House Edge -- Is It Really Required?

[Finestream]

If the idea not to put a house edge in the casino to attract more gamblers is viable, that would have been implemented a long time ago, if there are casinos that implemented that kind of system, I think they are not successful as I haven't heard a popular casinos with no house edge.

For gamblers, we certainly like to play in a casino where we think we have a decent chances of winning, but it's not gonna happen as casinos advantage is what makes their business profitable against majority of the gamblers. 

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[Barnabe]

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.

They are competing with zero advantage it's true, but one can argue that they are still competing in variance. If we suppose the players are acting irrationally and will gamble all their winnings, it becomes a battle in variance (the first to go bust loses) and in such a battle the bigger bankroll should have the advantage (meaning that in this scenario it will tend to win over time).

[Viscore]

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.

That is why no casino that is in good mind that would operate a business without a house edge.

Casino is one of the most profitable business but they also have big maintenance, they need to ensure that they have a good place to cater the gamblers, pays their employees on a regular basis, and other necessary maintenance, and without a house edge, where would they get that.

Every business has to ensure that they are consistently profitable as expenses is constant, with that, they can operate longer.
I think if there's a casino that would operate without a house edge, they would not last long.

[reliable]

If the idea not to put a house edge in the casino to attract more gamblers is viable, that would have been implemented a long time ago, if there are casinos that implemented that kind of system, I think they are not successful as I haven't heard a popular casinos with no house edge.

For gamblers, we certainly like to play in a casino where we think we have a decent chances of winning, but it's not gonna happen as casinos advantage is what makes their business profitable against majority of the gamblers. 

All the players would like to have and play with no house edge, but at the end of the day casino owners or gambling sites will have t make money to bear the expenses and make profits. It is only possible via having the house edge and thus inspite of this people try their luck and lose lot of money as well as they play just to make money from gambling.

[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.

That is why no casino that is in good mind that would operate a business without a house edge.

Casino is one of the most profitable business but they also have big maintenance, they need to ensure that they have a good place to cater the gamblers, pays their employees on a regular basis, and other necessary maintenance, and without a house edge, where would they get that.

Every business has to ensure that they are consistently profitable as expenses is constant, with that, they can operate longer.
I think if there's a casino that would operate without a house edge, they would not last long.

Also, if you've ever been in Vegas, you'll notice that when you're playing, the waitresses will bring you quite a lot of "on the house" drinks.
Trust me, those are paid by the house edge as well.

My friend would go there and spend like $20, but go home with $100 of drinks in his guts

[Barnabe]

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.

That is why no casino that is in good mind that would operate a business without a house edge.

Casino is one of the most profitable business but they also have big maintenance, they need to ensure that they have a good place to cater the gamblers, pays their employees on a regular basis, and other necessary maintenance, and without a house edge, where would they get that.

Every business has to ensure that they are consistently profitable as expenses is constant, with that, they can operate longer.
I think if there's a casino that would operate without a house edge, they would not last long.

Yeah, but online casinos have a small maintenance cost. If the owner is a developer the casino will only cost them a few bucks for the server and some time spent in promoting it and solving problems related to its customers.

[deisik]

It could end well, but it probably wont.
House Edge gives the casino a bit more protection from Variance

I certainly agree with you. However, the ranges of house edge we currently see in the industry (~1%, while sometimes even less than that if we account for things like rakeback) are not a good protection against variance. If we postulate this (which seems to be a valid assumption anyway), then we have only one avenue left through which most online casinos are able to profit and prosper. And this is same variance which leaves gamblers' balances empty with no way of retribution

Luck is on the side of the big bankrolls

[Barnabe]

What is the smallest edge on crypto casinos ? Have someone ever seen a casino with a 0.1% edge or something similar ?

[o_e_l_e_o]

Statistically speaking, a zero house edge casino would not be profitable. Over infinite time, the variance trends towards zero, meaning the casino would pay out exactly what they took in.

However, for this to be true in practice, you would need all customers to be playing perfectly, have perfect money management, and have a combined bank roll equal to that of the casino. Obviously, this is not the case. The majority of people are bad at money management, especially when it comes to gambling, and so the majority of their customers will be poor at managing their bankroll and their bets. Players frequently tilt, bet overly aggressive, think they are on a winning streak, bet bigger and bigger trying to regain losses, etc., all of which works in the house's favor. Their bankroll also isn't combined. The average person who walks in with $100 isn't going to say "I'll walk away when I hit $200". The majority of people would keep going and aim for higher profits. In reality, this means a swing of several hundred dollars in their favor which the casino can take in stride, whereas a swing of only $100 in the other direction is enough to bankrupt them.

Also, if you've ever been in Vegas, you'll notice that when you're playing, the waitresses will bring you quite a lot of "on the house" drinks.

Those drinks pay for themselves. Drunk gamblers are more likely to bet big, play suboptimally, and make mistakes.

[tyKiwanuka]

Martingale seems really a fascinating topic for a lot of gamblers But don't worry @deisik, I like your approach and thinking out of the box, although you know my opinion about something that might work to a certain extent in reality (with small gains, if you play it safe), but not in theory.

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.

Imagine all those players putting all their funds in one pot and going all-in a few times - and getting lucky. Then this "syndicate" would suddenly have the house edge over the casino.

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In general, this is of course a zero sum game, which is maybe good for money laundering, but else then that ? Your theory of a "bankroll house edge" makes sense, as far as I see it, but only, if you make Martingale mandatory for all players and no syndicates allowed. But all in all this is so far from reality, that it's hard to wrap your head around it (at least for me ).

