House Edge Explained: How Casinos Make Their Money

The house edge is the average share of every wager that a game keeps. If a game has a 3% house edge, then over a very large number of rounds it pays back 97 coins for every 100 wagered and keeps 3. It is the price of playing, and in a game of pure chance nothing you do within the rules changes it.

Edge and RTP: two sides of one number

House edge is 100% minus RTP. A 97% RTP game has a 3% house edge. Casinos tend to quote the edge because it tells them what they keep, and game makers tend to quote the RTP because it sounds better to players, but the information is identical.

The edge applies to the total amount wagered, not to your balance. That distinction matters:

• Bet 100 coins, win, and bet the 194 you now hold (a 50% chance pays 1.94x): you have wagered 294 coins, so about 8.8 coins of expected cost have been charged against you.
• Wager 200,000 coins in total over an evening and the expected cost at a 3% edge is 6,000 coins, whether your balance started at 1,000 or 100,000.

This is why fast play and many small bets cost more than slow play over the same time, and why "I only lost my winnings" is less comforting than it sounds: the edge was charged every time those winnings went back on the table.

Where the edge comes from: the pay gap

A casino game pays less than the "fair" price of the risk. The fair multiplier for something with probability p is 1 / p. The game pays a little under that.

In Cashout Arcade the rule is written into every multiplier: the pay is 0.97 / p, rounded down to four decimals. So a 50% chance pays 1.94x instead of the fair 2x, and a 1-in-10 chance pays 9.7x instead of 10x. The missing 3% is the house edge. The cash-out games guide walks through the same rule using Mines tiles.

Traditional casinos hide the same gap in different places. Roulette pays 35 to 1 on a number that comes up 1 time in 37, when 36 to 1 would be fair. A baccarat Banker win is charged a commission. A slot machine's reels are weighted so that the jackpot comes up less often than the number of symbols suggests (see how slot machines work).

Worked example: roulette, and why every bet has the same edge

On a European (single-zero) wheel there are 37 pockets. A bet that covers k of them wins with probability k / 37 and, at the standard payouts, returns 36 / k coins per coin staked (the stake plus winnings of 36 / k minus 1). Multiply:

expected return = (k / 37) x (36 / k) = 36 / 37 = 97.297%

k cancels, which is why a straight-up number, a split, a corner, a dozen and red-or-black all carry the same 1/37, or 2.703%, edge. Add a second zero (the American wheel) and the denominator becomes 38 while the payouts stay the same: 36 / 38 = 94.737% returned, a 2/38 or 5.263% edge. Many sites misquote one of these figures; the fractions above are exact.

Cashout Arcade's roulette is single-zero and prices every bet at the same 3% instead of 2.703%: a straight number pays 35.89x rather than 36x. The full table is in the roulette odds guide.

Not every bet at a table is equal

Roulette is unusual in treating all bets alike. Most games offer a menu with very different prices. Craps is the clearest example, using figures from the Wizard of Odds craps appendix that you can verify with a few lines of arithmetic:

The same game has a 0% bet and a 16.7% bet. Picking the bet matters far more than any "system". The craps guide shows our four bets side by side.

Baccarat has the same shape. With eight decks, the Banker bet (after a 5% commission) carries an edge of about 1.06%, the Player bet about 1.24%, and the Tie bet at 8 to 1 about 14.36%, according to the Wizard of Odds baccarat page. The baccarat guide computes the same bets for our rules.

Ranking by edge: what the numbers say

Using published, checkable figures (not Cashout Arcade's, which are all 3% by design), a rough ranking from cheapest to most expensive looks like this:

Two honest caveats. First, these are the rules of traditional casino tables, and edges move with the rules (number of decks, what a 12 pays, whether you can surrender). Second, "edge" means nothing without the word "average": a 2.7% edge does not stop you winning tonight.

Why sessions still swing

If the edge is small and certain, why does play feel random? Because variance dwarfs it. A single even-money bet can swing your balance by 100% of the stake in either direction, while the edge moves it 3% on average. Over 100 rounds the standard deviation of an even-money style bet is about 10 times the stake, but the expected cost is only about 3. The edge becomes visible only after thousands of rounds, which is the pattern shown in the table in the RTP guide.

That is also why a "winning streak" proves nothing about the edge and why tiny edges are enough to run a casino: the house plays millions of rounds, where the law of large numbers works for it, while any one player plays a few hundred, where luck still rules.

House edge in a social casino

Cashout Arcade's coins are virtual, so the edge does not take real money. It does something else: on the games' own results, it pulls your coin balance down by about 3% of whatever you wager, which is the same pressure that governs a real game. Two things follow.

• The edge is a design choice, not a hidden mechanism. Every game's return is published on the Odds page, and each game has an info screen with its exact figure.
• The edge is not the whole picture in the app. Optional perks (My Casino, Game Mastery, VIP rewards, the Lucky Jackpot and the Bad Luck Saver) add coins after a round and are described on the Odds page. They never change what a round does, but at higher levels they can offset part or even all of the 3%, so your balance depends on them as well as on the game's return.

Most games sit at exactly 3%. A few games with fixed prize tables return slightly less (never below 96.5%), and two types of game depend on you: Blackjack and Poker assume perfect play (see the blackjack strategy guide), and Shell Game keeps 10% from a player who only guesses.

The practical takeaway

• The edge is a price. Treat the coins you play as the entertainment budget, not an investment.
• The edge applies to every coin you wager, including re-bets of winnings, so total wagered is the figure to watch.
• Within a single game, no bet-sizing or timing pattern changes the edge (see why betting systems fail). Choosing the bet can: at a real craps table, the cheapest and the dearest bets differ by more than 16 points.