What is “The House Edge”?

It should be no surprise that the casino has a built-in advantage on its games. The casinos don't beat the players because they get lucky, they beat the players because the odds are stacked in their favor. This built-in advantage is called the house edge. In numbers, it's the the percentage of the player's bet that the casino keeps as profit, over the long term. For example, in roulette house edge is about 5%. That means for every dollar bet, the casino keeps 5¢ as profit, and returns the other 95¢ to the players as winnings, on average.

Of course if you bet a single dollar just once then you're not going to get exactly 95¢ back—you're either going to lose the whole dollar or win more whole dollars. But that's beside the point. The point of the house edge is to see what the average loss is. If all the roulette players in a casino collectively gamble $1 million on a Friday, night, the casino expects to pay back around $950,000 as winnings and keep around $50,000 as profit.

We all know that the casino wins in the long run. The house edge tells us how much the casino will win on average. The longer you play, the closer your losses will get to the house edge.

Here's a program that plays roulette to show what happens the longer you play. Note that the actual house edge in American roulette is 5.26%. Go on, give it a try.

House Edge Simulator Bet $5 on red... Total Amount Bet Amount Won

or Lost Percentage Loss 1 time $5 10 times $50 100 times $500 1000 times $5000 100,000 times $500,000 1,000,000 times $5,000,000

What you probably saw from the test above is that between 1 and 100 times, anything could happen. You might even be ahead after 100 rounds. But the more rounds you play, the more likely you are to lose. After 1000 rounds, you'll almost certainly be behind, and your result will probably be within a stone's throw of the house edge. After 100,000 rounds your loss will be pretty close to the 5.26% house edge.

The casino doesn't have to beat every player every time. They just know that they'll win around 5.26% of the total of all roulette bets placed over the year.

So that's how the house edge works. The casino doesn't have to destroy you with terrible odds—they give you an almost even game and make just a few percent on each bet on average. And that's why they don't have to cheat: they have a built-in mathematical advantage on every game, so cheating is pointless. All the have to do is get you to play, and they'll win in the long run.

The grind

So if the casino takes only a 5.26% profit on roulette, why do most players lose 100%? It's because the house edge applies to the amount you bet, not the amount you take to the casino. Let's say you sit down at a roulette table with $100, and bet $5 a spin, at 30 spins an hour. You're betting about $150/hr., even though you brought only $100 with you. As you play, you win some rounds, and so some of your bets from your winnings, not from the amount you brought with you. After 13 hours of play (if you last that long), you've bet $1950. And 5% of $1950 is $97.50, almost your full $100.

The effect of the house edge whittling away at your stash as you constantly rebet it is called the grind. To lessen the effect of the grind, play games with a lower house edge, and play for shorter periods of time. The ultimate way to avoid the grind is with my Halfies System.

House edge of popular casino games

The house edge is different from game to game. Here's the house edge for the most popular casino games.

The catch here is that if you don't play the proper strategy, the house edge is even higher. A typical blackjack player probably plays at about a 2-3% disadvantage, not the 0.5% listed in the table which is for a player using basic strategy. A craps player who makes sucker bets is facing a house edge higher than 0.8%. A video poker player who is just guessing rather than using a strategy card is likewise getting worse odds. This doesn't apply to games that have no strategy, like roulette and slot machines, where you generally get the same odds no matter how you play. For more on strategy, see our Crash Course in Table Games.

Notice that the harder a game is to master, the better the odds. It takes some time to learn how to play blackjack, craps, or video poker properly, but they have the lowest house edge. The simplest games, like slot machines and keno, have the highest house edge. But notice the simplest games have the biggest jackpots. That's why people flock to them.





Why is the house edge important?

The house edge is important because it's one of the variables that dictates your average loss. But it's just one of the ways. A common mistake is to view the house edge as the be-all, end-all. It's not. Your average loss depends on several factors:

Average bet size Speed of play (rounds per hour) Total hours played House edge

The formula for average loss is:

Amount bet per round x house edge x number of rounds per hour x number of hours played

Or you could use my calculator which does the heavy lifting for you:



Turn your phone sideways for a better calculator!

