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Basic Understanding Of The House Edge

  • 15/11/2021

It is quite easy to understand the basics of casino gambling. Despite the differences in the rules, the fundamental principle is the same for every game. Whether it's a spin on the slot machine, a spin of the roulette wheel, a roll of the dice at the craps table, or a hand of blackjack, players place bets and are betting against the casino popularly known as the house.

The house or bet shop takes the players' stakes when they lose. And if a players win, on the other hand, the house pays out the result of their stake. That's all you need to know to get started playing casino games.

To be successful, players will need to learn the rules of all games they wish to play, but these rules are usually fairly simple. In our opinion, it's a good idea to at least have a basic understanding of how casino gambling works. Furthermore, you need to know how casinos make money and become familiar with the concept of payout percentages and house edge.

How Casinos Make Money

Generally, casino games are games of chance, which means that luck plays the most important role. Even though some games need an element of skill such as blackjack, luck is generally the most important factor in deciding a player's success. It doesn't mean, however, that the casino must get lucky to make a profit from game players.

Casino games come with an inherent advantage known as the house edge. As a result of the casino's edge, it will always make money from games played over time. A casino's house edge is caused by the fact that its winning wagers are not paid according to their true odds. Therefore, each time a player wages money, casinos are technically making money.

Even though the house doesn't win all its wagers, speaking mathematically, the odds are always in the casino’s favour. Since the long-term expectation of casino games are negative, they are called negative expectation games. The importance of betting at a top casino site, including, cannot be stressed enough.

How the House Edge Works

Here is an example we would use to portray the above. Consider that we want to play roulette and stake $1 on a single number for each spin. Depending on whether you play American or European roulette, the roulette wheel has 37 or 38 numbers. Therefore, your odds of winning are either 1 in 37 or 1 in 38. For this example, let's use the European version which has 37 numbers.

The odds of winning your bet are approximately one in 37. However, this doesn't quite work like that due to variance and standard deviation, but in the long run, you will spin each number once approximately 37 times. We'll assume that every number appears exactly once every 37 spins for the sake of this example.

So, if you were to wager $1 for every spin, you will spend at least $37 for 37 spins. Which will give you zero return chance on 36 spins with a $37 return on 1 spin. The percentage of $1 in $37 is 2.7%. Therefore, the house edge is 2.7%. You can figure out the payout percentage by subtracting 2.7% house edge from 100%. The payout percentage would be 97.3%.

Bottom Line

Regardless of what bet you place, the house edge/payout percentage remains the same. As a result, the house wins for every $100 wagered at roulette is $2.70. Although casinos would never make exactly $2.70 for every $100 wagered, on average, they would make something close to that amount.

Note that casino games do not all have the same house edge, and you will have an advantage playing those games with a low edge limit. Generally speaking, the lower the house edge, the less you will lose over time.

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