The cost of playing

23 March 2019

By John Marchel

Modern gambling facilities earn their profits by charging the customer a fee or commission for the privilege of playing in their casino. This fee is known as the edge or house advantage, which is built into each and every game.

One way of understanding of this edge is by tossing a coin. In this hypothetical coin toss game, you bet $1 that heads will show up. However, if tails come up you lose your $1 bet, but if heads do appear you win; however, the casino will only pay you 99¢. This 1¢ difference is the house edge, or vigorish (simply vig, as used in the gaming industry), which the casino uses to make its profit.

Another way to think about is when you lose, the house wins, when you win the house also wins.

Let’s use the game of roulette for example. We know that the house edge is 5.26% for the double zero game found mostly in the USA. In that game, there are 36 numbers plus the 0 and 00. The odds of you winning is one in 38 or 37 to 1. If you win the casino pays you $35 for your dollar bet. You do keep your original dollar and are paid an additional $35 returning a total of $36. The difference is two dollars (38 minus 36). Divide the $2 by 38 which is the true odds and you come up with the house edge of 5.26%. So, you could actually cover all the numbers on the layout, including the 0 and the 00, but you will still lose money.

The same vig (house edge) is employed on other games found in the casino. Here is a partial list to illustrate some low vig games from high vig games. This is how the casinos rate the games.

Game House edge
Baccarat (banker) 1.17%
Baccarat (player) 1.63%
Big six wheel 11.1% to 24%
Blackjack 0.50%
Caribbean stud poker 5.26%
Craps (double odds) 0.60%* (*depending on bet made)
Keno 25%
Let it Ride 3.5%
Pai Gow poker 2.5%
Sports book 4.5%
Roulette (double 0) 5.26%
Roulette (single 0) 2.7%
Three card poker 3.4%

BET YOU DIDN'T KNOW

• The odds of winning the Powerball lottery in the US is 1 in 80,089,128. However, going to Australia and playing their lottery, the odds are only, 1 in 54,979,155, making it a much better game for the player.

• The odds of getting a Royal Flush in a five-card (no wild card) poker deal is only 650,000 to one.

• In 1980 math whiz Jess Marcum, who helped to develop radar and neutron bomb, figured out the odds for a craps player who wagered $1 every bet for two months straight would have one chance in 2 trillion to win $1,000 before he lost $1,000. However, he showed that by decreasing his exposure at craps to only 25 minutes and wagering $200 every bet, the same gambler would increase his odds to 1.15 to 1.

• The running of the 1913 Kentucky Derby had the highest long shot in the history of the race. Doneall was the winner at 91 to 1 odds. Putting $2 on Doneall to win would have produced $184.90.

• Here is a popular tip for playing roulette. Bet $10 on one number and let it all ride once when the $10 bet wins. That’s $350 for the first win and $12,600 for the second win. What are the Odds? Pretty long.

• Atlantic city’s first casino, Resorts, opened on Memorial Day 1978. Within nine months it had paid back its entire $77 million capital investment. That was a very good odds return.

• Francois Blanc, who created the famous casino at Monte Carlo, established the principle that is still the soul of the casino business. “The house must either (1) have more capital than any individual gambler or (2) establish a limit so that superior capital can never be brought into play against it.
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• The Duke of Wellington not only defeated Napoleon, but also was a member of the English Crockford Gambling Club. He never had a losing session while at the club. He only came for the food and drink, he never gambled.