Have you ever wondered why they always say, ‘the house always wins,’ when it comes to gambling? That’s because there is such a thing as the house edge in most kinds of organized gambling activities. While gambling is a form of recreation that many people all over the world indulge in, it also serves as the foundation for a large global industry that rakes in billions of dollars annually. Whether it be through traditional gambling establishments or on online platforms, the gambling market is generating massive revenues and is an economic driver for numerous countries around the globe.
The Business of Casinos
At the end of the day, a casino is there to make money. It’s a business venture that sells a certain service to its consumers. In this case, as a gambler, you are the consumer who is availing of a service. Of course, you are always free to organize your own card games at home with friends and family. But there’s certainly a different appeal to playing games at the casino or on a mobile app. There’s a certain level of convenience and excitement to pushing your chips towards the center of a table in the hopes that you’ll win big.
One key to sustainability in business is profitability. And if casinos are losing money to their players, then that wouldn’t make for a very profitable business model, would it? This is precisely where the house edge comes in. Casino games are typically structured in a way to favor the house, more often than not. For a game like poker, the house suffers no losses as players lose money to each other while the house continually rakes up profits for big hands. In a game like blackjack, the player definitely has the potential to win some money from the house. But because the way the game is formatted, players are always likely to come out on the losing end in the long run.
What is the House Edge?
Essentially, every game will have varying levels of chances of winning. A house edge is a mathematical representation of the probability of the house winning against a player. Of course, again, it’s possible for some players to come out of a night at the casino with a huge amount of winnings. But for the most part, more money is lost on the side of the player than on the side of the casino.
Again, the house edge can vary depending on the casino game. Players typically rely on luck to win casino games instead of strategy. Even a game like poker, which requires a great deal of analysis and strategy, still relies heavily on the luck of the draw. But this is further intensified with other games like baccarat and roulette. Slot games are notorious for favoring the house significantly, but it’s still one of the most popular casino games in the world. A lot of that has to do with the fact that slot games are so accessible in many places. Aside from that, slot games are incredibly easy to get into and appeal greatly to novice gamblers who want to get into the hobby for the first time.
Calculating the House Edge
Again, the house edge can vary from game to game. Roulette, for example, allows betters to wager on a number anywhere between 1 and 36. While you think that you have a 50% chance of winning here when you just bet odd or even, there’s something you’re not taking into consideration. There’s an extra “0” on the board that isn’t included in the bets. This improves the house’s chances of winning to just a little over 50%.
Even different slot games will carry different chances of winning. There’s even a number for every slot game called the RTP or return-to-player. This is a calculation of the amount of money that the machine has historically given back to players relative to how much money was put in. Many slots players use the RTP as a way to gauge just how lucky they can get with a specific machine.
Knowing Your Limits
That’s why it’s very important for many gamblers to quit while they’re ahead. A lot of the time, greed can get the best of a player. And at the end of the day, if you continually push your luck, the house is eventually going to come out on top.