Understanding the House Edge

The concept of the house edge is fundamental in gambling. It is more than just a marketing gimmick of operators and game developers; it is the mathematical component that makes or breaks gaming adventures. It is the statistical spread that ensures that a casino will have a profit in the long run. But how can you make the most of it? The answer to this simple question starts with the basics.

What is the House Edge?

The house edge is a percentage that indicates how much of each bet a casino expects to keep on average in the long run. You can, therefore, use the house edge as a gauge for how difficult winning in a casino game is. The higher the house edge, the less likely your win is. Conversely, the lower your house edge, the more likely you are to win. However, this is a relatively simple understanding, and there is far more to it.

Casinos calculate the house edge using the concept of expected value (EV). The latter is the average outcome of a bet when all possible outcomes and their probabilities are considered. While this requires an enormous number of calculations and is very complex, it is a foolproof method. When you combine all of this knowledge into a single equation, you end up with predictions such as the casino making, on average, $5 for every $100 wagered in a game with a house edge of 5%.

Roulette, the Most Practical Example

The big three of online casino gaming are slots, blackjack, and roulette. It is very common for punters to look up, let us say, a blackjack strategy and then follow it to a T at a live casino. However, no casino game produces as many strategies as roulette. The allure of the world’s favorite spinning wheel is undeniable, but do you know how the house edge is calculated in roulette?

Let us take American roulette, arguably the most widespread roulette variant, into consideration. I am sure that you have read several articles on our site that tell you how European roulette is better than American roulette. Moreover, I am sure that the articles mentioned how American roulette has a house edge of 5.26%, while European roulette has a house edge of 2.70%. This is how those percentages were calculated.

American roulette consists of 38 slots, which are numbered 1 to 36, a single zero (0), and a double zero (00). If you bet $1 on red winning, you end up with these probabilities:

• The probability of you winning, which is divided by black slots, is P(Win) = 18/38
• The probability of you losing, which is divided by black slots, a single zero, and a double zero, is P(Lose) = 20/38
• The overall probability is P(American Roulette) = ( - $1 * 20/38) + ($1 * 1/38) = - 0.0526
• In other words, the probability is -5.26% or a 5.26% edge for the house.

European roulette has 37 slots, numbered 1 to 36, and a single zero (0). If you bet $1 on red winning, you end up with these probabilities:

• The probability of you winning is P(Win) = 18/37
• The probability of you losing, which is divided by black slots and a single zero, is P(Lose) = 19/37
• The overall probability is P(European Roulette) = ( - $1 * 19/37) + ($1 * 18/37) = - 0.027
• In other words, the probability is -2.7% or a 2.7% edge for the house.

You can apply the same math to other bettering options and even other games. However, this may be a bit more difficult because statistics, beyond a simple coin toss, are a bit unintuitive. But roulette is, after all, a game of luck. The house’s advantage is irrelevant since every roulette spin can land you a big win, right?

Why Does the House Edge Even Matter?

The importance of the house edge for the average punter is very straightforward. It tells you how big of an advantage the casino has over you. An advantage does not mean that the casino will win on every single roulette spin, but it does mean that they will win in the long run. The natural urge of every punter, then, is to minimize this advantage.

The easiest way that you can minimize the house edge of your favorite casino game is by finding variants with lower house edges. These variants have been fine-tuned by casino game developers and operators. Moreover, you can find low-house edge games associated with various promotions, which can help you make the most of your gaming funds. You can find superb promotions of every kind by using our advanced bonus search features. Regardless of how you choose to go about your next gaming adventure, remember that taking into consideration the math behind the madness is crucial to every adventure.