The casino, sportsbook and lottery industries generate over $150 billion in revenue each year in the United States alone. These staggering profits come directly from the pockets of gamblers. While some players occasionally win big in the short run, the mathematical certainty is that the overwhelming majority will lose their money in the long run. This inevitable outcome is a direct result of the statistical house edge built into every casino game and sporting event.
House Edge Definition
The “house edge” represents the mathematical advantage casinos and sportsbooks have over players. Also known as “vigorish” or simply “vig,” this built-in margin allows the house to reliably generate profits overtime. The percentage varies based on the game, with popular options like slots and roulette at the PlayAmo VIP club usually around 5% and blackjack closer to 1% when played using perfect basic strategy. While these percentages seem small, they have an enormously negative impact on player bankrolls over time.
To demonstrate why the house edge dooms most players’ bankrolls, let’s look at two gamblers who make a $100 even-money bet in a game with a house edge of 5%.
Gambler #1 loses his bet. His loss of $100 represents 100% of his wager. Gambler #2 wins her bet. Her win of $100 represents only 95% of her $105 total expected value. She lost $5 to the house edge without even realizing it.
While both players appeared to break even, Gambler #2 actually lost 5% of her wager to the house. Over hundreds and thousands of bets, nearly all gamblers will lose all of their bankroll like Gambler #1. The wins of Gambler #2 only serve to temporarily mask the slow drain of funds to the house edge before eventually going broke.
Real World Evidence
Several real-world studies have proven out the financial destruction wrought by the house edge over time:
- A 5-year study of over 45 billion online casino hands of poker analyzed by a consulting firm found that nearly all players lost money with the average loss per player exceeding $1,200.
- Sports bettors typically suffer a negative return on investment of -5% to -10% according to research by betting services, resulting in average long-term losses in the thousands of dollars.
- Analysis by news outlets found that the average New Jersey gambler lost $564 at Atlantic City casinos in 2013. With nearly 8.5 million visitors, that resulted in a staggering $4.8 billion in gross losses for players.
This irrefutable evidence underscores the difficulty in overcoming the mathematical house edge. While skill, knowledge and self-control allow players to mitigate losses, very few have the ability to emerge winners in the long run against the casino monster.
House Edge Trap
Despite the gloom projected by lopsided house odds, there remain ways to mitigate or overcome the house edge:
- Master blackjack card counting: Card counters leverage shuffle tracking and betting spreads to flip the house edge in their favor. With perfect play, blackjack offers the best odds against the house.
- Seek out promotions and bonuses: Take advantage of comps, freeplay offers, rebates and bonuses to reduce your expected gambling losses. Return play requirements on bonuses should still result in lower overall house edge.
- Bet on promotions and contests only: Placing sports bets only when they offer overlays (expected return exceeds 100%) or entering contests with prize pools exceeding the total entry fees avoids any house edge.
- Use optimal video poker strategy: Perfect, computer-like video poker play cuts the house edge below 1% on the best machines. Consistently applying the optimal strategy takes massive practice.
- Avoid continuous formats: Games like roulette and slots with continuous play and no stopping point inevitably lead to larger bets and faster losses. Better options have a fixed number of decisions before an outcome.
While the perfect application of some methods above can yield short-term profits, even experts battle the relentless grind of variance and mathematical house edge forever lurking.
Our Brains Are No Match
Ultimately, gamblers lose because they face casino owners armed with mounds of data, teams of statisticians, massive bankrolls and a house edge baked into every game. Our human brains struggle to grasp numbers and probabilities over millions of iterations. We recall our big wins while forgetting our losses. Casinos thrive on these psychological and mathematical edges.
So while that big win may come on your next trip, just know that the house edge means that short-term luck gives way to long-term mathematical certainty. So walk away from the tables and machines with a little extra money left in your pockets whenever you can. Your future self will thank you.
