The House Edge

A clear understanding of the house edge is necessary to anyone who hopes to make any serious money at a casino. This is the single most important factor in determining one’s chances when starting to play a game. The house edge in an online casino, it is important to note, is the exact opposite of the payout percentage. The reason this is important, is that it is a slightly different system than that used in brick and mortar casinos. Let’s take a look.

The first thing any player should do at an online casino is to clearly understand his or her odds. Never forget that the casino is not there for your joy. It is not there for your entertainment. It is not there to hand you over any money. The casino has one purpose in mind. To take your money however it can. This goes directly counter to your purpose, which is to take money out of the casino. The interesting thing about this, is that when you win, you are not taking money from the casino proper. You are taking money out of a pool that builds up when other players lose. It is a zero sum game and that necessarily means there are winners and there are losers. Luckily for the casino, those rules don’t apply. They have a nifty little thing called the house edge.

For anyone about to play a game, there are two types of odds working concurrently. The odds as you understand them, and the true odds. Any game with even money is based on true odds. If one bets one dollar and gets back a full dollar, the odds were true at 1:1. Now, sometimes games have games that advertise true odds, but payout is not exactly 1:1 it is more like 1:0.98. This gives the casino an edge of 2%. It’s not much, and makes little difference on the surface, but it does mean that slowly, but surely, the casino is racking up some serious money whether you win or lose. Generally speaking, these are your odds. And they will be expressed as 98% by the casino. The house edge and your odds are two sides of one coin.

Every game has a different house edge. This further complicates matters, because not everyone is savvy enough to go look up the odds on any given game. All people want to know is that a casino is known to pay back a good amount of cash. This is not enough information, because the global percentage is an aggregate average of all the games in the house. Some games might even have a 101% payback rate, which skews the numbers to make them seem more favorable. At the same casino you might find games with payback percentages as low as 75%. Only a fool would sit at such a machine.

There are two games in the casino that are less subject to fixed house edges. Whereas most games are set in stone, these two particular games are set up in a way that rewards skilled play. This means that the average player will have one set of odds that are the same for any random choice. If an unskilled player sits at the blackjack table and a chimpanzee is next to him, making random choices, both have the same odds of winning. As players learn the games and the probabilities associated with them, however, the picture changes. The chimpanzee can never improve his odds, but the skilled player can. This makes an enormous difference when it comes to actually making money.

It is not difficult to find out the odds in an online casino. They are often posted directly on the homepage. This is required by regulatory standards, and it is a boon to players, who can use the information to determine their best chances at succeeding. Choosing the right games is the first step toward defeating the house advantage.

The casino has a particular word used to describe the money it earns through the house advantage. This is known as the “House Drop”. The House Drop has an interesting peculiarity. It is designed to give the casino an advantage over a long period of time. If a player spends a long time at a game, the House Drop slowly increases. This is a mathematical certainty. Over the short term, though, the House Drop has no measurable action. Over the course of two roulette spins, a player might win an inordinate amount of money and walk away. In this scenario, the House Drop didn’t have time to aggregate its function and the casino is unable to earn money from the winning player.

The way the House Drop works is by the law of averages. Over time, every player’s chances of losing increase steadily. Short play sessions are therefore much preferable to gambling marathons. And if a player happens to make a significant win, the smartest thing to do is to walk away with it, because the House Drop will come into effect eventually and slowly chip away at the newfound money.

Oftentimes, people think of odds and the house edge as the same thing. I said before that they are interconnected and two sides of one coin. This distinction is important, because they are not the same. The best example to illustrate the difference between odds and edge is to look at the game of roulette. In French roulette, there are 37 slots on the wheel: 36 numbers and one 0. The odds on roulette are given as 1:36. What about that 0? It isn’t counted in the odds. The casino is paying as though there are 36 slots on the wheel instead of 37. That 0 slot gives the house an advantage. The true odds are 1:37. The difference between the given odds and the true odds are exactly 5.26%. The house edge sits squarely inside the difference. In the case of roulette this is immutable.

I mentioned already that in blackjack and video poker, the house edge is not set in stone. Random play at a blackjack table (the chimpanzee, for example) has a house edge of 5%. Not terrible. Many players might think they’re pretty successful given these odds, and might walk away happy. A skilled player, however, whittles the house edge down to 0.5%. A half percent difference from the casino. It might not sound like a lot, but it is an enormous difference.

When playing at an online casino always look for the games with the lowest house edge because they offer the best chance at keeping your money in your pocket. At every losing round, a smaller percentage of your capital will be taken away, which means you can play for much longer periods of time. Although over time you will slowly bleed money, this is also the only way to survive until a significant win. Once a win occurs it is best to walk away—particularly if one is ahead at that point.

The odds, unfortunately are always rigged in casinos. This is not a reason not to play. The entire point of the casino is that it offers a high risk/reward ratio. Those who win, win big. The risk is definitely worth the reward. This concept is the same as when playing a lottery. The risk of almost certainly losing $1 is worth the reward of winning $1,000,000. The casino merely offers more frequent chances to make the same wager.