The House Edge and Its Effect

The basics of casino gambling are really quite simple. Although the rules of each game are different, the fundamental principle is essentially the same for all of them. Whether it’s a hand of blackjack, a spin of the roulette wheel, a roll of the dice at the craps table, or a spin on the slot machine, players put up a stake and are betting against the casino (also known as the house). When the players lose, the house takes their stake. When the players win, the house pays out their stake.

The house edge is a percentage reflecting the advantage that a particular casino game has over the player. It is not, however, the ratio of money lost to the total wager. Instead, it indicates the average loss to the original bet, making it simpler for the customer to estimate their expected losses during a single hand or gaming session.

The higher the percentage, the larger the advantage for the house. If a player were to place an initial wager of $100 on a game with a 0.28% house edge, then they could expect to lose 28 cents. On a game with a house edge of 4%, that same wager would lose $4.

That may not sound like much of a profit for the casino, but consider that the doors to these establishments are open 24/7. Every minute of the day, the casino is raking in 0.50% here and 12% there. All these figures add up over time.

Why Casinos Don't Cheat

Assuming that you understand the house edge and what it represents, this mathematical percentage should also serve as the most compelling piece of evidence against casino fraud. Legions of bitter gamblers swear that casinos resort to underhanded means to take their money. In reality, this is nothing more than a defense mechanism meant to compensate for bad luck and poor strategy.

Simply put, casinos don't need to cheat to get your cash. They have an inherent advantage thanks to the rules of the game and payout odds (which always differ from the true odds). While some players might experience short-term success or even walk away as instant millionaires, most gamblers are going to wind up losing more than they win. This is why gaming establishments continue to flourish, despite the efforts of advantage players and an increasingly savvy betting public.

The House Edge for Casino Games

Casino games come in a wide variety, but you can be certain that all of them have been carefully designed to give the house an overall advantage over the players. The edge for some games is fixed, while others vary depending on factors such as deck size and rules. This section includes the house advantage for some of the most popular casino games currently being offered around the globe.

  • Blackjack: When playing with liberal Vegas rules, the house edge 0.28%. This includes the dealer standing on soft 17, late surrender, resplitting aces, doubling after splitting, and doubling down on any two cards.
  • Roulette: The European version with the single zero has a casino advantage of 2.70%. When the 00 is added for the American version, this advantage increases to 5.26%.
  • Slot Machines: WThe house edge on slot machines ranges from 2% to 25%, but it's almost impossible to gauge what the house edge is on the specific machine you're playing.
  • Video Poker: The traditional Jacks of Better version of the game with full pay has a house advantage of 0.36%. In a few rare cases, some video poker machines played with perfect strategy actually give the player a slight edge over the casino.
  • Baccarat: The edge is 1.06% when betting on the banker, and it's 1.24% when wagering on the player. If the tie option is chosen, the edge increases to 14.36%.
  • Craps: This popular dice game has a wide array of bets, often with a different house edge for each. The worst bets are any seven (16.67%) and two, twelve, and all hard hops (13.89%). Pass/come has an edge of 1.41%, while don't pass/don't come is slightly better at 1.36%. Taking odds on four or ten, five or nine, or six or eight all carry a house edge of 0.00%, which makes these some of the best wagering opportunities from any casino game (although the player must also pair this with a negative expectation wager).
  • Keno: This lottery-style game has a terrible house edge that usually ranges from 25% to 29%, making it one of the worst casino wagers. However, the potentially large payout ensures that bettors still flock to it.
  • Three Card Poker: The traditional Jacks of Better version of the game with full pay has a house advantage of 0.36%. In a few rare cases, some video poker machines played with perfect strategy actually give the player a slight edge over the casino.

Hourly Expected Loss

One way a gambler can use the house edge is to calculate the cost of their entertainment. And that's exactly how a gambler should view casino games, too—as a form of entertainment with a cost. It's not enough to know the house edge on a game, though. You also need to know your average bet size and the average number of bets you're going to make per hour.

