Playing The Casino House Advantage
If casinos did engage in fair bets, they would win about half the bets and lose about half the bets. In other words, the casino and you, on average, would break even, or at least come close to breaking even. While this arrangement would be more equitable, it would not, as a rule, generate enough money for the casino to pay its mortgage, much less foot the bill for the white tigers, pirate battles, lounge shows, $2 steaks, and free drinks.
To ensure sufficient income to meet their obligations and show a profit, casinos establish rules and payoffs for each game to give the house an advantage. While the house advantage is not strictly fair, it is what makes bargain rates on guest rooms, meals, and entertainment possible.
There are three basic ways that the house establishes its advantage:
1. The rules of the game are tailored to the house’s advantage. In blackjack, for instance, the dealer by rule always plays his own hand last. If any player busts (attains a point total over 21), the dealer wins by default without having to play his hand.
2. The house pays off at less than the actual odds. Imagine a carnival wheel with ten numbers. When the wheel is spun, each number has an equal chance of coming up. If you bet a dollar on number six, there is a one in ten chance that you will win and a nine in ten chance that you will lose. Gamblers express odds by comparing the likelihood of losing to the likelihood of winning. In this case, nine chances to lose and one to win, or nine to one. If the game paid off at the correct odds, you would get $9 every time you won (plus the dollar you bet). Each time you lost you would lose a dollar.
Let’s say you start with $10 and do not win until your tenth try, betting your last dollar. If the game paid off at the correct odds, you would break even. Starting with $10, you would lose a dollar on each of your first nine attempts. In other words, you would be down $9. Betting your one remaining dollar, you win. At nine to one, you would receive $9 and get to keep the dollar you bet. You would have exactly the $10 you started with.
As we have seen, there is no way for a casino to play you even-up and still pay the bills. If, therefore, a casino owner decide to install a wheel with ten numbers, he would decrease the payoff. Instead of paying at the correct odds (nine to one), he might pay at eight to one. If you won on your last bet and got paid at eight to one (instead of nine to one), you would have lost a dollar overall. Starting with $10, you lose your first nine bets (so you are out $9) and on your last winning bet you receive $8 and get to keep the dollar you bet. Having played ten times at the eight-to-one payoff, you have $9 left, for a total loss of $1. Thus the house’s advantage in this game is 10% (one-tenth).
3. The house takes a commission. In all casino poker games and in certain betting situations in table games, the house will collect a commission on a player’s winnings.
Sometimes the house combines its various advantages. In baccarat, for instance, rules favor the house; payoffs are less than the true odds; and in certain betting situations, the same as poker the house collects a commission on the player’s winnings.