HOUSE EDGE

Now we will take a look at that statistical vampire known as the House Edge. This is one concept you should be clear on, for it is what guarantees the casinos a winning position.

House edge is the mathematical advantage casinos hold over players, by paying of winning bets for less than what should be paid to fairly compensate the risk involved. See, there is a precise statistical probability for every bet you make in the casino. If the payouts were perfectly aligned with the probabilities, then in theory, in the long run, the casinos could never win in the long run.

The house edge is the unseen foe that never sleeps. It works against you with every bet you make, grinding away your fortunes with malicious intent.

We will look at the game of American roulette to illustrate. This game has 38 playable numbers : 1 through 36, plus 0 and 00. If you place a bet on one of these numbers and win, you'll be paid 35 to 1. But the mathematical probability of winning that bet is 37 ways to lose and 1 way to win. So you're paid 35 to 1 for taking a 37 to 1 risk. The difference is the house edge. At American roulette, the edge works out to 5.26%, which means that the casino earns an average of $5.26 out of every $100 wagered, by virtue of that numerical advantage.

The American wheel

All games are structured to guarantee the house a favourable position in this way. In theory, as long as the casinos keep their games moving, they can do nothing but win, for the numbers will automatically fall in their favour. And that's all it takes to make a successful business.

In Nevada, some casinos advertise a 98% return on their slot machines. What this means, is that for every dollar taken in, an average of 98c is returned to the player in the form of wins. How do they make money? Volume. If the casino's take from its slots is five million dollars a day, it will net $100,000. Not a bad day's pay for a game that doesn't even require a dealer.

Figure 1 below shows a simplified listing of the statistical casino advantage for certain casino games. These are arranged in order, with the best bets in the higher position