[freedomgo]

What is the smallest edge on crypto casinos ? Have someone ever seen a casino with a 0.1% edge or something similar ?

I don't see any casino with that kind of very low house edge, and actually it depends on the game.
So let's talk a particular game, for dice, usually the average house edge is just 1%, gamblers would already think it's a good percent and they have a good chance of winning but that 1% if a gambler plays regularly, he will lose in the long run, unfortunately, only few realizes that, that is why sometimes they think they are cheated when they lose.

[Barnabe]

What is the smallest edge on crypto casinos ? Have someone ever seen a casino with a 0.1% edge or something similar ?

I don't see any casino with that kind of very low house edge, and actually it depends on the game.
So let's talk a particular game, for dice, usually the average house edge is just 1%, gamblers would already think it's a good percent and they have a good chance of winning but that 1% if a gambler plays regularly, he will lose in the long run, unfortunately, only few realizes that, that is why sometimes they think they are cheated when they lose.

It was quite a long time ago, but I remember at some point casinos were doing sub 1% edges. Maybe it's not profitable in the long run so they all stopped...

And it's always easy to complain once you lose, gambling should be about fun and excitement if you are gambling more than you can afford you should always reconsider.

[deisik]

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)

If it turns out that the house edge is not how casinos turn in most of their profits, I leave it to you to decide on how charitable this type of gambling would be

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

Your analogy is skewed on so many levels

It would fit (to a degree) if users would have to pay for using these "free" products. And lo, it suddenly emerges as a perfectly viable business model in plenty of areas such as a mobile telecommunications industry where a network operator gives you a cell phone virtually for free provided you use it according to a specified data plan

And while we are at it, you are mistaken even on purely technical grounds. I don't know about Apple, but Microsoft offers a lot of its products for free as they earn by providing support. Just recall the inkjet printers manufacturers who are selling printers below cost of production, and then earning by selling extremely overpriced ink cartridges 

[Sadlife]

Im not a fan on leverage gambling so it maybe best to make it optional as some players are only there to play for entertainment not to drown in debt with percentage accumulated resulted in house edge especially when the one's im playing are random with no guarantee result.

[Saisher]

The answer is really obvious because majority of the gambling casinos has house edge if a gambling casinos can manage to overcome losses and make a profit, then he can launch one making it the first no house edge casino and every gambler will play here because they have a huge chance of making a profit than those with a house edge.

[btc78]

Im not a fan on leverage gambling so it maybe best to make it optional as some players are only there to play for entertainment not to drown in debt with percentage accumulated resulted in house edge especially when the one's im playing are random with no guarantee result.

all of us do mate,we are not fan of leverage but we can't do anything about that if the gambling site we are using needs to put this.

The answer is really obvious because majority of the gambling casinos has house edge if a gambling casinos can manage to overcome losses and make a profit, then he can launch one making it the first no house edge casino and every gambler will play here because they have a huge chance of making a profit than those with a house edge.

what do you mean the gambling casino need to overcome losses?make name even one gambling site that bankrupt (those legit and not some stupid scammers that close and open their site0

Look how long those casino business here in crypto talk.they are gaining more and more as years passed by.

[deisik]

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?

How do you know that the profits casinos earn come from the house edge?

Or at least the majority of them? We don't know that for sure. Moreover, as my example with a coin tossing shows, if your bankroll is incomparable to that of the casino, you are going to lose even with a relatively small negative house edge as the size of the bankroll itself is an effective house edge on its own, unless you utilize something like a safe martingale setup. But in the latter case you will be able to continually earn small profits despite a positive house edge

[Lakai01]

First of all thank you very much for coming back to me, unfortunately it is not self-evident here in the Gambling section that a discussion is actually taking place

If it turns out that the house edge is not how casinos turn in most of their profits, I leave it to you to decide on how charitable this type of gambling would be

Yes, of course. Assuming that the House Edge is not the (main) source of income, one cannot speak of a "charity" action. But when I look at the countless online casinos, the question arises for me, what other sources of income are there besides the House Edge? Hardly any portal shows advertising, only a few offer the opportunity to invest directly in the bankroll - as Bustadice does, for example.

Your analogy is skewed on so many levels

I'm fully aware of that Hence the "to put in exaggerated terms".
This comparison stands and falls of course also with the assumption that the House Edge is the main source of income of the casino.
What do you think these sources of income are?

[buwaytress]

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)

Probably the most practical explanation for why house edge. This correlation is demonstrable by the higher house edge for physical casinos, which have a higher overhead costs (more staff, refreshments, bills, rent, maintenance, marketing). Digital casinos have server fees (instead of rent), but also have maintenance and security costs, but fewer staff, cheaper marketing, etc. And a corresponding lower house edge.

House edge also allows for fewer restrictions that attract micro gamblers and high rollers. A casino that doesn't want house edge would probably want to lower exposure to variance, so they restrict max bets and min bets. With many crypto casinos, you get 1 satoshi min bets with 1 BTC upwards max bets, allowing martingale strategies with up to 30+ losing streaks (but house edge gives them less exposure to variance).

[deisik]

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

It is ironic how people start to make references to probability theory without actually knowing how it is going to play out in real life. In real life, though, if you play long enough on square odds, you will either bust or bust your opponent first (all other things equal). So 50-50 here refers to the odds of busting if the bankrolls are the same at the outset. In other cases, the higher the discrepancy between the bankrolls of the players, the sooner the one with a smaller bankroll is going to bust (and still faster if the stakes can be raised at will)

Something quite different from balancing out, however