advantage, also referred to as “house odds” is the disparity between the payout and actual odds of an event. It is not the probability of the event itself. So, a casino advantage is reduced when their payout structure more closely matches the odds of a particular outcome, and increases when the payout is further away from the actual probability. For example, let’s say there was a game where a dealer flipped a coin, and you bet on it landing heads or tails. The odds of each outcome on every trial is 50/50. So, a payout of 2 to 1 (even money) would not give either the house nor the player an advantage, because the payout is in perfect proportion to the actual odds. If you lose the bet, you lose your entire bet, but if you win, you are paid 2 for a profit of 1, making up for your loss every other trial. These would be considered very ‘good odds’. Over time, neither the player nor the house should see a ‘loss’ on the game. However, don’t count on finding such a bet at a casino. They design the games to hold at least a slight edge. Visit our related pages to find the games with the best odds and worst odds.

On the other hand, let’s say that the casino only paid you 1.9 to 1. Meaning if you lose, you lose your entire bet, but if you win, you only make a profit of .9 of your original bet.

If you played this a 100 times, betting 1 unit at a time, and the distribution held true, you would be expected to have 95 units at the end, but you have bet a total of 100, giving the casino an expected profit of 5 units or 5%. Therefore, this game would have a house edge of 5%. If you play for 150 trials, you would end up with 92.5 at the end.

The Grind

Notice in the example above that you bring 100 and bet 1 at a time for 150 trials. This means you made a total of 150 in bets, but only brought 100. This is because you didn’t lose every hand and were able to play with some of what you won back. However, having bet 150, you lost 0.5% of that, which is 7.5, leaving you with 92.5 (100-7.5) . This consistent and gradual loss over time for the player is known as ‘the grind’. The casino calls it profit.

Naturally, you would likely not bet the same amount every time (unless you were playing for a jackpot like on slots). This variation in bet is largely what creates the variation in outcome for players. Some players win and some players lose. To the casino, it averages out and these odds tend to hold true. But for individual players, it can vary greatly since they don’t play that many hands at a time and they also tend to vary their bets. The players that lose, get unlucky and happen to bet bigger on their losing hands. The winning players get lucky and happen to bet bigger on their winning hands. Of course, a player doesn’t know the outcome of a hand before they place their bets. It is simply the luck of the draw which player you will be each time. However, as we said before, if you place consistent bets, over time, the casino will take your money guaranteed. The game is designed that way.

Of course, when you play at an online casino, you do so with the hopes of winning. To do this, you have to beat the odds. The most likely way to legitimately “beat the odds” is to either place fewer bets, or by varying your bets.

Let’s take an example of 3 players all betting on the coin flip game mentioned before, 2 vary their bets and 1 plays the same bet every time. For the sake of the example, let’s assume a normal distribution of expected outcomes. In other words, half the time they win, half the time they lose.

Player A Player B Player C
Bet Profit/Loss Bet Profit/Loss Bet Profit/Loss
Win 1 0.9 6 0.9 5 4.5
Lose 5 -5 6 -1 1 -1
Lose 5 -5 6 -1 1 -1
Win 5 4.5 6 0.9 5 4.5
Lose 1 -1 6 -1 5 -5
Lose 5 -5 6 -1 1 -1
Win 1 0.9 6 0.9 5 4.5
Win 1 0.9 6 0.9 1 0.9
Win 1 0.9 6 0.9 5 4.5
Lose 5 -5 6 -1 1 -1
Total 30 -12.9 30 -1.5 30 9.9

As you will notice, the profit and loss for each player is different and the total bets are the same at 30. Player A lost 12.9, Player B only lost the expected amount of 1.5, and player C profited 9.9. However, the casino profited 3.5 overall. By changing the bets, they changed the expected outcome. One player for a larger win, and one for a larger loss than the player playing the same bet every time who lost as expected.

Bet Once or Just a Few Times. As we said, the best chances of you beating the casino are to bet fewer times or to vary your bets. So, if you budget Rs. 1000 for your gambling budget and you place one big bet and win, you have beat the odds and not given the casino a chance to make up for it. While there is the chance you will lose, this is the way to give yourself the best odds of walking out a winner. If you are feeling lucky you can try to bet a few more times, but if you win these, remember, the longer you play the higher chance of you giving money back to the casino.

Vary Your Bets. The other way to beat the odds is to vary your bets. Because of the inherent advantage of the casino, if you bet the same amount every time, given enough time, you will lose your money. The odds will eventually catch up and the grind will dwindle down your bankroll. However, if you vary your bets, it will change the expected payout and loss over the series of outcomes. It is more risky, as bigger bets also give you a better chance to lose, but if you are playing over a period of time, this will give you the best chance of walking away a winner. As we discussed before, keeping your bets the same over time will statistically guarantee a loss.

Why play? In the end, casino games are about the excitement surrounding the games. It gives us an emotional high associated with taking a risk and the chance of upside. It is what makes them entertaining. If you have ever won money at a casino, you understand why people play. While the casino odds are in the favor of the house, it is important to understand how the odds work so as to give yourself the best possible chance of walking out a winner. However, as we recommend throughout our site, never risk more than you can afford to spend on entertainment. Again, that is what casino games are for, entertainment.

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