House Edge

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“The first thing a gambler must do is accept the fact that the House has a
clear edge in every casino game”

Miron Stabinsky, from
Zen and the Art of Casino Gambling

House edge is the mathematical advantage casinos hold over players, by paying winning bets less than 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 the casinos could never win in the long run.

Let’s take a look at American Roulette for example. There are 38 playable numbers : 1 to 36 (inclusive), plus 0 and 00. If you place a winning bet on one of these numbers, you’ll be paid 35 to 1. But the mathematical probability of winning that bet is 1 in 38 (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 will earn an average of $5.26 for every $100 wagered, by virtue of their numerical advantage.

All games are structured to guarantee the house a favourable position in this way. Theoretically, so long as the casinos keep their games moving they can do nothing but win, for the numbers will automatically fall in their favour.

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.

The table 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.

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