Last updated on March 10th, 2025 at 01:30 pm
House edge is a term often bandied about on casino review sites and iGaming resources as though everyone’s supposed to know what it means.
And you absolutely should.
The house edge refers to the statistical edge all casinos hold over players in every casino game. This built-in house advantage is represented as a percentage indicating the casino’s average expected profit from each wager. House edge influences casino odds and your chances of winning in any casino game. The house edge guarantees the casino turns in a profit and wins more money than it loses.
This guide sheds light on the fundamental concept of house edge and explains it in a clear, comprehensive manner. Learn what house edge is and how to leverage it to make better betting decisions.
House Edge vs. Return to Player (RTP)
You may have seen house edge and return to player (RTP) percentages in Instant Casino’s resources and game descriptions. They represent the same thing in different ways. They indicate how much a casino game pays out over time and how much profit the casino keeps.
It’s important to look at every game’s house edge before playing since the numbers indicate your odds of winning and how much you can expect to get paid on average.
Defining RTP and Its Relationship to House Edge
The concepts of return to player and house edge are often misconstrued for one another. But in reality, they are inextricably linked concepts.
RTP is the theoretical percentage every casino game returns to players over time. It’s typically expressed as a decimal. This means an online slot with a 94% RTP will pay out €94 to players for every €100 wagered over its lifecycle.
The house edge is the percentage of all money wagered on a game that the casino keeps.
The following equation summarizes the relationship between the house edge and RTP:
House Edge = 100% – RTP percentage
Classic table games like blackjack, baccarat, roulette, and craps often display the house edge expressed as a low percentage (e.g., 1.17%, 3%, or 5%). Online slots often display the RTP as higher percentages (e.g., 96%, 92%, or 97%).
How RTP Impacts Player Winnings
Higher RTP games favor players over time due to their lower house edges. This gives a better chance of winning. Conversely, lower RTP games favor operators since it gives them a higher house edge.
It must be mentioned, however, that RTP doesn’t guarantee that you’ll win back the said percentage in a single or even hundreds of sessions. RTP cannot be used to predict specific outcomes; however, it can slightly improve your chances of winning over the long run.
House Edge in Popular Casino Games
Behind the allure of slots and table games lies a fundamental mathematical concept in the form of the house edge. It indicates the casino’s profit margin it expects in each game. Regardless of the game, knowing how to use the house edge can be the difference between a profitable session and a bad one.
Blackjack
If blackjack outcomes are determined by chance, it would be reasonable to believe that the dealer and player have an equal chance of winning. There is no way for the dealer to have a stronger hand than the player, assuming both play by the same rules. That’s where the house edge in blackjack comes in.
Blackjack rules inherently favor the dealer due to the “double-bust” rule. If you bust out with your cards exceeding 21, you automatically lose. Even if both the dealer and player bust out, you lose because the dealer acts last. However, when playing blackjack with flawless basic strategy, you can reduce the house edge to as low as between 0.5% and 2%.
Roulette
Single-zero European roulette is the best roulette variant in terms of house edge, with 2.70%. American roulette, which has a single zero and a double zero slot, has a higher house edge of 5.26%. European roulette wheels have 37 slots, while the American variant has 38.
The substantial decrease in house edge between variants is solely due to the extra double-zero pocket in American roulette. In terms of pure profit potential, European roulette is more favorable, assuming you stick to just even-money outside bets (e.g., red/black, odd/even, or high/low).
Craps
The bets with the lowest house edge in craps are Don’t Pass (1.36%) and Pass Line bets (1.41%). Paired with odds bets behind them, which have a 0% house edge, these two bets offer the best chances of hitting. The house edge on craps bets significantly increases in proposition bets. These are one-roll bets on specific outcomes, with house edges rising upwards of 9%, increasing the higher they pay out.
Baccarat
Known as James Bond’s favorite card game, baccarat features some of the lowest house edges in town. The object of the game is simple: to predict whether the Banker or Player scores a hand equal to or closest to 9 without going over or if the game ends in a tie.
Here’s what the main baccarat bets look like in terms of house edge:
- Banker win. The house edge on Banker bets can be as low as 1.06%. Although casinos often charge a 5% commission on winning Banker bets, it remains the best baccarat bet. Winning banker bets pay out at a 0.95:1 clip.
- Player win. The house edge on Player bets is 1.24%. Winning player bets are paid out at even money with no commission.
- Tie. Despite paying out at an 8:1 rate on winning Tie bets, they feature a 14.36% house edge. It’s the worst bet out of the three.
The low house edge in baccarat gives players a good chance at seeing almost a 100% RTP on their bets.
