House Edge

What is the casino advantage?

Most of my friends who don't gamble at casinos or visit them rarely often believe that casinos cheat the players and that is how casinos make millions. Not true!

This belief is certainly reinforced through pop culture, for example in iconic movies such as 'Casablanca' with Humphrey Bogart or 'The Sting' with Paul Newman. But these are underground casinos who can control the roulettte. The fact is nowadays casinos whether online or real brick-and-mortar, don't need to cheat because of something called the house edge.

While it is easily possible to win big in the short term, you simply cannot beat the casino in the long term. True, some players can reduce the house advantage through years of practice and excellent memory and observation. But such players are few and far in between and even if all of them descended on a casino they'd hardly make a dent in that casino's profits. So while these players may make the news headlines because of their massive winnings they are more of an aberration than the norm. Instead, let us concentrate on other players - you and me for instance.

No casino whether online or real, pays out winning wagers according to the game's "true odds". "True odds" are odds you would calculate on a pure mathematical basis. For example, if you wager that the roll of the dice would display one dot at the top, then the true odds would be 1:6 because there is a 1 in 6 chance of any single number appearing. If you win, the casino should therefore be paying you six times your bet. The casino however frames rules that stipulate a payout of less than 6 times the amount your wagered, in order to make a profit.

When it comes to numbers, here's another neat example; the American roulette has two zeroes and 36 non-zero numbers. These are in turn split into 18 red colored and 18 black colored numbers. So if a player bets $5 on a black number, his chance of winning is therefore 18/38 whereas his chance of losing $5 is 20/38. The difference in both above examples is called the 'House edge' or Casino Advantage.

Let's no kid ourselves, without the house edge, there would be no casino at all, they have to make a living after all!

Back to our examples, everything can be expressed in terms of a probability. So, if you flip a coin, there's a 50% chance of it falling heads and a 50% chance of it falling tails i.e. 50-50 chance or an even bet. So in this case, if you bet a $10 and called out "heads" and were paid $10 if you won, then you would be paid true odds. But if you were paid say $8 or $9 every time you won then the house edge would be the difference between the true odds and the odds that the casino pays you when you win.

Game Bet Percent (minus) Hands per hour
Baccarat Bank 1.06 80
Player 1.24
Tie 14.4
Craps Pass/Don't 1.4 30
Field 5.6
Hardways up to 16
Roulette American 5.26 50
European 2.7
Caribbean Stud Ante 5.3 40
Bonus 48
Let It Ride Base 3.5 40
Bonus 15-30
Big Six Wheel One 11.1 ?
$5 $10 $20 16-22
Joker 24
Keno Average 27 7
Blackjack Basic Strategy 0.50 60
Poor/Hunch 3-5
Counter Positive
Video Poker Perfect Play Positive 600

 

In American Roulette for example, there are 36 numbers and two zeros. The odds of you winning are one in 38. But instead of paying you 38 times your bet for every win, the casino only pays you 35 times. So if you had bet $1 you would have got $35. You of course keep the dollar you had bet with and you are paid an additional $35 so you now have $36. Now 38 minus 36 returns 2 which when divided by 38 and multiplied by 100 indicates the house edge which in this case would be 5.26%.

The interesting fact here is that even if you cover all the numbers you would still end up losing money. Games such as Craps, Big Six and Roulette have a fixed percentage because one roll of the dice or single spin of the roulette wheel will never change the odds.

The only anomaly if it can be called that is Blackjack and Video poker. In the case of blackjack, every time a card comes out of the shoe, it alters the remaining deck (and therefore the odds) of the cards on the table. When the odds are altered from perfect randomness, the advantage can move from casino to player depending on the cards and the skill of the players. Video Poker is another game that requires a player's skill and strategy, something that the casino has no control over hence here too the odds can shift from the casino to the player.

So my friends, the casino does not have to cheat at all - at least not in the way we understand the meaning of the term cheating.

However, we can say they don't play fair because the games and rules are so designed that the long term odds are heavily in favor of the casino but in the short term you could still make loads of money and that, is called "luck". In the case of online casinos, the payout is generally better due to their lower operating costs and need to popularize the online casino so while understanding of the house edge is important, don't let it bother you too much. Have a good time and good luck.

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