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| Online Casino House Edge Explained |
The house edge is where the casino makes its money. If a casino has a house edge of 3% then for every £100 that is bet there the casino gets to keep £3 and £97 is returned to the players like at sportsbook 32x.
This is a long term average and it certainly does not mean that you will only get back £97 out of every £100 you bet. For instance, if on one evening a total of £1 million pounds are bet at the casino by a large number of players, then the casino pays out £970,000 and gets to keep £30,000. Some people will win more than others; some people will lose more than others.
Different casino games have different house edges. The game with the lowest house edge is blackjack which has a house edge of between 0.5% and 1% depending on the specific format of the game being played. This assumes that the player is flat betting and playing optimally using basic blackjack strategy. If the player diverts from that then the house edge increases to 3% to 5%.
Some games have quite high edges. For instance Roulette has a house edge of 2.63% if it's the European version or 5.26% if it is the American version. Keno heavily favours the house with a house edge of up to 25% and slots have house edges of just a few percent to up to 15%.
The way to make money from casinos despite their house edge is by exploiting variance. Just as different games have different house edges, they also have different variances and betting offers. Looking at a game such as roulette, we can analyse it using the binomial distribution. There is not space here to go into the details, but it is possible to show that the variance (or standard deviation) of ten spins of the wheel is 3.13. Now the range where nearly all the players will end up is taken to be six standard deviations so after ten rounds with everybody betting £1 a round, 99.9% of players will, after taking account of the house edge, on average be between £10 down and £8.00 up. We just need to make sure that we end up on the right side of this.
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