Average Loss Calculator Game Rounds / Rolls

Per Hour Bet per round House Edge Average Avg. Loss for

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 20 25 50 100 200 300 400 500 1000 2000 hour(s) hrs

of play Slots > 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 1¢ 2¢ 5¢ 10¢ 25¢ 50¢ 75¢ $1.00 $1.25 $1.50 $1.75 $2.00 $2.25 $2.50 $2.70 $3.00 $4.00 5.00 6.00 0.5% 1% 2% 3% (Bovada, educ. guess) 4% (25¢, Vegas locals) 5% ($1, Vegas locals) 6% ($1, Vegas downtown) 7% (25¢, Vegas downtown) 8% ($1, Vegas strip) 9% (5¢, Vegas strip/DT) 10% (1¢, Vegas locals) 11% (25¢ Vegas strip) 12% (1¢, Vegas downtown) 13% (1¢ Strip, 5¢ Venetian) 14% 15% (5¢, McCarran airport) 22% (Megabucks, no JP) 0.5% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 22% $ Video Poker 300 400 500 600 700 800 900 1000 1¢ 5¢ 25¢ 50¢ $1.25 $2.50 5.00 0.5% (9/6 Jacks or Better) 1.6% (8/6 Jacks or Better) 2.7% (8/5 Jacks or Better) 4.1% (8/5 JoB single-coin) 3.9% (7/5 Jacks or Better) 5.0% (6/5 Jacks or Better) 0.5% 1.6% 2.7% 3.9% 4.1% 5.0% $ Roulette 35 6 players 48 5 players 45 4p, source 2 55 4p, source 1 48 3p, source 2 60 3p, source 1 49 2p, source 2 76 2p, source 1 81 1p, source 2 112 1p, source 1 ---------- 140 online, slow 200 online, med. 260 online, fast 35 6 plyrs 45 5 plyrs 55 4 plyrs 2 plyrs 1 plyr 112 turbo 140 online 200 online 260 online $5 $10 $15 $20 $25 $50 $100 7.69% (Triple-zero / 000) 5.26% (American / 00) 2.70% (Single-zero / 0) 2.63% (00 with 1/2 back) 1.35% (0 with 1/2 back) 2.70% 5.26% $ Baccarat 52 (7 players) 60 (6 players) 70 (5 players) 84 (4 players) 105 (3 players) 138 2p, source 2 139 2p, source 1 125 1p, source 2 209 1p, source 1 ---------- 250 online, slow 350 online, medium 530 online, fast 52 7plyrs 60 6plyrs 70 5 plyrs 84 4 plyrs 105 3 plyrs 138 2 plyrs 209 1 plyr ---------- 250 online 350 online 530 online $5 $10 $15 $20 $25 $50 $100 1.06% (Banker) 1.15% (Half & half) 1.24% (Player) 1.06% 1.15% 1.24% $ Craps 102 (11 players) 123 (9 players) 135 (7 players) 144 (5 players) 216 (3 players) 203 1p, source 2 249 1p, source 1 ------------- 160 online, slow 240 online, medium 335 online, fast 102 11plyrs 123 9 plyrs 135 7 plyrs 144 5 plyrs 216 3 plyrs 203 1player 249 1p fast ------------- 160 online 240 online 335 online $5 $10 $15 $20 $25 $50 $100 1.40% Don't Pass 1.41% Pass Line 1.52% Place 6 or 8 1.82% Place to lose 6/8 2.50% Place to lose 5/9 2.78% Field 3.03% Place to lose 4/10 4.00% Place 5 or 9 4.76% Buy 6 or 8 4.76% Buy 5 or 9 4.76% Buy 4 or 10 5.56% Any craps, 7.5:1 6.67% Place 4 or 10 9.09% Big 6/8, Hard 6/8 11.1% Hard 4 or 10 11.1% Any craps, 7:1 16.7% Any seven 1.36% 1.41% 1.52% 1.82% 2.50% 2.78% 3.03% 4.00% 4.76% 5.56% 6.67% 9.09% 11.1% 11.1% 16.7% $ Blackjack 52 (7 players) 60 (6 players) 70 (5 players) 84 (4 players) 105 (3 players) 80 2p, source 2 139 2p, source 1 148 1p, source 2 209 1p, source 1 -------- 200 online, slow 300 online, med 550 online, fast 52 7playrs 60 6players 70 5players 84 4players 105 3 plyrs 148 1 plyr 209 1p fast -------- 200 online 300 online 550 online $5 $10 $15 $20 $25 $50 $100 0.16% 1D H17 DAS 0.27% 1D H17 RSA 0.26% 2D S17 DAS 0.30% 1D H17 ------------ 0.15% 2D S17 DAS RSA Sur 0.20% 2D S17 DAS RSA 0.20% 2D S17 DAS Sur 0.29% 2D S17 RSA Sur 0.34% 2D S17 RSA 0.34% 2D H17 DAS RSA Sur 0.35% 2D S17 Sur 0.39% 2D H17 DAS Sur 0.40% 2D H17 DAS RSA 0.46% 2D H17 DAS 0.48% 2D H17 RSA Sur 0.54% 2D H17 Sur 0.55% 2D H17 RSA ------------ 0.29% 6D S17 DAS RSA Sur 0.35% 6D S17 DAS Sur 0.36% 6D S17 DAS RSA 0.43% 6D S17 DAS 0.43% 6D S17 RSA Sur 0.48% 6D H17 DAS RSA Sur 0.50% 6D S17 RSA 0.50% 6D S17 Sur 0.55% 6D H17 DAS Sur 0.57% 6D H17 DAS RSA 0.63% 6D H17 RSA Sur 0.64% 6D H17 DAS 0.69% 6D H17 Sur 0.72% 6D H17 RSA ------------ 0.50% 8D H17 DAS RSA Sur 0.57% 8D H17 DAS Sur 0.59% 8D H17 DAS RSA 0.64% 8D H17 RSA Sur 0.66% 8D H17 DAS 0.71% 8D H17 Sur 0.74% 8D H17 RSA ------------ 1.00% 3:2, imperfect play 1.66% 8D 6:5 S17/DAS/RSA/Sr 0.16% 0.27% 0.26% 0.30% --- 0.15% 0.20% 0.20% 0.29% 0.34% 0.34% 0.35% 0.39% 0.40% 0.46% 0.48% 0.54% 0.55% --- 0.29% 0.35% 0.36% 0.43% 0.43% 0.48% 0.50% 0.50% 0.55% 0.57% 0.63% 0.64% 0.69% 0.72% --- 0.50% 0.57% 0.59% 0.64% 0.66% 0.71% 0.74% --- 1.00% 1.66% $ Play online casino games with fake money! It's better than losing real money.

