The House Edge Explained: The Basics, Why it’s Important and Calculating the House Edge

There are things that everyone should know before they step onto a casino floor or login to an online casino, and the house edge is one of them.

If you want to maximise your chances of doing well playing popular casino games, it’s important to understand the concept of the house edge.

Put simply, the house edge refers to the statistical advantage that the casino has over players in a specific game. The house advantage varies depending on the casino game, with blackjack house edge being lower than the house edge of American roulette, for example.

The house edge is the reason why casinos are able to stay in business and make profits.

So what exactly is it?

Definition of House Edge

The house edge can be thought of as a built-in advantage that the casino has in every game.

It is typically represented as a percentage and reflects the average amount of money the casino expects to win from each bet over the long run. It’s crucial to note that the house edge is not a guarantee for each individual bet.

In fact, you may experience short-term wins or losses that deviate from the expected average, but over time, the house edge will play out.

Why Is House Edge Important?

Understanding the house edge is essential for making informed decisions while gambling.

Here’s why:

Realistic Expectations:

Knowing the house edge allows you to set realistic expectations about your chances of winning.

It helps you understand that, in the long run, the casino is likely to come out ahead. This knowledge can help you avoid unrealistic beliefs and prevent disappointment or frustration.

Game Selection:

The house edge varies from game to game.

By understanding the house edge, you can make informed decisions about which games to play. Some games have lower house edges than others, which means your money is more likely to last longer and you have a better chance of winning in those games.

By selecting games with favorable house edges, you can improve your overall gambling experience.

Bankroll Management:

Your bankroll is the amount of money you have set aside for gambling.

Understanding the house edge allows you to manage your bankroll effectively. You can set appropriate betting limits and make decisions about the size and frequency of your bets based on the house edge.

This helps you avoid overspending and extends your playing time.

Strategic Choices:

Different games have different strategies that can help get that house edge as low as possible.

For example, in blackjack, using a basic strategy can significantly reduce the casino’s advantage. By understanding the house edge, you can learn and apply these strategies, giving yourself a better chance of winning.

Calculating the House Edge

Calculating the house edge as a percentage of the player’s initial bet is a way to quantify the casino’s advantage. It provides a measure of how much the casino can expect to win on average from each bet placed by players.

To calculate the house edge, the casino takes into account the probability of winning or losing for each bet in a game. This probability is determined by the underlying rules of the game and the specific bets available.

By understanding the role of probability, you can gain insight into how the house edge is determined.

Probability

Probability plays a crucial role in determining the house edge because it represents the likelihood of different outcomes occurring. The higher the probability of a particular outcome, the lower the potential payout and the higher the house edge.

Conversely, lower probability outcomes typically offer higher payouts but increase the house edge.

Game Rules

Game rules also have a significant impact on the house edge.

Different games have different rules that can influence the casino’s advantage. For example, in blackjack, the number of decks used and whether the dealer stands or hits on a soft 17 can affect the house edge.

Similarly, in roulette, the presence of a single zero (European roulette) or double zero (American roulette) changes the odds and consequently the house edge.

Strategies

Strategies employed by players can also impact the house edge.

Certain strategies, such as using basic strategy in blackjack or employing optimal betting systems, can help reduce the casino’s advantage. These strategies are based on mathematical principles and aim to maximize the player’s chances of winning or minimize losses.

By making use of these strategies, players can decrease the house edge and potentially improve their overall outcomes.

Just Remember

It’s important to remember that the house edge is not a fixed amount for each bet. Rather, it is an average calculated over a large number of bets. This means that in the short term, players may experience deviations from the expected house edge due to luck and variance.

However, over time, the house edge will play out, resulting in the expected average profit for the casino.

Casino Game House Edge

So, now that you’re aware that different casino games have different house odds, let’s take a look at the casino advantage for the most popular casino games in the world.

Blackjack

Blackjack is often lauded as a top gambling game in regards to the odds being in the player’s favor.

With basic strategy: around 0.5% to 1%

Without basic strategy: can range from 1.5% to 2%

Roulette

As you can see below, spin the roulette wheel at the roulette table that leans European roulette, as the odds will treat you much better than playing american roulette.

