House Edge Explained – How Casinos Make Their Money
Last Updated: September 24, 2021
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Gambling is an incredibly fun but often also very expensive hobby. Casino games, in particular, offer a lot of entertainment and excitement, along with a chance to actually win money anytime you play.
Yet, I have never met a person who can honestly say they have won money in casino games in their lifetime, assuming they played a decent amount.
And while superstitious old gamblers will tell you it's because the games are rigged, and you’re being cheated out of your money, this is far from the truth.
The reason I say casino games aren't “rigged” is that they offer exactly what is advertised. This means a game of chance in which the house has a distinct edge of some kind.
Each casino game is different and comes with a different degree of the casino house edge. Yet, every game I have ever played in a casino gives the house some kind of an advantage, and this is where they make their money.
If you don't know how this concept works, I am going to explain what is a house edge and how casinos use it to make money without resorting to any dirty tricks or cheating.
If you are a conspiracy theorist and you keep asking why you are losing money in casinos, this article will help shed some light on that. It’ll answer some basic questions about the casino house edge and help you understand where the famous adage that “the house always wins” comes from.
What is the Casino House Edge?
House edge is the term used to refer to the advantage that a casino has over its players in a particular game of chance.
The vast majority of games you will find in casinos have house edge ingrained in them. A popular exception to this rule is the game of poker, which is played between players without any house edge. However, the house charges rake in poker as well, so they still make money in the process.
In classic casino games such as blackjack, roulette, baccarat, or slots, the casino always has an advantage of some kind. In most cases, this advantage will be anywhere in the range of 1% to 25%, depending on the game, the bets you make, etc.
You may be wondering what it is that makes this casino house edge possible. A single answer can’t cover all the different options. In each game, there is something in the rules that gives the house advantage.
I am going to show you how the casino house edge works in several different games and why the casinos always make money at the end of the day, regardless of how you play or how lucky you are.
House Edge in Roulette
Roulette is one of the most popular casino games in the world, and it’s played in several variations. The most popular variation of the game is European roulette, which gives the casino an edge of 2.7% over the players.
Now, you may think that your betting system or some other roulette strategy you have come up with makes a difference, but it really doesn't. Regardless of how you are betting, the casino will always win 2.7% of all your bets over the long term.
The more you are betting, the more you will lose in the long run.
Notice that 2.7% is a relatively small number and the house edge is not massive. This means that the simple mathematical concept called variance will make you win big on some nights and lose big on others, practically never losing exactly 2.7% of your bets on a given night.
In roulette, the house advantage comes from the fact that there is a total of 37 numbers on the wheel, but all payouts are made as if there were 36.
For example, if you make a straight bet on a number win, you will be paid 35:1. However, your actual odds of winning are 36:1 because there are 37 numbers on the wheel. This one extra number accounts for the 2.7% edge.
This same principle also applies if you bet on odd/even or red/black. There is one number on the wheel that doesn't fall into any of these categories. Every 37th time, you are going to lose these bets regardless of which side you bet, and the casino will come out the winner.
Casino House Edge in Blackjack
Blackjack is one of the best gambling games you can play in a casino in terms of your winning chances. However, getting optimal results in blackjack is only possible if you play the basic strategy perfectly, which is not something everyone does.
The house advantage in blackjack can go down all the way to just 0.5% but can also be well over 2% if you don't know how to play your cards right.
This is one of the few gambling games in which the way you play actually changes your odds and the casino edge.
However, regardless of how you play the game, the house will always win in the long run. This is not because the dealer is cheating you or pulling cards from the bottom of the deck, but because blackjack rules give the dealer an advantage over you.
In blackjack, in particular, the house edge comes from the fact you have to go first. The dealer gets to peak at their card and wins straight up if they have a blackjack, without giving you a chance to tie. Other than that, the odds for both the player and the dealer are the same.
At the most basic level, I can say that I would always recommend playing blackjack with optimal strategy over other gambling games. It gives you the best chance to win money and has you losing the least over the long run.
House Edge in Video Slots
Video slots are possibly the most popular way of gambling in a casino. In most casinos, you will find dozens or even hundreds of slot machines, as opposed to only a handful of playing tables that require dealers and other staff to operate.
Being so popular, one may expect them to be the best games, but slots are actually often very unfavorable for the players.
Online casinos offer some of the best video slot games, but even those usually have a casino house edge ranging between 3% and 10%.
In live casinos, you will often find machines that give the house an advantage of as much as 20%, with only 80% of the money wagered by players paid back through wins.
The advantage of slots is that they let you play lower stakes and bet only cents per spin. If you are looking to just have fun for a prolonged period of time, playing slots is often a good idea.
Yet, in terms of sheer equity and chances to win, video slots are almost always the worst games you could play in any casino.
This may come as a surprise, considering that casinos have to pay more to maintain table games. However, since table games attract high-stakes players, even the small advantage is sufficient for the casino to make a big profit.
If you are going to play slots in a casino, try to get some information on the actual RTP of the games in question. If you can’t, it is often best to stay away from the machines that may have a massive edge over you.
The House Always Wins
The saying has it that the house always wins, and it’s definitely the truth, even if not for the sinister reasons that are often implied.
If you are playing casino games, you should be aware of the fact that the casino has an ingrained advantage in every game they offer. Usually, there is no way to get around that.
This does not mean that casino games are unbeatable or that there is no way to win money in them. In fact, I have personally won in a casino many times, and I’m sure many of you have as well.
The theoretical edge of the casino in most games is very slight. It takes a long time for the variance to even out and the casino to win this theoretical percentage of all bets made.
My tip is to always try and play the games with the highest return rates and lowest casino house edge. This way, you will give yourself the best chance of winning. However, don’t focus on that exclusively and try to have fun while gambling responsibly on the games you like and enjoy.
Casino House Edge FAQ
What is the house edge in casino games?
Casino games all have a strict set of rules, which impact the final outcome of gameplay. These rules, in general, are designed to give the casino a slight advantage, known as the casino edge or house edge. This advantage can be anywhere between 0.1% and 50%, and it determines the long-term results that players can expect.
What does RTP stand for?
RTP stands for “return to player,” which is the percentage of money returned to the players through winnings. Each time you make a wager, you can expect to lose a slight percentage of that wager in theoretical terms. The higher the RTP, the less you are losing at the game.
What games have the lowest casino house advantage?
There are some casino games that come very close to break-even. These include various video poker machines, baccarat, and blackjack. Any game that has an RTP of over 98% is a good gamble, but those with payouts over 99% give you the best chance.
How much of an edge does the casino have in roulette?
In the classic game of European roulette, the casino maintains an advantage of 2.7%. This does not change depending on how much you bet or what kind of bets you make. The edge is always the same. In American roulette, this advantage is nearly doubled, while French roulette cuts it in half for even-money bets.
Can I change the house edge in casino games?
In most games that casinos spread, there is no way to diminish the house edge or make it worse. That said, blackjack is a great example of a game where your actions do impact the RTP rate, as playing the optimal strategy will reduce the house edge to as little as 0.5%. On the other hand, making random decisions not backed by math can be quite costly.
Is there a casino house edge in poker?
There are many games that contain the word poker in them. Casinos have an edge in games you play against their dealers, such as Caribbean Stud or Casino Hold'em. In games like Texas Hold'em or Omaha Hold'em, the house only charges the rake, while players play among themselves. The casino does not make any profit from the actual outcome of the hands.