Slot Machines
On average, slot machines feature a house edge of approximately 4%. However, the house edge varies wildly between games. For instance, slot machines in physical casinos can offer a house edge as high as 20% (indicating a ridiculously low RTP of 80%), while some of the top high RTP online slot games offer a house edge as low as 1 to 2%.
The house edge varies depending on how the game was developed and the RTP percentage set by each game’s random number generator (RNG). Here’s how these main factors influence slot game house edges:
- Paytable. Payout structures are central to slot game development. They indicate the size and frequency of winning combinations. Slot games featuring higher payouts for landing rare winning combinations tend to have a low house edge.
- Volatility. High volatility slots offer bigger payouts but less frequent wins. These can contribute to lower RTP rates and higher house edges.
- Bonus features. Free spins, metagames, and other gameplay features influence house edge. Slots with more bonus features could have a lower house edge than those with simple gameplay.
- Random number generator algorithms. Developers add RNGs to slot games. The algorithm used determines the game’s RTP. RNGs ensure that every spin outcome is independent and randomized. They are tested by audit labs before being deployed in slot games. Developers and labs run thousands to millions of spins in a short amount of time to determine the RTP.
Ultimately, theoretical slots RTPs differ from actual RTP rates. Your odds of winning at slots are determined by hit frequency, game features, max wins, variance, and volatility. For this reason, slots typically offer higher house edges than table games.
Factors Influencing House Edge
House edge varies across casino games due to the following factors.
Game Rules
The house edge is baked into casino games as part of their rules. It can vary depending on game rules and variants. This includes game mechanics and probabilities of winning outcomes. For instance, single-zero European roulette has a significantly lower house edge of 2.7%, making it a better variant to play than American roulette.
However, in French roulette, the house edge is minimized to a miniscule 1.35% on even money bets, making it the highest RTP (98.65%) roulette variant. The key difference is the introduction of two rules to the French game:
- En prison rule. En prison takes effect whenever the ball lands on zero, and you have a live even money wager on the board. Your bet will be placed “in prison” for the next spin. If it wins, you’ll get 100% of your stake back. Otherwise, you lose your stake.
- La partage rule. Similar to En prison, La partage takes effect when the ball lands on zero, and you have a live even money bet. You receive half your stake back.
These two rules, combined with a single-zero wheel, make French roulette the most attractive option for punters looking to beat the house.
When it comes to blackjack, the number of decks that variants use can significantly reduce the house edge when played with basic strategy. Single-deck blackjack, for instance, reduces the house edge as low as 0.5%. Understanding rule variations can help you choose blackjack games with better odds of winning.
Player Decisions
Player decisions also play a major role in reducing the house edge in games. For instance, in blackjack, playing with perfect basic strategy can reduce the house edge to as low as 0.5%. The same can be said for games like video poker and poker, where optimal player decisions can give you a slight advantage in certain situations.
Bet Types and Probabilities
As we mentioned earlier in craps, bet types and probabilities change depending on the payout they offer and the probability of them hitting. In roulette, outside bets have lower house edges than inside bets. This is reflected in their lower money payouts and higher chances of hitting. Inside bets offer higher payouts, but their higher house edges give them a lower probability of hitting.
Strategies to Manage House Edge
There isn’t one strategy that will completely overcome the inherent house edge. But players can leverage their understanding of it to their advantage and make better decisions when choosing games to play. By focusing on games with a lower house edge, using optimal strategy whenever possible, and managing bankroll properly, you can tilt the odds slightly in your favor.
Playing Games with a Low House Edge
Choosing games with a lower house edge will give you better odds of profitability over the long run. These include games like blackjack, which offers the lowest house edge when played with basic strategy, and baccarat, which offers the second-lowest house edges available.
While playing games with a low house edge won’t guarantee wins, they offer better odds of paying out over the long run.
Using Basic Strategies
Since blackjack is one of the few table games where you have a measure of skill and discipline, you can increase your chances of winning by implementing basic strategy and good bankroll management.
However, deviations from optimal strategy and blackjack variants can significantly increase the house edge. To keep the house edge in blackjack to a minimum, follow these tips:
- Master blackjack basic strategy. Blackjack basic strategy gives you the best chance of winning. Basic strategy is a set of guidelines providing suggestions on when to hit, stand, double down, and split. Handy cheat sheets are available in iGaming resources.
- Avoid insurance. Pros avoid insurance because it increases the house edge considerably. It implies a one-in-three chance of the dealer getting blackjack from a face-up Ace card, blowing up the house edge to 31.5%.
- Avoid side bets. Side bets have high house edges due to their higher payouts and should be avoided.
Bankroll Management
Ultimately, there are no guarantees of winning each time you play. In fact, you’re more likely to lose over the long run due to the house edge. This is where proper bankroll management comes in. Set hard budgetary limits and win targets, and do not exceed them. This way, you can avoid losing more money than you can afford and keep gambling a pleasurable activity rather than a source of stress.
