What is the House Edge?

Casinos are known to be so many things. Some consider them to be a place to have fun, some consider them to be a place where they can get rid of their anxieties and worries and some consider them to be a place where they can hone their gambling skills and make some money in the process. Irrespective of what you believe the casino to be, you should understand that it is the duty of the casino to try and extract as much money as they can from their customers and still send them home with a smile on their faces.

The process of extracting money is not even close to what you would call cheating. In fact, most games offered by the casino have an inbuilt profit system that allows the casino to profit a certain percentage of each bet. The process that allows the casino to pocket a part of the bet money is known as the house edge.

A house edge, also known as the casino advantage, refers to the difference between the true odds and the odds that the players are offered on each win. For example, you bet a total of $100 in a game that offered $100 upon winning. The probability of winning or losing in case of true odds would be 50-50. Therefore, the players could expect a total of $100. However, while playing in casinos, players might only be offered with a return of $95. The $5 retained by the casino represents the house edge, which would be 2.5% in this case.

The entity that controls the play of the game and sets the rules of gambling is called the house. The house makes its money by enjoying a winning advantage which is built into each and every game that it offers. Some games might have a lower house edge while others might have a higher house edge. The higher the house edge, the lower the chances of winning. For all purposes, the house edge for a set of games can be determined as the ratio of the money lost by players with respect to the total money wagered.

Different games have different payouts and different calculations for determining the house edge. A few games that are actually based on the skill of the player include video poker and blackjack. If a player manages to play these games with proper strategies, they can actually expect a positive return. Therefore, the casino enjoys a very small house edge in this case. On the other hand, if a player spent time playing the slots, they would have to deal with a clear house edge that would force them to forfeit a certain percentage of each bet to the casino.

The lowest house edge is always offered by online casinos as they can operate on the lowest possible margins due to their lack of infrastructure costs, lower staffs, cost benefits, lesser overheads and lesser utilities. This allows them to retain a greater percentage of their revenues and thereby offer their players with a lower house edge so that more players win at their games. And simply put, the more the number of winners, the more the number of players who get attracted to the casino. And, the more the number of players, the more the revenue earned by the online casino.

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