Once you have that information, you can just multiply all those factors together in order to get the average amount of money you can expect to lose per hour. This won't resemble your actual losses until you start getting a lot of hours under your belt, because anything can happen in the short term. But it's still not a bad idea to have some idea of how this works.

Here are some examples:

  • Blackjack: Depending on how many players are at the table, blackjack plays at a similar pace to baccarat. If you're the only player at the table, you might see as many as 200 hands per hour. But with a couple of other players at the table, you're looking at more like 80 hands per hour. For this example, we'll assume 80 hands per hour at $100 per hand and a 0.28% house edge. Your expected hourly loss is $22.40. Keep in mind that you need to use perfect basic strategy to achieve this expectation.
  • Roulette: The European version has a 2.70%. You shouldn't play any other version, because you can almost always find a single zero wheel if you're just willing to do a little bit of looking around. Like the Pai Gow games, you're only looking at 40 hands per hour or so. At $100 per bet, that's $4000 in action and $108 per hour in expected losses.
  • Slot Machines: We'll assume a 10% house edge, although you might find looser games than this. But slots is a fast paced game. You're talking about 600 spins per hour. Most slots players don't bet $100 per spin, but if you did, you'd be looking at a massive hourly expected loss of $6000. Even if you only play for $10 per spin, you're looking at $600 per hour.
  • Video Poker: The house edge for full pay Jacks or Better is 0.36%, but you're looking at 600 hands per hour. Chances are you won't be putting $100 into action on each hand; $5 per hand is more likely. That's $3000 in action per hour, and 0.36% of that is only $10.80, making this one of the most affordable types of casino entertainment you'll find.
  • Baccarat: If you stick with the banker bet, you're looking at a 1.06% house edge multiplied by an average bet of $100 and an average number of bets per hour of 80, you're looking at an expected loss per hour of 1.06% X $100 X 80, or $84.80.
  • Craps: With craps you can expect to see around 50 rolls per hour. The calculations for the hourly loss are a bit more complicated with this game though, because most of the commonly placed bets are not decided in a single roll. If you were playing the pass bet on every roll, for example, you'd expect that bet to be settled around once every 3.4 rolls. So at 50 rolls per hour, it would be settled about 15 times per hour. The house edge of this bet is 1.41%, so you'd expect to lose $1.41 per settlement over a $100 wager. With 15 settlements an hour, that equates to an expected hourly loss of $21.15.
  • Keno: Keno's huge house edge of between 25% and 29% makes it look like one of the worst bets in the casino, and in a sense, it is. But in terms of hourly expected loss, it's probably better than you think. That's because most people don't bet $100 on keno at a time—they usually only bet a dollar. And they might only make between 6 and 12 bets per hour. Call it 12 bets an hour at $1 each, and your expected loss is only $3 or $4.
  • Three Card Poker: This game plays faster than you might think. You can assume 70 hands per hour at $100 per hand. With a 3.37% edge, you're looking at an expected loss per hour of $235.

In Summary

The house edge has existed for as long as land-based casinos have been around, and it's been refined over the centuries to be as efficient as possible. Its sole purpose is to ensure that gaming establishments have a long-term advantage over their customers, something which is necessary for the continued operation of any casino.

Games such as slot machines and keno provide a larger advantage for the house, although their potentially sizable payouts ensure that customers keep coming back for more. This is especially notable in the case of slots, as their 2% to 15% edge hasn't prevented them from being the largest revenue generator at casinos around the globe.

Under the right set of circumstances, the house edge can be marginalized or even turned to the player's favor. This is possible in video poker or certain wagers in craps, although the random nature of such games still doesn't guarantee a long-term profit.

The best tactic for a gambler is to accept that the odds are stacked against them. Once this realization sets in, you can concentrate on enjoying yourself, which should be the main reason for visiting a casino in the first place.

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