House Edge -- Is It Really Required?

[deisik]

This is not entirely my idea, so, as they say, don't shoot the messenger

Let's imagine an extremely wealthy casino whose bankroll size by far exceeds the bankrolls of all its players combined. Will this casino need a house edge to earn profits? As I see it, the house edge would make for more revenue flow, but it will still be making profits with a zero house edge simply because it will be able to stay in the game longer than any other player. Put differently, the sheer size of its bankroll will be the house edge on its own

I know every casino wants money, and it is unlikely we will see something described above in real life. However, it would be interesting to hear about examples which follow the logic of the bankroll size being a house edge in and of itself. If you know of such cases, especially when the advantage of this kind is subtle or even deliberately disguised, please share them with the inquiring minds here. Don't hide your knowledge under a bushel

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[milewilda]

Dont know if this line do really fits out " the sheer size of its bankroll will be the house edge on its own" No matter how big it is, it cant really be considered nor treated as an house edge.
Yes, it maybe bigger than the total of its players bankroll but doesnt mean that they wont consider out to put HE. If you are a business owner then what would be your primary motive on building this casino?
Of course, to make more money and come to think that if they do continue to have that HE-less thing then they would continually spending out or having the expense from maintenance -staff salary etc.
Is isnt sustainable for long run? no owner would get this kind of option.

[bittraffic]

A businessman will always put up a business for profit. Even if he is as wealthy as Warren Buffet because its what drives them. The mains reason why they chose to put up a casino is that they know casinos make more money which is the primary goal. They may even evade taxes to have more of the profit.

I don't know if you could ever find one casino that has zero house edge, P2P is the most possible.

[deisik]

Dont know if this line do really fits out " the sheer size of its bankroll will be the house edge on its own" No matter how big it is, it cant really be considered nor treated as an house edge

But that's how things turn out to be

In fact, it is not very difficult to show how the bankroll size can be an effective house edge in real life. Imagine you are tossing a coin with your friend. When you lose you pay them a dollar, if you win they pay you as much. Pretty simple setup, isn't it? And it looks like your chances are equal. And they are, at least as long as you toss a coin a couple times or so. However, if you have only 10 dollars while your friend 100, their chances of busting you are 10 times higher than yours busting them. This is the "house" edge that a bigger bankroll provides

[avikz]

Casinos are no charitable organisations - They are serious business and serious businesses always want to make money!

So the house edge will continue to exist as long as casinos will exist. House edge is one of the major revenue sources for the casino business. The percentage may definitely vary from one casino to another but it will remain in existence.

However, sometimes we may see some casinos without house edge but that will come with an expiry date. Usually some casinos choose to have zero house edge as a promotional activity to lure in new players and then use various reward methodology for retaining them. But I believe there will be only a handful of casinos who will be interested to forego such a lucrative revenue stream even if there bankroll is bigger than the total fund held by their players.

[mindrust]

I don't know if you could ever find one casino that has zero house edge, P2P is the most possible.

Even if there is one, then it probably means it hasn't decided to scam its customers yet.

A casino basically has no income other than what the house edge makes for it.

Google ads, donations etc won't work out for a business like this.

[tbterryboy]

I am not sure how house edge is working on most other games but in dicing it is too visible and from that I also had thoughts like why houses may go for zero house edge.

Because, for example with 0.5% housed edge they reserve additional 0.5% of rolling number numbers after the actual 50% of numbers for the X2 payout. If there are 1000 possible numbers to be rolled then they reserve 50 extra numbers after allocated 500 numbers. In summary house gets 550 consecutive numbers (like 1 to 550) and a gambler gets consecutive 450 (like 551 to 1000) numbers to decide who is going to win.

If you notice, very very rarely rolling number appears between 551 to 550 and all other times either house or gambler wins based on what number appears. If houses decide to give up those 50 numbers, I believe there cannot be any big differences given that gamblers continue their martingale and losing all the bankroll in the end.

