House Edge -- Is It Really Required?

[serjent05]

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

True indeed but if your friend quit halfway while bagging 20% of your money, then what left is 80%.  That is just for one player, what about if you play with 80 players more and these players do the same tactics.  Then you will find out that your bankroll no matter how huge it is will become depleted.

Another thing, Casino establishment is a business so the owner wants to ensure that they will take profit no matter what happens and they see house edge as their advantage.

[deisik]

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

It is next to impossible for several reasons

First, all casinos are more or less small fish, and they have to be very careful in managing their bankrolls. There are people who have more bitcoins (for example) than most online casinos would ever dream of. In these circumstances a no house edge business model may not be economically viable (though it remains to be seen). Second and most important, people are taking a small house edge (say, 1%) as something legitimate. In other words, it won't give any substantial advantage by reducing it further (apart from happy hours and similar ideas)

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

Again, we don't know how much of an online casino revenue flow is due to house edge and how much of it comes from variance (i.e. people being irrational) and sheer bankroll size. The point is that the house edge can be easily overcome by variance if you know how to take advantage of randomness. The bankroll size, on the other hand, is unbeatable. To repeat, it is a statistical certainty that cannot be meaningfully challenged

[ralle14]

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.

I also recall there's a gambling site that had a very low house edge 0.2%-0.7% and it's only possible because they operated through moneypot no bankroll was required for them. Unfortunately their site didn't gained players and enough wager volume so they couldn't continue to operate on their own. Safedice had one of the lowest house edge in dice sites but the owner disappeared and their management suddenly crumbled.

[shoreno]

many casinos now have growned alot since the day they have started but they still have a house edge . some have a different house edge based on the games they have  but majority of these sites have other forms of promotions too and one of it was rain or rains .  i heard before that funds came from rains are from house edge  . you can also get your house edge back in the form of rakebacks and other gambling promotions just to be fair for other big bettors because rains was random too

[Yatsan]

many casinos now have growned alot since the day they have started but they still have a house edge . some have a different house edge based on the games they have  but majority of these sites have other forms of promotions too and one of it was rain or rains .  i heard before that funds came from rains are from house edge  . you can also get your house edge back in the form of rakebacks and other gambling promotions just to be fair for other big bettors because rains was random too

Agree! And casino owners are gambling too with their business so it's normal to have a house edge for their advantage. All of the Casino's have different ways to make a promotional campaign and honestly I think they are spending more on giving back to player than their house edge. For me it's not really required if you are big, but most of the casinos are still implementing it for more profit and promos for their website.

[SquallLeonhart]

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.

Why Microsoft is not stopping about catching pirated copy of windows even they are one of the world's biggest corporate and their founder is top richest of world for consistently more than a decade.

Bill Gates is ready to donate millions to billion dollars for philanthropy purposes but never think about forgiving a licence issue which costs ~$150.

Without the income stream, microsoft will be no more a giant. You may do lots of giveaways but you should never think about giving up your primary source of income. To be sustaining, you must collects fees and then you may donate or may not. If you start sacrificing your basic fee itself then you may end up bankrupted. Just the basic economic rule of a business model.

Houses may think about zero house edge in this possible ways:

• By having house specific coin/token. All gambling should be done on that coin/token alone.
• By introducing monthly subscription fee.
• Zero house edge only for some hours.

[abel1337]

many casinos now have growned alot since the day they have started but they still have a house edge . some have a different house edge based on the games they have  but majority of these sites have other forms of promotions too and one of it was rain or rains .  i heard before that funds came from rains are from house edge  . you can also get your house edge back in the form of rakebacks and other gambling promotions just to be fair for other big bettors because rains was random too

Agree! And casino owners are gambling too with their business so it's normal to have a house edge for their advantage. All of the Casino's have different ways to make a promotional campaign and honestly I think they are spending more on giving back to player than their house edge. For me it's not really required if you are big, but most of the casinos are still implementing it for more profit and promos for their website.

Right, I am also wondering that casino is spending more on their promotion than the extra profit they get from house edge, It is also possible that it is for long term sustainment for their gambling sites like for domain fees and other fees for the gambling site. As a gambler, I don't really make the house edge as a big deal because it knows it exists for the sustainment of the gambling site. A house edge is pretty normal for an online casino that's why we shouldn't complain about that.

