What is the house edge in gambling?

Understanding what the house edge is in gambling

The house edge is the share of each bet that the casino anticipates it will retain in the long run. It’s a statistical edge that guarantees the casino will always win in the long term, no matter how much the outcome of any game might vary in the short term.

Knowing the significance of the house edge will help you place your bets wisely, as it differs from game to game. The larger the house edge, the more likely the casino is to win over a long period of time.

What is the difference between house edge and RTP?

It's easy for players to mistake house edge for the term "Return to Player" (RTP), but they are actually opposite sides of the same coin. Here's a brief explanation of both.

• House Edge: The percentage of each bet that the casino keeps to itself.

• RTP: The percentage of the total wagers that are returned to players as winnings over time.

For example, if a game has a house edge of five per cent, the RTP would be 95 per cent. Although the house edge works in favour of the casino, RTP works in favour of the players. The two are inversely related, meaning that as one increases the other consequently decreases.

How does a casino house edge affect your winnings?

The casino house edge directly impacts your long-term winnings. You might get lucky and win in the short term but the house edge ensures that over time the casino will make a profit.

Let’s look at some examples of how the house edge impacts different casino games:

The long-term impact of the house edge becomes evident the more you play. If you are playing a game with a high house edge, such as slots or roulette, you are likely to lose money faster than you would at a table game like blackjack.

Casino game with the lowest house edge

If you are looking for games that limit the casino’s in-built advantage over you, then you should focus on those with a lower house edge. Here are some popular casino games with the lowest house edge:

Blackjack

Blackjack is one of the best games to play if you want to minimize the house edge. The house edge can be as low as 0.5% when players utilise optimal strategy. It is a game of skill as well as chance, and your decisions can significantly influence the outcome.

Baccarat

With a house edge of around 1.06% on the banker bet and 1.24% on the player bet, baccarat is another game with a relatively low house edge. It is simple to play, making it a popular choice for casual gamblers.

Craps

Craps offers several bets with a low house edge. The Pass Line bet, for example, has a house edge of just 1.41%. Sticking to these low edge bets reduces the casino’s advantage over players.

Video Poker

Video poker offers one of the lowest edges in the casino, with house edges that can be as low as 0.5% if you play the right variation and use the right strategy.

European Roulette

European roulette is preferred over its American counterpart because it has a lower house edge of 2.7%. This is due to the fact that European roulette has only one zero, whereas American roulette has both a single and a double zero.

Poker-Based Games

Games like Texas Hold'em Poker and Caribbean Stud Poker have relatively low house edges, but it also depends on how adept a poker player you are.

How to beat the house edge? Is it possible?

Unfortunately, no strategy can eliminate the house edge entirely, but there are ways to minimise its impact. You should only use strategies that improve your odds or help you manage your bankroll effectively. Here are some strategies that will help you lower the house edge:

• Card Counting

In games like blackjack, card counting can give you an advantage by keeping track of the ratio of high to low cards remaining in the deck. While this does not eliminate the house edge, it can reduce it.

• Bankroll Management

Setting limits on how much you are willing to bet can help you preserve your bankroll in the long term. 

• Optimal Strategy

Playing with an optimal strategy, especially in games like blackjack and video poker, can minimise the house edge. For example, learning the best moves in blackjack or understanding which hands to hold in video poker can reduce the house edge significantly.

• Myth vs. reality

There are many myths surrounding the idea of "beating the house edge", especially when it comes to luck or superstitions. The reality is that there is always a house edge which is always in favour of the casino, but the right strategies can help you reduce its effect.

The house edge in online casinos

Online casinos typically have the same house edge as traditional land-based casinos, but there are a few differences worth noting.

• Software-Based Odds

Online casinos use Random Number Generators (RNGs) to determine the outcome of games. This ensures fairness but players still need to be aware of the house edge.

• Differences in Payout Percentages

Online casinos may offer slightly higher RTP percentages on certain games compared to their land-based casinos. This is often due to lower overhead costs and the ability to cater to a larger, global audience.