Understanding The House Edge
What is a Casino?
I’ve heard it described many ways. Some people say its “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, 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 5%. Simply put, The house edge is the difference between the true odds and the odds that the casino pays you when you win.
The House Edge Chart 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 odd of you winning is one in 38 or 1/38. If you win the casino pays you 35 for you dollars bet. You keep your original dollar, and are paid $35. 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. 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 out come. 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 make up 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. We will discuss these games in the future.
For now look over the Chart to get an idea of the house edge for the games. Next week we will look at how this edge effects you and your bankroll as we discuss the “Price We Pay to Play"