Whether you win or lose at the casino is usually determined by luck. However, it's essential to recognize that casinos operate on a calculated business model rather than relying on chance. To ensure profits, casinos have a built-in advantage known as "house edge," which indicates the percentage they are expected to retain for every bet.
What is House Edge in a Casino?
The casino, also called the “house”, uses various odds and rules to get an edge over the players. The house edge guarantees a casino's financial viability. It enables casinos to cover operational costs, pay employee wages, invest in amenities and generate profit. It’s what keeps the lights on and enables players to play at casinos in the first place, so we can’t really blame them for it.
Mathematically, the house edge is defined as the percentage of each wager that the casino expects to win on average over the long run. Imagine a simple coin flip game where you bet on heads or tails. If the odds were exactly even (50% chance of each outcome), neither you nor the casino would have an advantage, and the game wouldn't be profitable for the house. However, in a casino, the odds are always skewed slightly in the casino's favor. If the casino pays out 95% of the wager for a correct bet, they retain a 5% house edge. So, if you bet $100, you could win $95 if you're right, but if you're wrong, the casino keeps the entire $100. Over many bets, this 5% edge ensures that the casino will ultimately come out ahead.
How do casinos make money?
To find out how casinos make money, it’s important to understand how the odds are stacked in their favour.
One way in which the house gets an edge is by setting payouts slightly lower than the true odds, creating a margin for profit. For example, in craps, there are 5 to 1 odds of hitting a seven, but the house only pays you 4 to 1.
Another way casinos get an advantage is through the specific game rules and design. In a game like blackjack, players are required to act before the dealer. If a player chooses to “hit” and receive an additional card, but they go “bust” (going over 21), they automatically lose their bet to the casino. This means that even if the dealer also goes bust later, that player still loses.
Some games don’t feature a house edge at all. For player-versus-player games like poker, the casino takes out a commission, known as a rake, which is usually 2.5% to 10% of the pot.
It's important to note that while the house edge guarantees the casino's profitability in the long run, it doesn't mean all players lose all the time. You can still experience short-term success due to the inherent variability in games, but over time, the odds will favor the house.
What is the House Edge in Different Casino Games?
House edge varies significantly across different casino games and even among different bets within those games. Let's explore the house edge for some of the most popular casino games:
House edge in Roulette
Roulette house odds depend on the specific variation you play. For European roulette, you can expect a house edge of 2.70%, with an even lower 1.35% edge for games featuring the La Partage and En Prison rules. American Roulette, with an additional double zero (00), features a higher house edge of 5.26%.
House edge in Blackjack
Blackjack offers one of the lowest house edges in the casino, typically around 0.5% to 1% and as low as 0.28% if you play with perfect basic strategy. Skilled players who engage in card counting can at times even gain an advantage. For the vast majority of inexperienced players, the house edge for blackjack is 2% and higher.
House edge in Poker
Being a player-versus-player game, poker doesn’t feature a house edge. Instead, the casino takes out a commission fee from the pot, known as a rake.
House edge in Slots
The slots house edge is usually described in terms of RTP (Return-To-Player), and varies from one game to another. Most modern slots have an RTP of 90-95% (10%-5% house edge), with high jackpot games featuring a lower RTP.
House edge in Craps
The craps house edge can vary depending on the bets you make. For instance, the Pass Line bet has a house edge of around 1.41%, while betting on Any Sevens comes with a much higher house edge, at approximately 16.67%.
House edge in Keno
The keno house edge is among the highest in casino games, ranging from 25% to 40%. This is owed to its incredibly high payouts, resembling state lotteries.
House edge in Baccarat
Baccarat typically has a low casino house edge, around 1.06% for the Banker bet and 1.24% for the Player bet. The Tie bet has a higher house edge of 14.36%.
These are some examples of games you will commonly stumble upon in land-based casinos as well as online. While house edge isn’t the only variable you should consider when deciding what game to play, it’s important to be aware of it. Here’s a casino house edge chart outlining some of the games we’ve discussed and more:
How to Calculate House Edge?
In order to calculate the house edge for a game, we have to find out the expected value (EV). EV is a statistical concept that represents the average outcome of a repeated random event. To calculate the EV, you multiply the possible outcomes by their respective probabilities and sum them up. Let’s look at European Roulette as an example.
We know that if a player makes an even bet of $1, their chances of winning $1 is 18/37 since there are 18 even numbers out of 37 (18 even numbers, 18 odd numbers and the 0). However, the chance of losing $1 is 19/37. Let’s see where this takes us:
EV = (1)(18/37) + (−1)(19/37)
= 18/37 − 19/37
= −1/37
= −2.7%
If our expected value is -2.7%, it means that European Roulette has a 2.7% house edge.
How Does the House Have an Advantage in Blackjack?
Blackjack is a unique casino game where skill and strategy can significantly influence the outcome. It's also a game where the house edge can be minimized when played correctly.
The standard house edge in blackjack, when playing with basic strategy, is approximately 0.5% to 1%.
Unlike roulette, where each spin is independent of previous events, every hand played in blackjack changes the composition of the remaining deck. Because of the 3 to 2 payout for blackjacks (21), having more 10s and Aces in the deck gives an advantage to the player. Card counters who follow the flow of the cards can beat the house edge by increasing their bets when the deck is rich in high value cards.
If you’d like to learn more, check out our detailed blog article on How to Win at Blackjack.
What Percentage of Gamblers Win?
In the grand scheme of things, a relatively small percentage of gamblers win in casinos. The house edge ensures that, over a large number, the casino comes out ahead. This doesn't mean that individual players can't have winning sessions or streaks, provided they manage their bankroll.
Why Casinos Always Win
To sum it up, casinos consistently come out on top in the long haul due to the house edge ingrained into every game, which gives the casino a mathematical advantage. This edge guarantees that, as time progresses, the casino will amass gains from the bets made by players. This enables them to cover operational expenses and accrue substantial profits.
Understanding house edge is crucial for any player looking to make smart decisions at the table. Within the constraints of the casino's mathematical advantage, players can still improve their odds of winning by employing betting systems and various strategies, which we dive into on our blog. If you’re looking to try your luck at some of the games we've reviewed, visit MrWest and experience all the bonuses it has to offer!
Responsible gaming advisory
Please note that the strategies and recommendations offered in our blog articles do not guarantee success or winnings. Gambling is inherently risky and should be undertaken with player discretion. MrWest holds no responsibility for any losses incurred by players while using these strategies and tips.
At MrWest, we are dedicated to endorsing responsible gaming as an integral part of our customer care and ethos. We aim for you to enjoy your casino experience while being fully aware of the risks of problem gambling. If you or someone you know is struggling with addictive gambling behaviors, please reach out:
- Gambling Therapy: https://www.gamblingtherapy.org/
- Gamblers Anonymous: http://www.gamblersanonymous.org/
- Responsible Gaming: http://www.responsiblegambling.org/
Resources
- Weissman, R. L. (2011). Trade like a casino: Find your edge, manage risk, and win like the House. John Wiley.
- Joel Speranza Math. (2019). Expected value and House Edge [YouTube Video]. In YouTube. https://www.youtube.com/watch?v=Ebc8Vd3J_cg