[deisik]

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

This is not the only way to make profits

When you bust, all your money becomes casino's. And the bigger the bankroll of a casino relative to your bankroll, the higher are your chances to bust even if the odds are equal, i.e. when there's no house edge as it is commonly understood. Put differently, a bigger bankroll already gives a casino advantage over you, and this is a house edge on its own, and as such it can generate profits in exactly the same way as a regular house edge

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

People often appeal to theories, even resort to posting some arcane stuff, without truly understanding the very basic ideas behind these theories, how they work in practice. But let's return to my example of tossing a coin. You have 10 dollars and your friend has 10 dollars too. You pay 1 dollar for each loss and receive 1 dollar when you score a win. And one of you will inevitably bust in the end, and it won't take long, probably in fewer than 100 tosses

This is what statistics actually says

[o_e_l_e_o]

This is what statistics actually says

This is what statistics says when you have a finite resource, which in your example is each person's bankroll. When you have infinite bankrolls, then statistics says that over infinite time the variance will be 0.

And one of you will inevitably bust in the end, and it won't take long, probably in fewer than 100 tosses

The probability of tossing heads 55 times or more in 100 tosses, therefore giving you a swing of at least 10 over the other person tossing 45 tails, is only 0.1841. Similarly, the probability of tossing tails 55 times or more will also be 0.1841. So the chance of someone going bust in 100 tosses is around 36.82%, if we ignore the variation in the order of the tosses. So that wouldn't quite be "probably".

If we are taking "probable" to mean a >50% chance of it happening, then you would need 180 tosses. There is a probability of 0.2512 to toss 95 heads or more in 180 tosses, meaning a a 50.24% chance for someone to go bust.

[Finestream]

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

Again, we don't know how much of an online casino revenue flow is due to house edge and how much of it comes from variance (i.e. people being irrational) and sheer bankroll size. The point is that the house edge can be easily overcome by variance if you know how to take advantage of randomness. The bankroll size, on the other hand, is unbeatable. To repeat, it is a statistical certainty that cannot be meaningfully challenged

A casino having a house edge does not just take all the bets a gambler would put even if they have a house edge.
House edge will remain as fix, something that they won't remove on the part of the casino, but in terms of bets, the house can always put a limit especially to those lucky high rollers, and that again gives them the advantage.

They are into profit, and they like to make sure that they will win and stay profitable, that's why high rollers usually choose a casino that has big limits so they can gamble within their range.

[deisik]

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

You know what they say?

Right, there is nothing so practical as a good theory (the emphasis on good, obviously). And the theory says that on finite timeframes (dealer's choice), it is not something which "might work to a certain extent in reality" but rather something which would work most of the time given enough sample size (to make the theory fully applicable)
 

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

This would be sheer luck, indeed. However, you don't need luck for that at all. A bunch of wily and artful gamblers can slowly but surely drain a casino's bankroll empty, and drive it out of business without any luck involved. Ironically, it would turn to be a matter of extreme luck for the casino to stay afloat in that case

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

It can't possibly be a zero sum game for the simple reason someone is set to bust at the end of the day

And I'm not sure what martingale has to do with that unless you actually mean the opposite of what you have written above. A thought-out martingale strategy takes away from the house edge, in whatever form it may exist. It is hard to beat a mighty bankroll, but if your goal is limited only to taking something from it, a small piece of the pie, the more the merrier

[swogerino]

In order for a casino to be successful and profitable it is a must to have the house edge implemented.In the Op theory that the larger bankroll makes you stay longer online and play longer is not true in all cases.Some player can be smart and win a lot in poker making this casino lose all its bankroll.Also in slot machines if you don’t have an house edge strange things can happen depending on the pay frequency and variance of the slot.

[tyKiwanuka]

It can't possibly be a zero sum game for the simple reason someone is set to bust at the end of the day

How so ? If I play with 0.1% stake (or whatever) of my bankroll for each "bet", I can never go broke. And with no house edge, over a big enough sample size, my bankroll will be the same as to when I started playing.

And I'm not sure what martingale has to do with that unless you actually mean the opposite of what you have written above.

When you talk about "staying in the game longer", this is Martingale:

(...) 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.

If you disallow Martingale and everyone plays with a proper money management*, there are no winners here, it's a zero sum game. Doesn't matter if the casino has gazillion times the bankroll of all their players combined. 