Focusing exclusively on the house edge leads to silly mistakes like thinking that the lottery (lotto) is a horrible deal, when the reality is that the most you can lose on a single lotto ticket is a mere $1 or $2.





Why play when there's a house edge?

You might wonder, "Why play at all if the house has the advantage?" That's a good question. You're likely to lose when you gamble, which is indeed an excellent argument for not gambling.

People play because even with the odds against them, it's still possible to win. That would have to be the case, otherwise nobody would play. Anything can happen in the short term. The odds are against your getting heads twice in a row from two coin flips, but it could happen. If you played baccarat for a year, you'd expect to be seriously in the red at the end of that year. But what about for just a weekend trip to Vegas? You could certainly come out ahead. The odds are against it, but it's definitely possible.

Another reason is that if you know what you're doing, it's cheap entertainment. A blackjack player using proper strategy at a $5 table expects to lose only $2.50/hr. If she tips $5/hr. that's a total loss of $7.50/hr. That's cheaper than most forms of entertainment, like movies, and it's certainly cheaper than Vegas shows.

Jackpots vs. the House Edge

My main gambling advice (after not betting more than you can afford to lose) is to avoid slot machines, because they have a high house edge that bleeds you dry rapidly. Play any table game at small stakes and your money will last a lot longer.

In response, slot players will say that slots offer the chance of a big jackpot, while table games don't. With slots you can win thousands (or millions) for a measly quarter or two. But a $10 at blackjack will win you only $10 or $15. And a loss will wipe out your $10—a much bigger loss than the 25¢ or $1 you lost on the slot.

Okay, I hear you. But there are two things to consider:

You pay a hefty price for the chance of hitting the jackpot. The high house edge on slots depletes your bankroll much more quickly, which means either less playing time (and less fun) if you bust out, or bigger losses (and less fun) even if you don't lose everything. Take a look at the table again (above), and notice that there's an almost direct correlation between the house edge and the amount you can win from one bet. The more you can win at once, the higher the house edge. You can win the same jackpot on a table game, simply by doubling your bet several times in a row when you're on a winning streak. See my article on how to win a $1 million at a table game for more on this.

House edge is of limited value for the lottery

As they say, a little knowledge is a dangerous thing. Some people learn about the house edge and expected value, and then try to apply those concepts to non-casino games like the lottery, and come to the bad conclusion that the lotto is a horrible bet, or the the ridiculous conclusion that it's better to play when the jackpot reaches a certain level because then there will be no house edge. Here's an article on why these premises are fatally flawed.





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