What Is House Edge, And Why Does It Matter?

House edge is a concept that is extremely important to understand as a gambler. If you think about it, it makes sense that casinos wouldn’t leave their profits up to chance. Every game in casinos has a built-in advantage over the players. In this article we discuss how house edge works and how to overcome it.

How Does House Edge Work?

House edge, or casino advantage, is the percentage of each bet that the casino takes as profit. It isn’t, however, a set ratio per bet but an average across all the bets made, considering wins and losses.

For example, if you bet $100 on a game with a 4% house edge, it doesn’t mean that you’ll lose $4 on the bet. You’ll either lose the bet or multiply it. House edge is about all the bets over time. Let’s say that players at the roulette table with a house edge of 5% collectively bet $1 million on a Friday night, the casino would expect to pay out $950 000 in winnings and take $50 000 in losses as profit.

It’s common knowledge that casinos always win in the long run, and the longer you play, the closer your losses will come to the house edge percentage.

The Grind

So with an average advantage of 5.26% on roulette, how is it possible that most players make a 100% net loss on the money they arrive with in a night? This is because house edge applies to the amount you bet, not the money you arrive with.

Picture it like this: you arrive at the roulette table with $100 and bet $5 dollars 30 times each hour. That’s $150 an hour. The only way to do this is if you’re using some of your winnings to keep betting. If you were to play for 13 hrs (which is unlikely, but this is a good example) then you would have bet $1950, from which the casino would take an average of $97.50. That’s almost your full $100 that you arrived with.

This whittling down of your money as you keep re-betting is known as the grind. You can avoid the grinds effects by playing games with a lower house edge, and for shorter periods of time.

Why It’s important

House edge is one factor that contributes to your average losses. The other factors are your average bet size, rounds per hour and total hours played.

This formula helps you to work out your average losses:

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

Games that require skill always have a lower house edge, and when you play with an excellent strategy, you lower the house edge. Most players, however, will play at a higher disadvantage because they are lacking basic strategy and make poor bets. So the key to overcoming the house edge is to learn basic or advanced strategies and maintain them throughout your play.

To Bear In Mind

Know that you are effectively paying for your entertainment, and against the odds, you can still win. The odds stacked against you are what makes gambling exciting!