Video Poker and more

Some small mathematics are in order to give you an thought how the casino gets their money. Casino games generate revenue all on long term, so therein lies the casino’s advantage. So that is why you need to quit while you are ahead, because a player can only get the small term benefit. Online casinos have the same rules, from online poker to blackjack.

All the games in the online casinos give the player the lure of a possible small-term payout, but in reality they provide the casino or “house” a long-term advantage. There are games out there that are classified as “random with a tactical element”, and these games give the player some decisions to make. For these games there is the possibility to use their own skill to minimize the house advantage, but they can never deny their inheritance which is that they have a long-term disadvantage. If they wanted to eliminate that disadvantage they would have to have years of training, extraordinary memory and numeracy skills, not to mention highly developed visual skills.

The player does not receive the payout according to the “right odds”, and that is where the disadvantage comes from. Example given, say we have a dice game and the gamble is that you need to guess the number that comes up. The ratio congruous to the “right odds” and is 5 to 1, only the casino will payout on a 4 to 1 ratio so you will lose out some.

The house edge or HE is the profit the casino will receive from the original bet the player made.

Test case: We are into American Roulette (for instance), you have two zeros and 36 non-zero numbers (18 red and 18 black), as if you never played roulette before. We are going to bet $1 on red (we are being risky), our chance of winning $1 is going to be 18/38 and the chance of us losing the whopping $1 (or essentially winning -$1) is 20/38.

Our expected value as a player, EV = (18/38 x 1) + (20/38 x -1) = 18/38 – 20/38 = -2/38 = -5.26%. So the conclusion is that the HE is 5.26%. We are going to play for 10 rounds, bet $1 each round, then the average profit the house will be getting from us will be 10 x $1 x 5.26% = $0.53. Naturally the casino cannot get 53 cents but it is on average from millions of players playing ten rounds and each and everyone is betting one dollar.

HE varies per casino game some have 25% in the case of Keno, or maybe 15% like slots and some have even less.

This above calculation is relatively speaking an simple one, but usually this is not the case, normally computers have to compute the combinatorial problems.