How House Edge Works

Roulette is probably the best game we can use to demonstrate how the House Edge works and how the House Rules may affect a player's probability of winning. The European Roulette wheel has numbers 1 to 36 and number zero (0) which means that there are 37 possible outcomes when betting on one single number. In other words, for every spin, 36 numbers will lose, and there will only be one winning number. If a player is lucky enough to choose the winning number, the payout is expected to be 36-to-1, which are the true odds. This, however, is not the case. Most casinos have 35-to-1 odds, which means that the House Edge tends to be in favor of the casino. The zero (green slot) is what gives the casino its advantage.

To see how exactly this affects the actual payout, the following is a practical example. If a player decides to wager a chip for each number of the Roulette wheel, this will mean that there is no possible way of losing, right? Not entirely accurate. The player will give up 37 losing chips and get only 36 chips as a payout for the winning number. This means that the House Edge will have dictated one chips net loss for the 37 chips wagered. This can be calculated as a 2.7 % (1/37) of the House Edge.

The case is almost the same with American Roulette, but the difference is that it has double zero (00) in addition to the one zero (0) in European Roulette. This means that the total number of possible outcomes in American Roulette is 38. Considering that the payout for a successful bet remains the same 35-1, the net loss in this case will be two chips. This way, the House Edge will be 2/38 (5.6 %) which means that the House Edge for American Roulette is almost double that of European Roulette.

House Edge Varies From Game to Game

The examples mentioned above highlight the House Edge for European and American Roulette. However, other games such as Baccarat, Blackjack, Poker and Keno also have House Edge calculations that are specified in the House Rules. Each casino sets a specific set of odds for every game which eventually determines the probabilities and winning odds. Below are examples of general House Edges for other different casino games.

Keno

Keno often has one of the highest casino-advantage House Edges which usually ranges between 25% and 29%. This is about ten times higher than the European Roulette as seen in the example mentioned earlier.

Blackjack

Blackjack is one of the simplest table games because most people have played some form of the game whether at home, school or when hanging out with friends. When played professionally following the liberal Vegas rules, this game has a house edge of about 0.28%.

Baccarat

If you’re betting on the banker, the house edge on this game is 1.06%. However, when wagered on a player, it goes to 1.24%. And if a tie option is chosen, then the edge shoots to 14.36%.

Craps

This game comes with a wide variety of bets which means house edges also range. The range can be anything from 0.00% for odds on four or ten, five or nine, or six or eight to 16.67% for any seven.

Slot machines

Normally, house edge on slots ranges between 2% and 25% although it’s quite difficult to tell the exact figure when playing the game.

Video poker

The average house edge for this game is 0.36% although it’s not uncommon to find video poker machines that give players a slightly higher house edge on this game.

After learning how the House Edge works in favor of casinos, it may seem pointless to try placing wagers that appear skewed in favor of the House. Well, there’s always a chance to win because statistically speaking, the House Edge has to even out after a given number of bets which therefore creates a window of opportunity for players to cashout. In fact, for most games, players can hit lucky streaks by winning several hands or spins consecutively. In some cases, it is even possible to extend the winning streak by placing more wagers.

Hourly Expected Loss

Want to know why understanding a game’s house edge is so important? Well, it can help you calculate the cost of gambling. One thing you need to understand is that while casino games offer you some form of entertainment, the activity comes at a cost. As such, it’s important to always calculate how much you are going to invest and the probability of winning games. Here, you need to know your average bet size as well as the average number of bets you make per hour. Using this information, you can know how much you’re bound to lose every hour should you incur losses.
The following are examples of hourly expected losses for various common games;

Blackjack

When playing blackjack as a single player at the table, you will see close to 200 hands per hour. However, if joined by a couple of players, then you could be seeing around 80 hands per hour. Assuming 80 hands per hour at $200 and a 0.28% house edge, then your expected hourly loss could be around $44.80 in an ideal situation.

Baccarat

With a banker bet that has a house edge of 1.06%, an average bet of $100, and an average number of bets of 80, you can calculate your expected loss for this game through 1.06% x 100 x 80 which gives you $84.80.

Keno

Looking at the Keno’s huge house edge that usually range between 25-29%, one could be tempted to think that the game has one of the worst hourly expected loss. However, in most cases, players avoid placing big bets on this game with a majority placing bets of only $1. Considering that these players make about 6-12 bets per game, you can expect that their hourly expected loss should be approximately $3-4 which is quite modest. (25% x 12 (max bets) x $1).

Roulette

Assuming you are playing the European version that has a house edge of 2.70%, a $100 bet and with 40 hands per hour, that will mean $4000 in action and expected hourly losses of $108.

Slot machines

Generally, slots tend to be fast-paced games and thus expect up to 600 spins per hour. Assuming the game has a 10% house edge and that you’ve placed a $10 bet, your expected hourly losses could be about $600.

Video poker

If you are playing the full pay Jacks or Better which comes with a house edge of 0.36% and records about 600 hands per hour, it is highly unlikely that you will put bets of $100 on each hand. Assuming you only place $10 bets, that translates to $6000 each hour and thus an expected hourly loss of only $21.60. Looking at it, this games is one of the most affordable you will find on any casino.

Wrap up

The basic structures of a casino gaming dictate that the odds are always in favour of the House. Nevertheless, it could still be possible to make significant winnings once you understood the House Rules and expected hourly losses of the casino. All these statistical probabilities, however, should not stop you from enjoying your casino experience.

Beginners Guide to Casinos