The term 'house edge' is known well to most casino gamblers.The house edge is, in other words, the advantage that a casino has over its players and is measured in percentages. For example, in a game with a house edge of 5% the casino will retain 5% of all money that is bet on that game. If $100,000 is bet on the game over the course of a night the casino will hold on to $5,000.

1. What is the house edge in blackjack? The casino has a house edge of 8% against players. By incorporating disciplined strategy, you can lower this down to as little as 0.5%, depending on what the table rules are. This is done by utilizing proper techniques when doubling down and splitting at the right moments.
2. Blackjack House Edge Introduction. Enter any set of blackjack rules from the options below. The house edge under proper basic strategy for these rules is indicated in the box below.
3. The house edge is half of one percent so if we take $100 million and multiply it by.005 we get $500,000 which is how much the casino expects to make off of you in the long run if.

I’ve heard it described many ways. Some people say it’s “A place to have fun” others say its “Disneyland for adults”. No matter what you think a casino is, keep this in mind. A casino is a business. BIG BUSINESS!! Bob Stupak, the former owner of Vegas World Casino, told US and World Report, “Its our duty to extract as much money from the customer as we can and send them home with a smile on their face.”

So, how does the casino go about extracting money from you? Do they Cheat you?
NO!

They don’t have to cheat because except for Blackjack and Video Poker, every Casino game has a built-in profit on every bet. This is known as the House Edge or Casino Advantage.

Every bet you make has a certain probability of winning or losing. If you bet on the flip of a coin, the probability of heads or tails is 50-50. This would be an even money bet. If you bet a dollar and was paid a dollar when you won, you would be paid TRUE ODDS. However, if the casino only paid you 95 cents every time you won instead of a dollar the House edge would be 2.5%. Simply put, The house edge is the difference between the true odds and the odds that the casino pays you when you win.

Look at this It shows the Casino’s advantage for different casino games. All are fixed except for Blackjack and Video Poker. These two games actually can have a positive payback depending on the skill of the player and the rules or payback table.

Look at the game of Roulette. You will see that the house edge is 5.26% for the double zero game. This is how we figure the edge. In the game, there are 36 numbers plus the 0 and 00. The odds of you winning is one in 38 or 37 to 1. If you win the casino pays you 35 for your dollar bet. You keep your original dollar and are paid an additional $35 returning $36. The difference is two dollars (38 minus 36). Divide the $2 by 38 which is the true odds and you come up with the house edge of 5.26%. So you could actually cover all the numbers on the layout and still lose money. These are great odds for the house but not for you. Games like Roulette, Craps, Big Six a have a fixed percentage because one roll or spin will never change the outcome. There will always be 38 numbers on a roulette layout and 12 numbers on a pair of dice.

Blackjack is in a different category because every time a card comes out of the shoe, it changes the makeup of the cards remaining. The advantage can shift from player to house depending on which cards have been played and the Skill in which you play your cards. Video Poker also is based on skill. If you play the perfect strategy, there are actually some games that have a positive return based on their pay table.

From the above chart, you can see why a casino does not have to cheat to make money. Does that mean you will lose every time? No of course not. If you did you wouldn't keep coming back. However, in the long run, the casino will win on negative expectation games.

Until Next time remember:
Luck comes and goes.....Knowledge Stays Forever.

A house edge is a mathematical advantage that the casino has over you if you play long enough. In this post, we look at the meaning of house edge, how casinos make money on different games and how you should look at the odds.

A Quick History on Gambling

Gambling dates back to a time when history, as we know it, was not even written.

Excavations at sites of the Mesopotamian civilization reveal the use of a six-sided dice dating back to around 3000 BC. The gambling dens of ancient China placed bets on animals fighting.

By the 10th century, games like lotto and dominoes (a precursor to Pai Gow) appeared in China. Playing cards in China can be seen in the 9th century, the Japanese gambling pastimes were tracked to the 14th century and the Persian game of As-Nas dates itself to the 17th century.

The first known casino, the Ridotto, opened in 1638 in Venice, Italy. It closed down in 1774 as the city government felt it was impoverishing the locals.

In the United States, gambling dens were the saloons (yes, as in the Westerner movies). In the early 20th century, the United States banned gambling through state legislation and social reforms.

It wasn’t until 1931 that gambling was legalized in the state of Nevada. In 1976, the state of New Jersey allowed gambling in Atlantic City.

Casinos around the world

Gambling centres have come up all over the world now but some are more famous than others.

Here’s a list of the most popular ones –

• Monte Carlo in Monaco is a popular casino and tourist attraction for the rich & famous. This casino is featured often in James Bond novels and films.
• Casinò di Campione is located in the Italian enclave of Campione d’Italia in Switzerland. Founded in 1917, it is today Europe’s largest casino and a most popular gambling destination besides Monte Carlo. Such is the income from the casino, that it manages the entire operation of Campione without the need for any other revenue or taxes.
• Macau is a former Portuguese colony and a special administrative region of China since 1999. Macau recently surpassed Las Vegas as the world’s largest gambling market. The Venetian Macao is the world’s largest casino.
• Singapore is an upcoming destination for visitors who have the urge to gamble. The Marina Bay Sands is the world’s most expensive standalone casino and among the world’s ten most expensive buildings.
• The United States has over a thousand casinos. This number continues to grow as more states seek to legalize casinos. On last count, 40 states have some form of casino gambling. Las Vegas in Nevada has the largest concentration of casinos in the United States followed by Atlantic City, New Jersey and then Chicago.