That extra 0 really does make a difference.

European Roulette (single zero): approximately 2.7%

American Roulette (double zero): around 5.26%

Craps

Pass Line Bet: about 1.41%

Don’t Pass Line Bet: roughly 1.36%

Baccarat

Banker bet: approximately 1.06%

Player bet: around 1.24%

Tie bet: roughly 14.36%

Pokies

The house edge for pokies can vary significantly, typically ranging from 2% to 15% or higher.

Keep an eye out for different house edges on different pokies, as they can vary wildly due to factors such as the type of pokie machine (progressive jackpots or video poker games for example), payback percentages, and the specific game mechanics.

There are pokie developers and casinos which will have a high house edge and a quite bad return to player (check out our guide on return to player for more detail), and these should be avoided like the plague if you’re looking to keep a healthy bankroll.

Basic Strategy for the Lowest House Edge

Basic strategy is a blueprint of advisable and calculated decisions to carry out in certain casino games, specifically blackjack (split aces anybody?)

It is based on mathematical calculations and statistics, aiming to minimise the house edge and getting those winners chances as high as possible for the punter. By following basic strategy to a T, punters can make the most advantageous moves based on their own hand and the dealer’s upcard.

Implementing basic strategy can significantly reduce the house edge in blackjack (as discussed in our guide on playing blackjack).

On average, without using any strategy, the house edge can be around 1.5% to 2%. However, by employing basic strategy, the house edge can be lowered to approximately 0.5% to 1%, depending on the specific rules of the game.

Here are a few examples and tips for implementing basic strategy in popular casino games:

Blackjack

• Hit: When your hand has a low total (such as 8 or less) or the dealer has a strong upcard (such as 7 or higher).
• Stand: When you have a strong hand (such as 17 or higher) or the dealer has a weak upcard (such as 6 or lower).
• Double Down: When you have a favorable hand and the dealer has a weak upcard. Doubling your initial bet allows you to receive only one additional card.
• Split: When you have a pair of cards with the same value, you can split them into two separate hands. This strategy is advantageous when the dealer has a weak upcard.

Roulette

• Since roulette is a game of pure chance, there is no specific basic strategy to influence the outcome. However, punters are recommended to be informed about the most popular roulette strategies and also to choose the European version over the American version, as it has a lower house edge due to the absence of the double zero.

Craps

• Pass Line Bet: This is one of the best bets in craps, with a house edge of approximately 1.41%. By placing a bet on the pass line and taking odds when possible, you can reduce the house edge even further.
• Don’t Pass Line Bet: This bet has a slightly lower house edge of around 1.36%. It involves betting against the shooter, and similarly, taking odds can improve your odds further.

Remember, basic strategy requires consistency and discipline.

It is advisable to drill the strategy into your mind through revison, or carry a basic strategy chart with you when playing. With practice, it will become easier to remember.

By following the remarkable decisions determined by basic strategy, you can make more informed choices and increase your chances of winning, enjoyed the benefits that a low house edge assists with.

Keep in mind that basic strategy does not guarantee wins in every hand or session.

It is a long-term strategy designed to give you the best statistical advantage. Short-term fluctuations and luck can still occur, but over time, sticking to basic strategy can lead to better overall results.

Conclusion

To wrap up, when it comes to the house edge at casinos, it generally goes like this.

The house edge is basically the casino’s way of having a little advantage over punters in the long run. Now, this edge varies depending on the game you’re playing. Games of chance, like online pokies or roulette, tend to have a higher house edge than games that require a bit of skill, like blackjack or poker.

But here’s the thing, don’t let that deter you from having a good time!

Understanding the house edge is like knowing the ins and outs of the casino. It helps you set realistic expectations and make smarter choices with your bets. It’s really an invaluable asset to have by your side at any online casino (or land based).

So, next time you hit the casino, remember to keep an eye out for games with lower house edges.

That way, you can stack the odds a bit more in your favor and have a larger shot at winning. Stay sharp, stay savvy, and may the odds be ever in your favor.