Generally speaking, casino games are specially designed to be profitable by giving the house a statistical edge on players. This advantage is called the house edge and it guarantees online casinos’ profitability in the long term.
This brief guide will tell you exactly what the house edge is and how it works, along with additional information on standard deviation and the element of risk.
What Is the House Edge?
Shortly put, the house edge is the average loss ratio to the initial bet. It tells how much a game will pay out on average throughout its lifespan. It also provides information on the best returns on players’ bets.
The house edge is the product of the games themselves and it is not pre-set by casinos. In games like blackjack or Caribbean Stud Poker, the initial bet is not necessarily the last one. Some games allow players to gradually increase their wagers depending on the odds. This means the extra money a player wagers on these games is not part of the denominator that determines the house edge. In games like Ultimate Texas Hold 'Em that ask players to make two initial bets, the house edge is only based on one of these wagers.
House advantage figures are determined by optimal or near-optimal gameplay strategies chosen by players. Taking advantage of free spins bonuses offered by top online casinos is one way of testing around a few different house edges on exciting slots.
How Does the House Edge Work?
Knowing the house edge of some of the most popular online casino games can make a huge difference for players eager to redeem the best welcome bonuses and start playing at a new casino. For example, a player who knows a game has a 0.7% house edge can assume that for every $10 bet they place, they lose 7 cents on average. Poker machines that rely on the Random Number Generator (RNG) mechanism use a computer program to randomly choose symbol combinations when players click a button. The RNG is therefore programmed in such a way that it will generate more losing symbol combinations than winning combinations.
On a single zero game of roulette with 36 numbers and the added green zero, the spinning wheel can randomly stop the ball on one of the 37 possible stops. This means the odds of a player selecting one of the 37 possible stops is 1 in 37. At the same time, the house payouts are set at 35 to 1. This means the house never loses in the long run thanks to the 2.7% house edge.
Here are a few useful examples of house edge values for some of the most popular online casino games you could play with no deposit bonuses:
- 2.70% house edge for single zero roulette
- between 2% and 15% for slots
- 1.06% for baccarat
- 5.22% for Caribbean Stud Poker
- 1.46% for Pai Gow Poker
- between 25% and 29% for keno games
- 7.28% for Three Card Poker
- 0.46% for video poker
What Is the Element of Risk?
The element of risk is a tool used to measure a player’s chances of winning a game that requires multiple bets. It offers a modified house edge that relies on several wagers. The element of risk also represents the average loss divided by the total bets. Those bets where the original bet is also the final bet do not present any differences between the house edge and the element of risk. Bets, where such a difference exists, include:
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Blackjack played with Atlantic City rules with a house edge of 0.43% and an element of risk of 0.38%
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Caribbean Stud Poker with a house edge of 5.22% and an element of risk of 2.56%
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Let It Ride with 3.51% house edge and 2.85% element of risk
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Three Card Poker (Ante & Play) with 3.37% house edge and 2.01% element of risk
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Casino War (on the Go to war on ties bet) has a house edge of 2.88% and an element of risk of 2.68%
What Is Standard Deviation?
This element measures the volatility of a player’s bankroll while engaged in a certain online casino game. It is used to determine the probability that a certain number of bets within a session will end within pre-set limits. The standard deviation formula for the final result over N bets is the product of the standard deviation for a single bet and the square root of the number of initial bets completed during the session.
The formula assumes that all casino bets are equal in size. The probability that the result of a session will fall within a standard deviation is 68.26%. The probability that the result of a session will fall within two standard deviations is set at 95.46% and 99.74% for three standard deviations. The greater the variance in standard deviation, the more limited the number of times players can wager their bankroll before losing them in their entirety. At the same time, the number of bankroll wagers goes higher when the standard deviation goes up.
Final Thoughts
The CBN team recommends players brush up on their house edge knowledge given its crucial role in determining their average loss. Along with the standard variation and the element of risk, players can use this measure to protect their bankrolls with more ease. It is also important that players consider the time spent engaged in a certain game, the average size of their bets, and the number of rounds per hour they anticipate they can play.