Recommended Article: In gambling as in life, there are very few times when humans keep emotions aside. The gambler’s fallacy is one important lesson in human behaviour where people believe in something which has no statistical basis. In this article I explain in details the everyday examples of gambler’s fallacy, inverse gambler’s fallacy and retrospective gambler’s fallacy.

Types of Casino Games

There are many types of casino games which use pure luck or a combination of luck and skill. The games created are card games, slot games, table games, number games etc.

Here’s a list of all popular casino games –

1. Roulette
2. Poker
3. Blackjack (21)
4. Baccarat
5. Craps
6. Slots
7. Texas hold ‘em
8. Keno
9. Bingo
10. Wheels of Fortune (The Big Six)
11. Pai gow poker

Of these the top five favourite games among casino visitors are Slots, Blackjack, Roulette, Poker and Craps.

What is House Edge?

House Edge is a term used to describe the mathematical advantage that a gambling game has over you when you play the game over & over again. This advantage results in an assured percentage return to the casino or gambling joint over time. Quite true in reverse, the house edge is the assured percentage loss of what you bet.

Let’s understand this in numbers.

If the house edge is 0.5%, it means for every $100 you bet, the casino should have earned $0.50 cents back from your initial stack. This means over a long playing time, for the $100 you bet, you are likely to take home $99.50.

Remember, all games featured in a casino are skewed in the favour of the casino. In other words, the casino has a better chance of winning than you do.

Why is House Edge important for Casinos?

The House Edge assists the gambling provider as a commercial business to cover its costs of providing the game, paying for the staff, maintaining the casino or club etc. It also helps to turn the business a profit.

This casino advantage (house edge) is the product of the games themselves and not set by individual casinos. So no matter where you choose to invest your dollar, if you’re betting on casino games, the fact is you can’t escape giving the casino it’s due.

Casino games are designed to provide predictable, repeatable long-term advantage to the casino. The games offer the players the general possibility of short to long-term gains in the short run.

Blackjack Casino House Edge Chart

This is what keeps players coming to the casinos often. And the more the player plays, the higher is the probability of the the house winning.

Example of a House Edge

A house edge (or house advantage) is created with the casino not paying the winning wagers according to the game’s true odds.

Let’s understand with an example.

House Edge example with one roll of a die

Let’s play a game which will have the roll of one die.

You can choose a number from 1 to 6 and if the roll happens to fall on your chosen number, you shall be paid four times of the money you have waged.

So, where is the catch?

Now, the true odds would be 5 times the amount wagered as there is a 1 in 6 chance of your winning number to show up. By paying only four times, the house has created an advantage for itself and a disadvantage for the player.

The house edge is defined as the casino’s profit as a percentage of the player’s original bet. Going back to our previous scenario, we see –

• Probability of winning = 1 on 6 (16.66%)
• Winning factor (multiple) = 4
• Probability of losing = 5 on 6 (83.33%)
• Losing factor = -1

Therefore, the player’s expected value = [16.66% * 4] + [83.33% * -1] = 66.64% – 83.33% = -16.69%

In other words, the house edge is 16.69%

Let’s take another example

House Edge example with American & European Roulette

In American Roulette, there are two zeroes and 36 non-zero numbers (i.e. 18 reds and 18 blacks).

This gives the house a higher edge as compared to European Roulette which have only one zero.

So, in the American Roulette, the chances of a player who bets on the red color winning is 18/38.

Correspondingly, the chance of him losing is 20/38.

The player’s expected value is – [18/38 * 1] + [20/38 * -1] = 0.473 – 0.526 = -5.26%

Thus the house edge (or house advantage) is 5.26%

On the other hand, the player’s expected value on a European Roulette table comes to –

[18/37 * 1] + [19/37 * -1] = 0.486 – 0.513 = -2.70%.

The European Roulette table’s house edge is lower at 2.70% making the European version a more player friendly version as compared to American Roulette

House Edge of Different Casino Games

The house edge of casino games varies greatly with the game.

The calculation of the house advantage for the roulette table was very easy. However it is not the case for other games which require computer simulation.

Games like Blackjack involve skills. The house advantage is arrived on an optimal play basis. This means it does not involve use of advanced techniques such as card counting.

Good blackjack have house edges below 0.5%.

Some games have an edge as low as 0.3% while for some games like Keno, the edge goes up to 25%.

Slots (a novice favourite) have a house edge of upto 15%.

Games with a high house edge will obviously pay out less on average over time compared to those that have a lower one.

You can now avoid getting stung by games where the casinos have a massive advantage over the player.

Blackjack Casino House Edge Casino

Casino.org published this list of house edge on different games

Lessons for Investing

Just like a casino, the world of investing also offers such long-term advantages if you look at it carefully.

This reminds me of what Jeff Bezos from Amazon.com once aptly said:

I very frequently get the question: ‘What’s going to change in the next 10 years?‘ .. I almost never get the question: ‘What’s not going to change in the next 10 years?‘ And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time … in our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection.

It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon; I just wish the prices were a little higher,’ [or] ‘I love Amazon; I just wish you’d deliver a little more slowly.’ Impossible. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.”

A smart investor will be able to identify this “house edge”. This could mean better quality products, lower prices, beautifully crafted aesthetic products, money back guarantee, fast delivery, excellent after-sale services, prompt customer support, amazing deals, better returns, lower portfolio risk, wide selection, environmentally conscious, superior brand etc.

Additional Resources

Here are some articles you can read to get better details on financial and stock metrics

• Rakesh Jhunjhunwala and his secrets to investing (Part 1)
• Building a high return portfolio with index funds – a step-by-step approach
• Complete SIP Investment Guide (over 8000 words compedium updated until 2020)
• The trillion dollar index fund story that John Bogle started in the 1970s
• Best SIP for achieving long term goals