Common Misconceptions About House Edge
The existence of the house edge has given rise to many common misconceptions. The following section dispels these myths.
House Edge Changes Based on Winning or Losing Streaks
The house edge is a fixed, unchanging mathematical value. It doesn’t change based on winning streaks. Just because you’ve rattled off a series of wins or losses doesn’t mean the house edge is tilting in your favor or against it. Every game is based on random events—and despite slight short-term deviations from this mathematical value, the house edge will remain constant.
Gambler’s Fallacy
The “gambler’s fallacy” refers to the misconception of the probability of a random event occurring in the future. When you’re on a hot streak, it’s easy to lose yourself in the heat of the moment, believing that the possibility of losing is eliminated. It’s the belief that winning or losing is a product of something other than randomness and luck. The cold, hard reality is that someone has to win and someone has to lose in gambling. Perceived “luck” can change at any given moment.
The Myth of “Due” Wins
Another myth is believing you’re somehow “due” a win after a long losing streak. You might believe the win be extended to believing that the next blackjack hand will win after 10 straight busts. The mathematical house advantage doesn’t magically tilt in your favor the more losses you eat. It always stays fixed regardless of previous wins or losses.
Tips for New Players
With the house edge explained thoroughly in previous sections, we’ll close out this guide with tips for novice players.
Start with Low House Edge Games
It’s always a good idea for beginners to start with low house edge games since they offer a better chance of coming out ahead. These include the following:
- Blackjack (0.5% house edge playing flawless basic strategy)
- Baccarat (1.06% house edge on banker bets)
- Craps (1.36% house edge on don’t pass bets)
- Video Poker (0.5% housed edge playing optimal strategy)
Slot games, in general, average 4% RTP, putting them in the high house edge category.
Understand the Rules Before Playing
It’s also important for newbies to understand the ins and outs of the rules and casino odds of games. This allows you to make better game choices and betting decisions taking house edge into consideration. Furthermore, knowing the rules and casino odds can help you formulate better bankroll management and betting strategies.
Focus on Fun Over Winning
The reality is that casino games are, first and foremost, a form of entertainment. They aren’t a consistent way to make money, nor are they something you earn a living with. Focusing on the fun aspect of gambling keeps the activity a pleasurable, leisurely pastime instead of a source of financial distress.
Conclusion
The house edge is a fundamental concept that plays a central role in casino gaming. Although it represents the house advantage held by the casino over players, it doesn’t serve as a guarantor of individual outcomes. By having a fundamental knowledge of the house edge as well as the mathematics that underpin it, you’ll be able to make better betting, bankroll management, and game selection decisions. Whether you’re new to iGaming or an experienced pro, acknowledging the importance of house edge is a critical skill to gain when navigating the wonderful world of online gambling.
Frequently Asked Questions
What is the house edge in casino games?
The house edge is the mathematical advantage representing the average amount a player can expect to lose playing casino games compared to their original stake over the long run. It is represented as a percentage of each bet.
What is the difference between house edge and RTP?
House edge is centered on the casino’s long-term advantage over players. RTP refers to the theoretical percentage a casino game is designed to return to players over time.
How does the house edge differ between American and European roulette?
American roulette has a higher 5.26% house edge compared to European roulette’s 2.70% rate due to the American roulette wheel having an extra double-zero pocket. European roulette uses the single-zero wheel, making it a better choice in terms of house edge.
How does the house edge in baccarat vary for different bets (e.g., Banker, Player, Tie)?
Banker bets offer the lowest house edge at 1.06%, making them the best bet on the board. Player bets offer a slightly higher house edge of 1.24%, and Tie bets sit at a whopping 14.86% house edge.
Why do slot machines typically have a higher house edge than table games?
Slot machines have higher house edges than table games because of their simple gameplay and potential for bigger payouts. They also rely on random number generators to set their RTP rates.
What are the best bets to make in craps to lower the house edge?
The lowest house edge bets in craps are the Don’t Pass bet (1.36% house edge) and Pass line bet (1.41% house edge).
How do game rules impact the house edge?
Rule variations, payouts, and wager types significantly change the house edge in casino games.
What are the best games to play if I want a low house edge?
The best low house edge games include baccarat, blackjack, French roulette, and video poker.
Why is bankroll management important when dealing with the house edge?
Proper bankroll management helps extend your budget and mitigate losses, especially considering that the longer you play, the more likely you’ll lose to the house edge.
How can I learn the rules of a game and its house edge before playing?
Search for online gambling resources, betting guides, and strategy guides and learn its gameplay, casino odds, and house edge before playing.