*The casinos play with proper money management too, i.e. the bet limits they set for their customers.

[sujonali1819]

My opinion about the house edge:

I think the house edge an extra opportunity for the casino owners of getting more profit from the casinos. And most of the players also take it easily, So why casino owners don't take this opportunity? They always looking for profits. So they will not remove the house edge from their site until the players start to avoid these casinos(which has house edge).

[o_e_l_e_o]

A bunch of wily and artful gamblers can slowly but surely drain a casino's bankroll empty, and drive it out of business without any luck involved.

How? There is no way to "surely" drain a casino's bankroll, unless that casino is offering flawed games that can be cheated, such as blackjack with only one or two decks and not clamping down on card counting. Even then, with the odds in the player's favor, it is not guaranteed by any means. If it were possible, then casinos would all have gone out of business by now. Whenever you play at a casino, there is always the risk that you lose.

It can't possibly be a zero sum game for the simple reason someone is set to bust at the end of the day

A zero sum game is a game where the net gain and net losses by all participants is balanced - hence the sum of all gains and all losses is zero. Gambling is indeed a zero sum game, since the gains of the player are perfectly balanced by the losses of the casino, and vice versa. If my bankroll is $100 and I go bust, then I have lost $100, but as the casino has gained that $100, the sum is zero. It is a zero sum game.

[Captain Corporate]

 How could you make any money with zero house edge? I mean come on, are you going to just left it to gods will and hope for the best? With zero house edge you are going to get either a player who makes as much money as possible without losing they will just bankrupt the casinos. Sure there is a chance they get unlucky and lose all of their money as well but you have to be insane to just wing it.

 There is no way a casino could operate without house edge, its their insurance and they will definitely continue with the house edge as well. Its required, its a must, it has to exist, otherwise there is point on starting a casino at all.

[deisik]

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

Remember Steve Ballmer's famous developers?

So I have four words for you. It is variance, variance, variance, variance. When you go all-or-nothing path, the house edge as it is commonly understood will be of little help as luck (another term for variance) will be dominating the scene in this case. And now, all of a sudden, it is one bankroll against another. Put differently, if your bankroll is way bigger than the casino's (and there are no limits on how much you can bet), the house edge becomes irrelevant as the size of your bankroll will be your own "house" edge. Now reverse the situation and read this post to see how casinos are earning dough

Your analogy is skewed on so many levels

I'm fully aware of that Hence the "to put in exaggerated terms"

Then let's get it straight, it is not an analogy

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)

You're welcome, bro!

This is what I've been doing with doges, and you know what? People are still in deep denial, and refuse to accept the fact that with small house edges of 1% at the outside, variance beats the house edge hands down (read, you should be extremely unlucky to bust if you do everything right)

[DoublerHunter]

^ There should be a house edge because that gives the gambling owner generate revenue just for them to survive on this kind of business.
As we know the house edge is always in favor of the casino owner, so, why we gamble if it's still possible to win? Because luck anything could happen in a short term of gambling and most gamblers hoping for luck that probably they have while they are in gambling. Nevertheless, for me technically speaking, the house edge has been a built-in mathematical advantage on every game and maybe can make a profit.

[bearexin]

I would say just to protect the casino it is really required to have a guarantee. Not saying without house edge they can't make any profit, I remember there was one casino who tried 0% edge for a while but they didn't had a big bankroll so they couldn't cover the losses long enough to wait for a win, and they just bankrupted basically.

This doesn't mean it will be the same for all casinos, this doesn't mean it will always be bankruptcy for the casinos if they have no edge, but at the same time we are talking about a "guaranteed" over a "probability" and I would pick guaranteed income for my casino over a probable one any day of the week. Considering even with the current house edge system there is abundant amount of costs to run, they really need that guaranteed income for sure.

[xxjumperxx]

 How could you make any money with zero house edge? I mean come on, are you going to just left it to gods will and hope for the best? With zero house edge you are going to get either a player who makes as much money as possible without losing they will just bankrupt the casinos. Sure there is a chance they get unlucky and lose all of their money as well but you have to be insane to just wing it.

 There is no way a casino could operate without house edge, its their insurance and they will definitely continue with the house edge as well. Its required, its a must, it has to exist, otherwise there is point on starting a casino at all.

Exactly.
Noone is running a casino out of the kindness of their heart.
Its a business and that business is here to make the owner money.
Simple as that.