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What Is the House Edge?

A Mathematical Advantage

Let’s pretend that you and a friend want to make some quick bets, so you get a coin and start flipping it. You decide that every time the coin comes up heads, you’ll win $5. Meanwhile, if it comes up tails, your friend will win $5 from you instead. Assuming we’re dealing with a fair coin, it’s pretty obvious that this is a fair bet.

Perhaps, though, your friend isn’t so smart, and is willing to make a more favourable bet for you. Every time the coin comes up heads, you’ll still win $5 – but if the coin comes up tails, you only have to pay $4 to him. Now you have an edge, but just how big is it?

There’s a fairly simple formula that can allow us to figure this out. We simply figure out our chances of winning, and multiply it by the amount we win. From that amount, we then figure out our chances of losing, and multiply it by the amount we’d lose. In this example, that looks like this:

(.5 * $5) – (.5 * $4)
($2.50) – ($2) = $0.50

Our advantage on every flip of the coin is $0.50. Of course, there’s no way for us to actually win $0.50 on any flip; either we win $5 or we lose $4. But over the long run, our average will trend towards an edge of $0.50 per flip. In other words, if we play this game 100 times, we’d expect to win about $50.

When it comes to casino games, this advantage is known as the house edge. That edge is what allows the casino to know that in the long run, it will make a profit. Of course, it’s perfectly normal for players to win in the short run, and that “short run” can last a long time if a player hits an early jackpot, or if you’re playing a game like blackjack in which the house edge is very low. But since casinos have thousands of players constantly making bets, they can be sure that they’ll almost always come out ahead overall at the end of the day.

When we talk about an advantage as a house edge, we talk about it as a percentage – the percentage of each bet the house expects to keep in the long run. In our case, our friend is betting $5 each time and expects to lose $0.50 on each of his bets. If we were a casino, our house edge would then be 10% – quite high by the standards of most casino games!

In most games, this house edge can’t be overcome by normal means, since it is an immutable mathematical part of the game. Systems that mix and match bets in an attempt to get around the edge won’t work. The only way to alter the house edge is to change the odds of the game, such as with a biased wheel in roulette or card counting in blackjack (in which players bet more when they know the odds are in their favor). On occasion, you’ll also find games that offer a player advantage, such as some video poker games. The house edge also doesn’t apply in games where you won’t be playing against the casino, such as in online poker. In some games, such as blackjack, there is an element of skill involved in play; inaccurate and sub-optimal play can often cause the practical house edge to rise.

House Edge Examples

Since the specifics of every casino game are different, the house edges in various games are also different. Here’s a look at the typical house edges in some common casino games:

Baccarat: The house edge is 1.06% on the banker bet, but a slightly higher 1.24% on the player bet. The tie bet has a much higher house edge, usually over 10%.

Blackjack: With so many rules variations, the house edge in blackjack can literally be different in every game and every casino you choose to play in. Still, most good blackjack games that offer 3-2 odds on blackjacks have a house edge under 1%, provided that you play the proper basic strategy.

Craps: The house edge on craps varies depending on what bets you choose to make. The most common bet – the pass bet – is also among the best bets in the game, offering a house edge of 1.41%. The “odds” bets actually have no house edge (the payouts are exactly fair for the bet you’re making), but can only be made if you’ve already made a pass or don’t pass bet. Other bets on the table have edges ranging from less than 2% to 11% or more. See also: How to Play Craps

Keno: A typical keno game in a live casino has a house edge of 25% or more. However, online keno is generally much kinder to players, with many online casinos offering keno games with house edges of 10% or less.

Pokies: Every pokie is different in this regard, but a good rule of thumb for online pokies is that the house edge is usually around 5% (though this can be lowered or negated by whatever added value you can get from any progressive jackpot being offered). In live casinos, the range is bigger, with house edges on pokies varying from as much as 15% or more to as little as 2% in some special cases. (Also see our article, Are Pokies Rigged?)

Roulette: On a double-zero wheel (the American roulette wheel), the house edge on roulette is a relatively high 5.26%. However, European single-zero roulette drops this house edge to 2.70%, with the edge going even lower on even money bets under certain rules.

Video Poker: The edge on video poker can also vary, with some machines in some live casinos offering tiny edges to the player with perfect play. More common paytables offer small edges to the casino, such as the common 9/6 Jacks or Better machine, which has a house edge of just around 0.46%. (See our article about Video Poker Rules for more.)