The house edge is a concept that seems to be defined a million times on the Internet,
in a million different ways. Part of this stems from the fact that the odds and
house edge have so many different names, and different ways to think about them.
It all comes down to math and two concepts: the odds and the house edge. Put
simply (alright, not exactly) 'odds' are the chances of losing verses the chances
of winning, in any given situation. The 'house edge' measures the theoretical
commission the house earns by paying winners less than the inverse of the odds
they must overcome. So the casinos are just shortchanging you with its 'house
edge'. For example, if you bet on two columns in roulette, the odds are 24 to
14 that you'll win. The casino robs you of two dollars though, by only paying
you $12 if you win, but still taking all $24 if you lose. So even when the casino
has the odds against them, in the long run they manage to take just as big a
Another theoretical number you hear the name of around the casino is the 'return
percentage' or 'pay out percentage' (a familiar term to slots fans). Basically
the return percentage is just that, the percentage of the money bet that would
be returned to the players, again if everything fell into a perfect statistical
row. Return percentages are no mystery to slots fans, who know it is simply
the compliment of the house edge. This just means that a 95% payout rate means
100 minus 95, or a 5% house edge. In games like blackjack and our old friend
video poker however, the return percentage is a variable that changes with the
quality of play.
The Vig, or Vigorish is a slightly different concept these days in casino gambling.
The Vig is most often used to describe a fee the casinos charge on certain bets.
In some instances the casino applies a Vig as a bet is being placed, and therefore
it is collected regardless of a win or loss, and other instances like in Baccarat,
where a Vig is only charged on a win (the winning banker hand in baccarat).
House hold, or hold percentage is the real world equivalent of the house edge.
If the edge were to be steady and all events were to go to a statistical T,
then the hold and the edge would be exactly equivalent. It can often be confusing
though, because for games like a slot machine where there is no variation, the
hold actually is the real counterpart of the house edge, it's simply based on
tallies rather than probabilities. At the tables, considering video poker for
instance, there is variance in play, which affects the amount of the edge the
casinos are actually pulling at any one point in time. The hold takes on a slightly
different meaning when it comes to the video poker machine, it is the amount
of cash the casino actually keeps out of the total dropped in the machine. It
is a counted real number, not a theoretical one such as the house edge, but
it is directly analogous to it.
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