House edge
What is house edge?
House edge is a fundamental concept in gambling and casino gaming. It refers to the built-in mathematical advantage that a casino or gambling operator holds over players in any given game. Expressed as a percentage of total bets, this metric represents the average profit the house expects to earn from each wager over the long term.
While luck and variance can affect short-term results, the house advantage ensures that the casino remains profitable in the long run.
Why does house edge matter?
Understanding the house edge is crucial for both players and operators. For gamblers, knowing the expected return on different games helps them make smarter choices, manage their bankrolls, and set realistic expectations. For casino operators, the house advantage is a core part of business strategy, directly impacting gross gaming revenue (GGR) and long-term profitability.
The house edge also promotes transparency. By comparing the expected return across different games, players can identify which options offer better chances and which are designed to favor the casino more heavily.
For a broader look at how operators use this data, see Blask’s guide to iGaming KPIs.
How is it calculated?
To determine the house edge, you need to analyze the probabilities of all possible outcomes and their respective payouts. The formula is:
House edge = ((Total amount wagered – Total amount paid out) / Total amount wagered) × 100%
Example:
Suppose players wager $200,000 on a game, and the casino pays out $194,000 in winnings. The house edge is:
($200,000 – $194,000) / $200,000 × 100% = 3%
This means that, on average, the casino expects to keep 3% of all money wagered on this game over time.
House edge across popular casino games
Different games offer different house advantages. Here’s how the edge compares in some of the most popular gambling activities:
- Blackjack: 0.5%–2% (with optimal strategy and favorable rules)
- Roulette: 2.7% for European (single zero), 5.26% for American (double zero)
- Slot machines: 2%–10% (varies widely by game and operator)
- Baccarat: 1.06% (banker bet), 1.24% (player bet), 14.4% (tie bet)
- Craps: 1.4% (pass/come bets), up to 16% (certain proposition bets)
- Video poker: 0.5%–5% (depending on paytable and strategy)
For insights on how game selection and performance affect operator revenue, check out Blask’s Brands page.
How does house edge influence player experience?
The house edge shapes the long-term outcome for players. Games with a lower edge, such as blackjack or baccarat, give players a better chance to win or extend their playtime.
High-edge games, like certain slot machines or keno, offer bigger potential jackpots but result in faster losses over time.
Players who understand the house advantage can adjust their strategies, choose games that fit their risk tolerance, and make more informed decisions.
For example, a player seeking longer sessions may prefer games with a low house edge, while those chasing big wins might accept a higher edge for a shot at a large payout.
Casino profitability
For operators, the house edge is a key driver of revenue. By setting the edge at the right level, casinos can balance player appeal with sustainable profits. Too high an edge may deter players, while too low may cut into margins.
The right balance ensures a steady flow of gross gaming revenue (GGR) and helps operators manage risk.
To see how house edge fits into broader business metrics, visit Blask’s guide to iGaming KPIs.
How does house edge compare to other key metrics?
| Metric | What it measures | Best for |
|---|---|---|
| House edge | Casino’s mathematical advantage | Long-term profitability |
| GGR | Revenue after payouts | Operator performance |
| Blask Index | Market share and interest | Market analysis, trends |
Real-world example
Imagine a new online casino launches a suite of slot games with an average house edge of 4%. Over a month, players wager $1,000,000.
The casino expects to keep $40,000 as profit, paying out $960,000 in winnings. If the operator introduces a slot with a lower house edge (2%), more players may be attracted, but the casino’s profit per dollar wagered decreases.
Operators often use data-driven insights to balance game appeal with profitability, adjusting house edge levels to optimize for both player retention and business growth.
How to find games with the lowest house edge
- Research game rules: Some versions of the same game offer better odds. For example, European roulette has a lower house edge than American roulette.
- Learn optimal strategies: In skill-based games like blackjack or video poker, using the right strategy can reduce the house advantage.
- Check payout tables: Paytables in slots and video poker reveal the expected return to player (RTP), which is the inverse of the house edge.
- Read casino reviews: Trusted review sites and analytics platforms like Blask provide information on house edge and game fairness.
For more on responsible play and player behavior, see Blask Customer Profile: responsible gambling.
Responsible gambling
Understanding the house edge is essential for responsible gambling. By knowing the expected loss rate, players can set realistic budgets, avoid chasing losses, and enjoy gaming as entertainment rather than a way to make money. Operators also use house edge data to promote transparency and player protection.