The House Edge

A house edge, a player edge or any imbalance which gives one side an advantage over the other comes into being when the payout on a bet doesn't match the odds of the bet.

For example: take a look again at that European roulette table:

European Roulette table layout

As we noted previously, there are thirty-seven numbers, giving us odds against any one number of 36:1.

In order for the bet to be fair, the payoff needs to be the same - thirty-six to one. In this way, you would on average lose your bet thirty-six times, then win back those thirty-six losses on that one occasion in thirty-seven when your number hits.

Unfortunately, in casinos the world over the payout on any single winning number comes in at only thirty-five to one. If you risk a dollar on one of the numbers and it wins, you're paid $35. There being thirty-seven numbers in total, if you were to bet a dollar on all of them you'd end up losing $36 and winning $35, for an overall loss of one dollar.

One dollar (your loss) out of thirty-seven (your overall initial wager) works out at 2.7 percent, and so 2.7 percent is the house edge on this particular bet.

For more information on the mathematical calculations involved in the house edge, see the mathematical expectation page.

The house edge is the casino's average profit in relation to the player's overall initial wagers. If you wager a thousand dollars over the course of an evening on a European roulette table you will either win or lose in any one session, but your average loss - assuming you always play those single-number bets - is going to be that 2.7 percent, or $27. Again, sometimes you'll win, sometimes you'll lose - and rarely will you lose exactly $27. However, the house edge of two point seven percent ensures that, over time, you will average out at -$27 for $1000 in wagering. Or -$270 for $10,000. Or -$2700 for every $100,000 - all of which explains why casinos like their roulette tables so much.

This is not chance; this is cold, calculated fact. That you might win does not change the fact that you WILL lose, at an average rate of 2.7 percent, if you play those inside numbers on a European roulette table. It's set in stone, immutable, and in no way dependent on whether or not the roulette gods are smiling at you on a particular day.

This is the "crystal ball effect" of gambling without the crystal ball: decide how much you're going to wager and you can work out your average return!

The same consideration governs every game in the casino. The calculations that produce the house edge numbers are very complex in some cases, but a number there always is, and that's the vital number that tells you how much you WILL lose, on average, for however much wagering you indulge in.

The lower the house edge, the less you lose. If the house edge is bang on zero, you're average loss is zero. And finally, in ultimate casino heaven, if you can find a game with a negative house edge, you will win on average.

These games do exist, all be they rare. The trick is in finding them and playing them correctly - the arithmetic takes care of the rest.

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