[Barnabe]

The initial idea is quite interesting though. The way I see it, if the casino has no edge, the only way it can win is when players go "tilt" or stop thinking rationally. If its bankroll is big enough to take on the richest customers and if you believe that in the long term players do not think rationally and will always bet their winnings, this idea could work.

At the end, in such a system, you are betting against rationality in players.

[pixie85]

Physical casinos don't really need a bankroll to profit because they can work around it by asking players to pay entry fee or something like that but they found that hidden costs are always the most effective. People asked for money on entry may be discouraged and not willing to pay. Those who pay a share of profits or a hidden fee in every bet somehow take it much easier.

What I'm trying to say is that it's nor required but casinos did their homeworks and found that it's the best way to maximize profits.

[deisik]

At the end, in such a system, you are betting against rationality in players

This is always the case if the number of players is above a certain threshold (give or take)

The truth is, perfectly rational players could easily take out any online casino with a sensible house edge (say, 1%). It is a statistical certainty. Since we don't see it happen very often, it only goes to prove that most players are not rational. So, in a way, we are already there. Regardless, it would be tremendously interesting to see the financial stats of a real online casino to assess how much of their profits actually comes from the house edge and how much from busts

[Yaunfitda]

This is not entirely my idea, so, as they say, don't shoot the messenger

Let's imagine an extremely wealthy casino whose bankroll size by far exceeds the bankrolls of all its players combined. Will this casino need a house edge to earn profits? As I see it, the house edge would make for more revenue flow, but it will still be making profits with a zero house edge simply because it will be able to stay in the game longer than any other player. Put differently, the sheer size of its bankroll will be the house edge on its own

I would say theoretically, the house can still make a profit if the game is 50-50. They can still "hold" base on the sheer volume of their capital.

I know every casino wants money, and it is unlikely we will see something described above in real life. However, it would be interesting to hear about examples which follow the logic of the bankroll size being a house edge in and of itself. If you know of such cases, especially when the advantage of this kind is subtle or even deliberately disguised, please share them with the inquiring minds here. Don't hide your knowledge under a bushel

You got me thinking as well, so I think of one game that could fit this "even-game" scenario. First that come to my mind is bacarrat, you just have to bet Player or Banker. But to make it even though, you have to strip it off with every side-bet, tie, super-six or super-seven, pairs, and that's where the house edge comes-in, to insure casino's profit. So I don't know if there are casino's that really has this so called "even-game.

[StephenJH]

The house edge is unbeatable but the professional gambler especially poker player can beat the other players or dealers on the long run. Why to leave in luck the tale of the casino instead of using proven success method? The house edge works for casino that is why they serve free drinks&meals to hold the gambler there for a long time.

[Wexnident]

But that's how things turn out to be

In fact, it is not very difficult to show how the bankroll size can be an effective house edge in real life. Imagine you are tossing a coin with your friend. When you lose you pay them a dollar, if you win they pay you as much. Pretty simple setup, isn't it? And it looks like your chances are equal. And they are, at least as long as you toss a coin a couple times or so. However, if you have only 10 dollars while your friend 100, their chances of busting you are 10 times higher than yours busting them. This is the "house" edge that a bigger bankroll provides

Going by the same logic, then doesn't that mean that if ten people were to against the single one with a single bankroll make the chances equal? And putting up your finance in a 50-50 chance seems quite idiotic to me. Same with how casinos work, they have an overwhelmingly large bankroll which is used to support the entirety of their player base. Seeing as you don't actually know how many people would start playing at your casino, the larger the bankroll, the better. Now let's say that without a house edge, a casino was flocked by gamblers.
 
Let's take your example again, the bankroll of the casino was 100. The original number of gamblers was 1, and 10 makes it equal. But what if there were 20? 30? Or more? Even if the chances were equal, in the sense, the total bankroll of the gamblers exceeds the bankroll of the casino. This makes it a disadvantage for the casino. This is also the reason why jackpots exist that has a probably at the very minimum I suppose.

