Casinos are a business, and they need to make money. And they don’t just do it for their restaurant or hotel services, also from the game itself. So everyone who offers has a slight house edge. This advantage is obtained thanks to specific rules of each game that benefit them.
Theoretically, the house edge is the percentage of money that the casino expects to get from each player bet. For example, a 1% margin indicates that you will lose 1% on average of every bet you make. Obviously, in a specific bet, the player can not lose 1%, the most normal thing is that they lose all the money from that bet or win it. But in the long run, it will be 1% of all.
The house margin is calculated using a simple formula:
E = (amount lost x probability of losing) – (amount won x probability of winning)
If the result is positive, the margin is in favor of the casino, otherwise, from the player.
For example, repeatedly tossing a coin and betting heads or tails, the probability of winning is 0.5 (50%). Assuming that if heads are lost, one unit of bet is lost and if you cross, you win one unit, the expectation would be:
E = 1 x 0.5 – 1 x 0.5 = 0.
In a game of zero math expectation, you won’t win or lose money in the long run.
Another easy to understand example is Roulette betting game slot online Malaysia on red or black. In American Roulette, 38 numbers are ranging from 0 to 36 (18 reds, 18 blacks, and two zeros). Zero or double zero is neither red nor black, and if it comes out, the bet is lost.
E = 1 x (20/38) – 1 x (18/38) = 0.0526 = 5.26%.
The house margin is a theoretical value calculated a priori depending on the rules of the game. The profit of the house is known afterward when it has finished playing. But it can be estimated using the concept of “expected loss.”
Expected loss = house margin x number of bets x bet value.
Assuming, for example, a margin of 1%, if the player plays 1000 games betting $ 2 on each, he will lose 0.01 x 1000 x $ 2 = $ 20.
Sometimes it will be more and sometimes less, but in the long term, the average will be that.
Below is a graph obtained with the simulator representing what has happened after playing a hundred thousand games of Blackjack. You start with $ 10,000, betting $ 5 on each hand, and the house edge is 0.32%.
Capital has constantly been oscillating, but with a downward trend. The player has lost $ 1,600 (100,000 x 5 x 0.0032). It is easy enough to see that if you continue playing indefinitely, all the money will disappear.