The Casino’s Allure – and How the House Edge Adds to It
The allure of the casino lies not only in the prospect of increasing your fortunes, but in the subconscious nostalgia of playing arcade games at the strip mall on weekends, Monopoly on rainy Sunday afternoons, or UNO around the table.
Whether you think of casinos as Disneyland for adults or not, a casino is a business aimed at having its customers walk away with a smile while still making a profit – the fundamental goal of every business, really! After all, if there were no profit, there would be no casinos – and if the patrons weren’t happy, there wouldn’t be any means of profit.
But have you ever wondered how casinos make their money? Are the slot machines rigged, the dice loaded, the dealers professional cardsharpers, and the roulette wheels magnetised? Absolutely not!
Casinos, just like their customers, are basically gambling. With every game, the casino is betting that the odds will be in their favour. And they almost certainly are every time – thanks to something called the house edge. But this doesn’t mean there isn’t the chance for you to win big when playing casino games. Really big too.
House Edge vs. The Odds
Now, there is actually a difference between the odds being in your favour (or out) and the house edge.
The odds refers to probability, the chance factor in a game, and are determined almost entirely by the hand you’ve been dealt.
House edge, on the other hand, is a term for the mathematical advantage the casino has to ensure a profit. It’s the built-in profit margin that allows the casino to make money regardless of whether you win or lose.
Understanding the House Edge
Every game has its own house edge, of course – and depending on the game, each round can have it’s own fluctuating edge too. For games of chance such as bingo, slot machines and roulette, the house edge is relatively high on average. Games of combined skill and luck, on the other hand – like blackjack, poker and craps – have a relatively low estimated profit margin.
If you bet $1 on a coin toss and were paid back $1 when you win, you have been paid true odds on an even bet. If you’re only paid 95 cents per win on the other hand, the difference is 5 cents profit. This is a simplification of the equation used to determine the house edge: true odds minus returns.
Roulette and Blackjack
Let’s use roulette as an example. Using a double zero or American wheel, where there are 18 red numbers, 18 black, a 0 and a 00, the odds of your number winning is 1 in 38. With a bet of $1, your returns on a winning spin is $35 plus your original $1 for a total of $36. The odds are therefore 38 and your reward is 36 (on a single number bet), with a difference of 2.38 divided by 2 is 5.26% – the house edge.
Because there are always 38 numbers on a double zero roulette wheel, the odds are fixed: one spin cannot change the outcome, as there are only so many possibilities, and therefore a fixed house edge.
Blackjack, on the other hand, is a game where the advantage can switch between player and house with every card dealt, depending on the card and the player’s skill. Even though there are a fixed number of cards, there are about 2,652 possible combinations assuming only two cards will be dealt for the round. With every card dealt, the number of possible future draws grows less, and your odds for a specific card grow less as well.
For this reason, the house edge is constantly evolving in a game of blackjack – but you can be assured that it always exists.
How the House Edge Works for You
Because of the house edge, casinos don’t need to employ card-sharpers, rigged slot machines, magnetised roulette wheels or loaded dice in order to make a profit – in fact, if they were to cheat in any way, you’d be far more likely to lose and far less likely to return as a result.
When you understand how the house edge works, you’ll also begin to realise that playing multiple hands or numbers does not automatically afford you any real advantage. Even though betting on two numbers in roulette doubles your chances of winning, your chances of losing also doubles, because your actual win or loss is based on the sum you bet.