[Darker45]

Required? Nope. As a matter of fact, there are casinos which have zero house edge. Edgeless (EDG) comes to mind first because it was popular back then. But, for sure, it is not the only zero house edge casino out there.

Does a casino need an edge to earn? I think so. And even with that edge, you could still lose. However, you need to have it to make sure your business is sustainable. Otherwise, you could end up expanding your capital investment for operational and other expenses without end. 

[deisik]

Let's take your example again, the bankroll of the casino was 100. The original number of gamblers was 1, and 10 makes it equal. But what if there were 20? 30? Or more? Even if the chances were equal, in the sense, the total bankroll of the gamblers exceeds the bankroll of the casino. This makes it a disadvantage for the casino. This is also the reason why jackpots exist that has a probably at the very minimum I suppose

I understand when people don't read entire threads

As I don't read them either, especially when there are dozens of pages (even though this thread has only a dozen posts all in all). But why not read the fucking OP, as small as this one? Just the first paragraph of it? But seriously, it is not my logic which seems idiotic (note that I'm speaking in your terms exactly), it is your post which makes it blaringly obvious that you didn't care to read the OP. Since if you did, you would know that:

Let's imagine an extremely wealthy casino whose bankroll size by far exceeds the bankrolls of all its players combined. Will this casino need a house edge to earn profits? As I see it, the house edge would make for more revenue flow, but it will still be making profits with a zero house edge simply because it will be able to stay in the game longer than any other player. Put differently, the sheer size of its bankroll will be the house edge on its own

Wouldn't reading just one sentence suffice to understand the point?

[slaman29]

Zero edge projects aren't new and guess what? They don't end well. At least, the ones I've used to follow.

Variance is a big problem for casinos, so house edge helps soften that problem (it actually doesn't protect them from it!).

[xxjumperxx]

It could end well, but it probably wont.
House Edge gives the casino a bit more protection from Variance.
Same goes for Poker Players, they will win win win, and then lose lose lose. Variance can be brutal and only a high enough BR will save you from go broke.

The Bankroll might seem big enough but can always be put to a test by a players luck.

[Pamadar]

This is not entirely my idea, so, as they say, don't shoot the messenger

Let's imagine an extremely wealthy casino whose bankroll size by far exceeds the bankrolls of all its players combined. Will this casino need a house edge to earn profits? As I see it, the house edge would make for more revenue flow, but it will still be making profits with a zero house edge simply because it will be able to stay in the game longer than any other player. Put differently, the sheer size of its bankroll will be the house edge on its own

I know every casino wants money, and it is unlikely we will see something described above in real life. However, it would be interesting to hear about examples which follow the logic of the bankroll size being a house edge in and of itself. If you know of such cases, especially when the advantage of this kind is subtle or even deliberately disguised, please share them with the inquiring minds here. Don't hide your knowledge under a bushel

Just like Government gaining Income from tax payers,House edge is something like this,Gambling site needs direct profit and that is from house edge so they have assurance of having funds to spent in their Daily expenses because what if time comes that luck comes to all players?and the House losses all the games?so at least the house edge is there to cover things they need to pay for a day of operation.

[Lakai01]

I know every casino wants money, and it is unlikely we will see something described above in real life. However, it would be interesting to hear about examples which follow the logic of the bankroll size being a house edge in and of itself.

In principle a very interesting idea, but one must also be aware that this is then a "charity gambling" platform and not (in the long term) a viable company.
The House Edge does not exist - as we have often discussed here - just for fun but to keep the company behind the casino alive. The House Edge also covers the costs that the company incurs for the operation of the site:

• Server costs
• Staff costs (server maintenance, ...)
• Costs for advertising contracts (e.g. signature campaigns)

To put it in exaggerated terms, your proposal could also be applied to Apple and Microsoft: Both companies with an incredible amount of capital, but who still won't come up with the idea of offering their products for free.

[btcltcdigger]

House edge typically nudges the odds into houses favor.
Since you basically have 50-50 %, and probability theory says that if you play long enough, you should remain at 0 (balanced out), the house edge just tips that in their facor.