The House Edge in Blackjack Explained

The house edge in blackjack might need to be explained to new gamblers. People in the business often talk about the "house edge" and how it's so low in blackjack, but the basic terminology can sound Greek to beginning players. If you don't know what the basic terms, then it's hard to appreciate why blackjack is a much better game to learn than most other online casino games. After this explanation, I hope you understand why blackjack is the game to play in a casino.

Basic Facts about the House Edge

Several basic facts should be known about the house edge. First, most casino games have a built-in house edge. This is a legal according to state gambling laws, so the casino or bingo parlor can stay in business. If a house edge didn't exist, then it would be a 50/50 proposition whether a gambling house could stay in business. In fact, given the fact that casinos have to pay employees, the utility bills, state fees, and taxes, they would almost certainly go out of business without a house edge. Most casino games put you at a disadvantage from the word "go".

Second, the more strategy is required in a casino game, the lower the house edge is. In other words, if you have to learn tips for beating the game and can affect the outcome with good decisions, then the game tends to have odds stacked a little more in your favor. Games like blackjack and video poker fall into this category, as they can have a house edge of 1% or less. Games which don't require strategy, such as slots, keno, baccarat, and roulette, the odds are going to be longer. This stands to reason, because a casino can assume that a certain number of players won't know the rules to a game, so the bad players will increase the average house edge enjoyed by the casino. A game of slots is going to have the same house edge, no matter if the person playing has never gambled or is a 30-year veteran of the casinos.

What Is a House Edge?

The house edge is the amount of money (as a percentage) of a player's wagered cash that the casino keeps. If the casino is expected to keep $1 out of every $100 you wager, then the house edge would be 1%. If the casino is expected to keep $5 out of every $100 wagered, then the house edge on a game would be 5%. The house edge assumes that the casino is keeping some percentage of the money you bet.

In rare cases, casinos offer games with a slight positive expectation, meaning for every $100 you wager, you would expect to receive back more than $100 (if you played optimally). The games with a positive expectation are used to drive customers into the casino by word of mouth. Most of the time, the game has a negative expectation--that is, the average player expects to lose money.

Why Play against a House Edge?

The obvious question a player might ask is why you should play against a house edge. This advantage the casino has doesn't apply to everyone. Not all players of a negative expectation game are going to lose. In fact, if the house edge is set at 1%, almost 50% of those players are likely to walk out of the casino with a little money. One player might walk out with $20. Another might lose $30. One player might get real lucky and win $500 at the blackjack table, while another gets real unlucky and lose $600. The point being, every gambler at the table has slight odds against them, so the sum total of those players is likely to give the casino the advantage. Because it's gambling, even this is certain, especially over a single day, a single week, or even a single month.

Not all gamblers are the same, either. High limit players called "premium players" for medium sized high rollers and "whales" for top-end high rollers also come into a casino. The size of these player's bets are so large than their wins can wipe out the profits of a thousand low-dollar players' losses, or make the casino a lot of money if they go on a losing streak. Since high rollers also face a house edge, casinos are in stiff competition to lure these players to their establishment, so they often offer a lower house edge on the same game for high rollers. So the more you bet, the lower the house edge tends to be. That's why a Las Vegas casino might offer European roulette in the private high roller lounge, but only offer American roulette for everybody else.

Blackjack House Edge

Anyone wanting a definite idea of the house edge they face on a particular game of blackjack can go to a blackjack house edge calculator, which are found online. These tools let you input factors such as the number of decks used, whether you can double after a split, whether the dealer hits or stands on a soft 17, and whether a surrender rule is in effect. Each of these factors changes the odds, but when you input these into the calculator, you'll be given optimal and realistic results. Optimal only means the theoretical house edge, while realistic results calculate the average efficiency of a player using basic strategy.