Online Casino Terms: What is House Edge?

House edge
Share on Social

 

When it comes to online casinos there are terms that any player should understand.
One of those terms is “House edge”.
In this article we will explain how it works, how it is calculated and how it affects your chances to win.

What is House Edge?

The house edge is a term that describes the casino’s inherent advantage over the player. It signifies the percentage of every wager that the casino expects to earn in the long term. This percentage is coded into the rules of the game, and it is intended to guarantee that the casino earns a profit over time, regardless of whether individual players win or lose.

For example, suppose a game has an edge of 5%. In that case, the casino anticipates earning $5 for every $100 wagered in the long term. This does not necessarily mean that a player will lose $5 for every $100 wagered, but rather that the casino expects to retain 5% of all wagers made on that game over time.

How is House Edge Calculated?

The computation of this edge involves a complex mathematical formulation that accounts for both the likelihood of the game and the corresponding payouts. This intricate formula entails a comparison between the odds of winning a specific wager and the payout proposed for that said wager.

Take, for instance, a game of roulette, where a bet on a single number has a 1 in 37 chance of winning, considering that there are 37 numbers on the wheel. However, the payout for such a bet is only 35 to 1. Hence, the edge for this wager is derived as follows:

House = (Payout Odds – True Odds) / Payout Odds

House Ege = (35 – 36) / 35

House = -0.027 or 2.7%

Accordingly, the casino can expect to retain 2.7% of all wagers placed on this particular bet over time.

How Does House Edge Affect the Player?

The influence of the house edge cannot be underestimated in terms of its effect on a player’s chances of achieving victory. If the edge is high, the player’s likelihood of emerging triumphant is reduced. In order to maximize the odds of winning, it is advisable to avoid games with a high edge and stick to games with high RTP, in order to maximize your chances to win.

Take slot machines, for example, which ordinarily possess a house edge of approximately 3-6%. This suggests that, for every $100 stake, the player can anticipate relinquishing a sum of $3-6. Since slot machines present a high level of variance, they pay out infrequently but have the potential for substantial payouts. Nevertheless, this high level of variance is neutralized by the high house edge, guaranteeing that the casino earns a profit over time.

Conversely, games like blackjack and video poker have much lower house edges, generally around 0.5-1%. As a result, the player is likely to lose a significantly lesser sum of money over a period, since the house edge is comparatively smaller.

Conclusion

When it comes to playing at online casinos, one must understand the critical concept of “house edge.” It represents the advantage that the casino holds over the player, ensuring its profitability in the long run by embedding it within the game’s rules. To increase one’s chances of winning, it’s important to understand how the house edge is calculated and which games have lower house edges. Opting for online casinos with transparent rules and low house edges is essential to ensure a fair deal and maximum chances of winning. With the knowledge of essential casino terminology, one can make informed decisions and enjoy a more fulfilling online gaming experience.