House Edge

Casinos are in business to make money. To ensure that they do so, every game they offer has a built-in advantage that favors them to the disadvantage of the player—the so-called “House Edge.” In this case, “House” refers to the game operator and “Edge” is the specific percentage of every wager that the House expects to retain as its revenue. When the House Edge is high, players have less likelihood of winning, while a low House Edge means better odds for the players.

House Rules Affect the House Edge

The House Edge can vary greatly from game to game and even from table to table. That’s because it is a function of the “House Rules” used to play the game. Small changes in the rules can lead to big variances in favor of either the House or the players.

Roulette is a particularly useful game for understanding how the House Edge works as well as how changes in the House Rules can affect the probability of a player winning. Take, for example, the wheel used for European Roulette. It contains the numbers 1 through 36 plus a zero (0), thus making 37 outcomes possible in total. For each spin of the wheel, one number will be successful and 36 will lose. If the player chooses the winning number correctly, at “true odds” the payout should be 36-to-1. But that’s not the case. Instead, the casino pays only 35-to-1 and creates for itself an advantage.

To see exactly how this reduction in the payout amount affects the player’s ability to win, consider the player who wagers one chip on every single number on the Roulette layout, including the zero. The player might be tempted to think that the bet cannot possible lose. After all, one of the numbers bet must come up on the next spin. But when that happens, the player will forfeit 36 losing chips and receive just 35 chips as the payout. That’s a net loss of one chip for every 37 wagered, or 1/37 = 2.7%—which just happens to be the House Edge for the game of European Roulette.

In the game known as American Roulette, the payout for a successful bet on a single number is the exactly same, 35-to-1. However, because the American wheel has a double zero (00) in addition to the zero, there are 38 numbers in play on every spin, not 37. The player who covers every number with one chip will risk 38 chips in total, only one of which will win. That means 37 chips will be lost, 35 chips will be received as the payout and the net loss will be two chips. In other words, the House Edge increases from 1/37 = 2.7% to 2/38 = 5.26%—almost double!

House Edge for Various Casino Games

Based upon the example given above, if this is the only difference between two games of Roulette, players would obviously be well advised to wager on the European version and stay away from the American one. But what of Roulette versus Baccarat or Blackjack? What games have the lowest House Edge and the highest probability of success?

Keno is clearly the casino game with the highest House Edge—a casino advantage ranging from 25% to 29%—about ten times that of European Roulette. At the other end of the scale, the House Edge for Craps is one of the lowest—as low as 0.021% when played with such favorable rules as 100X odds on the pass line. Between these two extremes fall all other table games, including Blackjack with a House Edge of 0.28% when Vegas rules are in effect. Baccarat, by comparison, favors the House by 1.06% on the Banker hand and 1.24% on the Player hand.

For Pai Gow Poker, the House Edge is typically around 1.48%, while for Caribbean Stud it is often in the vicinity of 5.22%. For Sic Bo it can vary between 2.78% and 33.3%, depending on the wager. Meanwhile, Slot games may feature a House Edge anywhere from 2% to 15%, and for Video Poker it averages around 0.46% in the case of Jacks or Better with a “full pay table.”

Changing the Odds, for Better and for Worse

Blackjack is a game with many variations in House Rules and one of the few games where the skill of a player can actually affect the casino’s built-in advantage. Single-deck Blackjack with classic rules and payouts offers the lowest House Edge. Players who pick tables with the most favorable rules and then adhere strictly to basic strategy can quite easily reduce the House Edge and tip the odds their way.

For example, in a single-deck game where the dealer stands on soft 17, shuffles after every hand, and allows doubling down not only on any two first cards but also after a split, a player making optimum choices will have an overall advantage of 0.15%.

On the other hand, the casino might allow the dealer to hit on soft 17 and take away the player’s ability to double down after a split. Those two seemingly small changes have the effect of flipping the odds so that the House gets at least a 0.17% advantage over the player.

Another way in which the House Edge can be increased is through modification of the payout rules. Using the single-deck rules outlined in the first example above, the House could choose to pay just 6-to-5 for a natural blackjack on the first two cards instead of the standard 3-to-2. That may seem like a minor change, but it actually boosts the House Edge up to 1.24%.

For that reason, players will always want to be on the lookout for games with rules to their advantage. Blackjack rules that help the player include a) more capability to split and double down, b) the right to take late surrender, and c) opportunities to re-split or hit split Aces, among others. When casinos prohibit doubling down on totals other than 10 or 11 on the first two cards or if they do not allow splitting more than two hands, the House Edge increases. Players must seek to avoid tables with such unfavourable rules.