Yplostylia Varkonin 
If you’ve ever wondered how casinos, like doctor spins casino, in Las Vegas, Monte Carlo, or Macau, can afford their sometimes impressive exteriors and interiors, we have the answer for you: the reason for this is the house edge. In this article, you’ll learn what this concept is all about.
Gambling has always been very appealing to people. Who hasn’t put a few euros on the line at the lottery, poker, or slot machines in the hope of winning big? It’s no coincidence that there are a huge number of different games of chance offered in physical casinos as well as online casinos around the world.
The latter would not exist if gambling did not also bring with it a significant profit potential for operators, based on the so-called house edge – a fundamental concept that is crucial to the functionality and profitability of these establishments.
What Is the House Edge?
The house edge is a central concept in gambling. Simply put, it describes what percentage of each bet goes to the casino in the long term. The house edge is the mathematical advantage that the casino has over the players. This advantage ensures that the casino remains profitable in the long term, regardless of short-term wins or losses of individual players.
The house edge varies depending on the game. For example, it is different in poker than in roulette. But more on that later. In general, it is determined by the specific rules and probabilities of each game. In roulette, the European version with one zero has around 2.7%, while in the American version with an additional double zero, it rises to 5.26%. This difference does not seem very large at first glance – but in reality, it has a significant impact on the players’ chances of winning and the casino’s profitability.
The house edge is therefore an important indicator for players to evaluate the potential profitability of a game. Games with a low house edge offer players better chances of winning, while games with a high house edge are riskier and tend to favor the casino.
What Is the Difference Between House Edge & Payout Percentage?
Often, players confuse the house edge with the payout percentage. While the house edge describes the casino’s advantage, the payout percentage refers to the percentage of bets that are paid back to players over a long period of time.
For example, if a game has a payout percentage of 95%, this means that out of every 100 euros wagered, on average, 95 euros will be returned to the player as winnings, while the casino keeps the remaining 5 euros. This 5% corresponds to the house edge.
How Is the House Edge Calculated?
Calculating the House Edge is based on mathematical principles and probabilities embedded in the rules of each casino game. To understand the House Edge, one must look at the specific probabilities and payout structures of each game.
Let’s take the game of roulette as an example. In the European version, there are 37 numbers (1 to 36 and a zero). If a player bets on a single number, the probability of winning is 1/37, while the payout if he wins is 35 to 1.
The expected loss per bet can be calculated by multiplying the probability of loss by the stake and the probability of winning by the payout. In this case, the result is:
- House edge = ([36/37] * 1) − ([1/37] * 35) = 0.027 or 2.7%
This principle of calculation applies to all casino games, although the specific probabilities and payout structures vary. In the game of blackjack, for example, the house edge depends heavily on the casino’s rules and the player’s playing style. With optimal game strategy, the house edge can be reduced to around 0.5%. This makes blackjack one of the most advantageous games for players. Because the chances of winning for players are already quite high, casinos are also particularly sensitive to tricks such as card counting.
For slot machines, the house edge varies greatly depending on the game and provider, but is typically between 2% and 15%. Here, the payout ratios and the probabilities for each possible winning combination are determined by the game developer.
If you want to have a good chance of winning in the long term, you should choose games with a low house edge – for example, blackjack or baccarat. Games like keno or certain slot machines, on the other hand, are much riskier and give the casino a greater advantage.
If you’re wondering why the table includes relatively unknown games like Caribbean Stud Poker or Let It Ride but not many more popular ones like Texas Hold’em or Omaha, the answer is easy. The house edge simply cannot be calculated for every game. This is especially true for games that rely heavily on individual skill, strategy, or decisions made by players. In such games, the house edge is not always present or can vary greatly. Here are some examples of games where the house edge is not easy to calculate:
- Poker (eg, Texas Hold’em, Omaha):
Reason: In poker, players play against each other, not against the house. The casino makes money through the rake (a small fee taken from each pot or hand), not through a fixed house edge.
- Sports betting:
Reason: The outcome of sports betting depends on countless variables that cannot be controlled by the operator, such as the performance of the teams or players, injuries, weather conditions, and many other factors. The casino or betting platform makes money by setting the odds and possibly by charging fees, but not by having a fixed house edge.
- Fantasy Sports:
Reason: Similar to poker, fantasy sports games are based on the skill and decisions of the players. The house usually makes money through entry fees and keeps a percentage of the prize pools.
Conclusion
At first glance, the house edge seems to give the casino an unfair advantage. That may be true in principle, but without it, there would ultimately be no casinos as we know them – and certainly not in such impressive forms as in Macau, for example. By choosing the right games, using the right strategy, and taking advantage of bonuses in online casinos, you as a player can ensure that the house edge is as low as possible – and still have fun playing and a good chance of winning.
