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    Angela Brown
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    The document discusses the calculation of casino house edge for various games. It defines house edge as the casino's profit expressed as a percentage of the player's original bet. It then provides examples calculating the house edge for American and European roulette, as well as a dice game. The house edge for American roulette is 5.26% due to the 38 possible outcomes and 20 numbers resulting in a loss. European roulette has a lower house edge of 2.7% because it only has 37 possible outcomes and 19 numbers resulting in a loss. The dice game has the highest house edge at 16.67% because although the odds of winning are 1 in 6, the payout is only 4 to 1 when the

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    The document discusses the calculation of casino house edge for various games. It defines house edge as the casino's profit expressed as a percentage of the player's original bet. It then provides examples calculating the house edge for American and European roulette, as well as a dice game. The house edge for American roulette is 5.26% due to the 38 possible outcomes and 20 numbers resulting in a loss. European roulette has a lower house edge of 2.7% because it only has 37 possible outcomes and 19 numbers resulting in a loss. The dice game has the highest house edge at 16.67% because although the odds of winning are 1 in 6, the payout is only 4 to 1 when the

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    56 views2 pages

    Casino House Edge

    Uploaded by

    Angela Brown
    The document discusses the calculation of casino house edge for various games. It defines house edge as the casino's profit expressed as a percentage of the player's original bet. It then provides examples calculating the house edge for American and European roulette, as well as a dice game. The house edge for American roulette is 5.26% due to the 38 possible outcomes and 20 numbers resulting in a loss. European roulette has a lower house edge of 2.7% because it only has 37 possible outcomes and 19 numbers resulting in a loss. The dice game has the highest house edge at 16.67% because although the odds of winning are 1 in 6, the payout is only 4 to 1 when the

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    of 2

    Calculation of Casino House Edge

    The house edge (HE) is defined as the casino profit expressed as a percentage of the player's
    original bet.
    The player's disadvantage is a result of the casino not paying winning wagers according to the
    game's "true odds," which are the payouts expected considering the odds of a wager either
    winning or losing.
    The house edge of casino games varies greatly with the game. House edges for slot machines
    and Keno may be up to 15% and 25% respectively.
    In games which have a skill element, such as Blackjack or Spanish 21, the house edge is
    defined as the house advantage from optimal play (without the use of advanced techniques
    such as card counting), on the first hand of the shoe (container holding the cards).
    The set of the optimal plays for all possible hands is known as "basic strategy" and is highly
    dependent on the specific rules, and even the number of decks used. Good Blackjack and
    Spanish 21 games have house edges below 0.5%.
    Example #1:
    Calculate the house edge for American Roulette, which contains two zeros and 36 non-zero
    numbers (18 red and 18 black).
    Solution #1:

    If a player bets $1 on red, his/her chances of winning $1 is 18/38 since 18 red numbers exist out
    of 38. However, his/her chance of losing $1 (i.e., winning −$1) is 20/38. Therefore, the
    expected value may be calculated as follows:

    Expected Value = (1)(18/38) + ( −1)(20/38)

    Expected Value = 18/38 − 20/38

    Expected Value = − 2/38 = − 1/19

    Expected Value = −5.26%

    Therefore, the house edge is 5.26%.

    Example #2:
    Calculate the house edge for European Roulette, which contain a single zero and 36 non-zero
    numbers (18 red and 18 black).
    Solution #2:

    If a player bets $1 on red, his/her chances of winning $1 is 18/37 since 18 red numbers exist out
    of 37. However, his/her chance of losing $1 (i.e., winning −$1) is 19/37. Therefore, the
    expected value may be calculated as follows:

    Expected Value = (1)(18/37) + (−1)(19/37)

    Expected Value = 18/37 − 19/37

    Expected Value = −1/37

    Expected Value = −2.7%

    Therefore, the house edge is 2.7%.

    Example #3:
    Calculate the house edge for a game played by wagering on a number from the roll of a single
    die with a payout of four times the amount wagered for a winning number.
    Solution #3:

    Since the probability of a winning number for a single roll of a die is 1/6, it follows the game has
    5 to 1 odd. However, with a payout of only four times the amount wagered (i.e., 4 to 1) for a
    winning number, the house edge may be calculated as follows:

    House Edge = (true odds − payout odds) / (true odds + 1)

    House Edge = (5 − 4)/(5 + 1)

    House Edge = 1/6

    House Edge ≈ 16.67%

    Work Cited: Calculation of Casino House Edge (math.info)

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