House edge (definition and examples)
House edge is the share of each wager a game keeps on average, 100 percent minus RTP. See Cashout Arcade's 3 percent edge worked out with real numbers.
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The house edge is the percentage of every wager that a game keeps on average over a very long run of rounds. It equals 100 percent minus the RTP. A game with a 3 percent house edge keeps 3 coins of every 100 wagered and pays back the other 97.
The edge is not a fee charged per round. It is built into the payouts, so each bet is slightly worse than a fair one.
A worked example from Dice
In Cashout Arcade's Dice you pick a win chance. At a 50 percent chance a fair game would pay 2x, because 1 divided by 0.5 is 2. The game pays 1.94x instead, which is 0.97 divided by 0.5. Over many 100-coin bets:
| Item | Fair game | Cashout Arcade Dice |
|---|---|---|
| Win chance | 50% | 50% |
| Payout on a win | 200 coins | 194 coins |
| Average return per round | 100 coins | 97 coins |
| Average result per round | 0 | minus 3 coins |
Over 1,000 rounds of 100 coins, 100,000 coins are wagered and the average loss is 3,000 coins. The edge is the same at every win chance, so setting Dice to 10 percent (pays 9.7x) or 90 percent (pays 1.0777x) changes how often you win but not the 3 percent.
Edges are not the same everywhere
Different games and rule sets carry different edges. A single-zero roulette wheel has 37 pockets and pays 35 to 1 on a straight number, so the edge is 1 in 37, about 2.70 percent. A double-zero wheel has 38 pockets and the same payout, so the edge is 2 in 38, about 5.26 percent. Cashout Arcade's Roulette uses 37 pockets and prices every bet at 97 percent, so its straight-number bet pays 35.89x including your stake.
Common misconceptions
- "The edge means I lose 3 percent of my session." It is 3 percent of the total wagered, averaged over many rounds. Betting 100 coins 50 times wagers 5,000 coins, an average cost of 150 coins, but any single session can end well ahead or well behind.
- "A smart bet size beats the edge." Bet size changes how much you stake in total, not the percentage. See Bankroll (definition and limits).
- "A low edge is a win." Lower edge costs less per coin wagered, but it still costs.
Coins in Cashout Arcade are virtual and have no cash value. The edge describes how the games are balanced, not money you could win or lose. Every game's figure is on the Odds page, and the longer explanation is in House Edge Explained: How Casinos Make Their Money.