Casino House Edge 101: What Is It and How to Calculate It?

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The house edge is a small advantage that gambling establishments have, but it’s still possible to win big!

That means the percentage of money lost is not based on the total bet–that’s good news for users of online gambling apps. The indicator shows the average loss in relation to the initial bet. This helps the player to have a better understanding of how much money they can potentially win during a gambling session.

People say, “The house always wins,” because the percentage is sky-high, but that doesn’t mean you can’t have fun and possibly win big! If the house advantage in a game is only 0.28%, a player betting $100 can expect to lose only 28 cents on the round. The exact stake in a wager with a house advantage of 4% would result in a loss of $4, and that’s not bad.

That may not seem like much money for a gaming app, but keep in mind that they are always open. The gambling establishment makes 0.50 percent an hour here and 12 percent there–it adds up to a hefty profit.

We’ll be exploring how (and why) the house always comes out on top and learning about the calculations behind it.

What Does the House Edge Really Mean?

A good way to think about the house edge is to view it as the casino’s profit margin. While some players may experience short-term success, the casino will always come out ahead owing to the inherent mathematics of the games itself.

And the casino isn’t cheating–it’s just using its math degree to its advantage. Many online casinos provide information about their game payouts on their websites, which allows players to know the advantages of each game.

For those who need a concrete example, consider this: if you bet $100 on a game of Roulette, the house edge is 2.70%, or $5.26. The casino will still take 5.26% of all bets from most players, no matter what you win that particular night.

With a large enough customer base, it becomes clear how casinos make most of their money–this fixed rate is similar to what gamblers pay for admission to casinos.

How to Calculate the House Edge

By comparing the house edge of different games, you can identify which gives the best returns to players in the long run. From the player’s perspective, the house edge is useful since it reveals which games provide the best chances of winning.

Naturally, the long-term payouts of games with a higher house edge will be smaller than those with a lower house edge. You can protect yourself from the casinos with an unfair edge over you by taking advantage of this freely accessible data.

This advantage is inherent to the games rather than predetermined by the casinos. As a result, it doesn’t matter how strategically you use your money; the house edge is always there in casino games.

When you want to figure out where the house’s edge comes from, all you have to do is compare the real odds of something happening with the amount the house will pay out for it.

Let’s look at fixing a prediction of a single number wager as an example:

American Roulette Wheel Graph
  • There are a total of 38 spaces on an American roulette wheel: 1-36 + 0 + 00 = 38.
  • So the real odds of getting one number right are 38 to 1, but the house is paying out 35 to 1.
  • When a player places a $1 bet, they receive a $36 payout, which is $2 less than what the real odds would pay.
  • The $2 indicates the house edge. In this scenario, the calculation would be 2 multiplied by 1/38, resulting in 0.0526, which is equivalent to 5.26%.
  • Using this fundamental theory, you can calculate the house edge for each bet in American roulette.
  • The initial five-number bet (available exclusively on American roulette) is the defining feature. The house edge on this wager increases to 7.89%, earning it the nickname “sucker” in the gaming world. Therefore, you should never make this kind of bet.

Final Thoughts

The aim of the house, whether in roulette, casino games, or sports betting apps, is to provide an exciting and engaging experience for gamblers. They have a chance to win their initial bet and potentially go on an amazing winning streak. As they continue to play longer, the probability of winning also increases.

Casinos provide their customers with complimentary drinks and rooms to make their gambling experience more enjoyable. Dear readers, remember that every game has a chance for a win and a loss. Keep a positive attitude and enjoy the experience. You have a chance to beat the odds, whether by choosing the right number in the roulette wheel or making informed decisions in sports betting.

Remember–the house edge is just one of the variables to consider when placing your bets!

Matthew Buchanan
Matthew Buchanan

Matthew specializes in writing our gambling app review content, spending days testing out sportsbooks and online casinos to get intimate with these platforms and what they offer. He’s also a blog contributor, creating guides on increasing your odds of winning against the house by playing table games, managing your bankroll responsibly, and choosing the slot machines with the best return-to-player rates.