A Guide to House Edge in iGaming for Operators

Understanding the house edge in iGaming is vital for operators looking to optimise their brands for profitability and player engagement. House edge affects all games and impacts all monetary aspects of the industry. This guide explains the ins and outs of house edge: what it means, why it’s essential, and how operators can use their knowledge of it to build successful iGaming brands.

What is the House Edge?

House edge is the mathematical advantage built into online casino games and all other types of gambling. It calculates a small percentage of total wagers the operator keeps over a certain period the operator keeps. In essence, it is the opposite of the Return to Player (RTP), which is the percentage of all wagers returned to players over the same amount of time via winnings. Combined, the RTP and house edge total 100% of all monies wagered. The combination balances profitability for operators and fairness for players. For a deeper understanding of related concepts, refer to WA.Technology’s guides on RTP and Random Number Generators (RNG).

For example:

• A game with a house edge of 4% means the casino retains €4 of every €100 wagered, while €96 is returned to players over time.

Why is House Edge Important for Operators?

1. Sustainability: Operator brands must be able to sustain their business. The house edge ensures profitability while providing a fair gaming experience for players.
2. Game Strategy: Different types of players seek different house edge games. For example, a newer player may go for a game with the lowest house edge, as a higher percentage of winnings are paid out. However, a more experienced player may choose a game with a higher house edge, as it’s more likely to have a higher volatility rate and, therefore, will usually offer bigger winnings. 
3. Player Engagement: Once brands have acquired players, transparency and sharing information about the house edge and how it works can help build player trust.

House Edge Across Games & Verticals

The house edge is variable and differs from brand to brand and from game to game. This variety is due to many elements, such as the brand, the vertical, and whether the game is a game of skill or chance. A top-notch casino provider team can help brands climb to new heights when balancing the house edge and making a casino successful. Experienced teams, like WA.Casino, understand how best to create a winning casino experience for operators and players.

Typical House Edge Percentages

Casino & Live Casino Games:

• Slots: The house edge typically ranges from 2% to 15%, depending on the RTP and volatility rate.
• Table Games: As table games allow for some element of skill to play well, the house edge works slightly differently but usually ranges between 1 and 5%. For example, with optimal strategy, blackjack's house edge can be as low as 0.5% or as high as 2%. For craps, the house edge could fall between anywhere from around 1.4% to 16.7%. These variables depend on the game rules and bet type. 

Live Casino Favourites

Let’s take a closer look at the most popular live casino games:

• House Edge for Poker: In poker, the house edge is a rake, a percentage of the pot taken by the house. This typically ranges from 1% to 5%, depending on the stakes and the specific game rules. Influencing factors include the game type, players’ skill levels, the rake structure, and the overall house edge.

For example:

• Texas Hold’em: In some scenarios, the house edge can be as low as 2%.
• Caribbean Stud Poker: Often has a higher house edge, around 5%, due to fixed payout rules.

• House Edge for Roulette: Roulette is a good example of how slight game adjustments affect the house edge. The design of the roulette wheel remains constant, but the number of zeroes significantly impacts the house edge. Each additional zero increases the house’s edge, conversely reducing the RTP. It’s as simple as that. 

For example:

• Single-Zero European or French Roulette: 2.70%
• Double-Zero American Roulette: 5.26%
• Triple-Zero American Roulette: 7.69%

• House Edge for Baccarat: Baccarat is a popular choice for live casino fans, partly due to its low house edge. Most variations of baccarat have a similar house edge. The house edge varies depending on the bet made.

For example:

• Banker Bet: 1.06%
• Player Bet: 1.24%
• Tie Bet: 14.36% 

• House Edge for Craps: Due to the many bet types available for craps, the game has many differing house edge amounts. Players choose their level of risk when they make their bet choice. 

For example:

• Pass Line Bet: 1.41%
• Don’t Pass Bet: 1.36% (slightly lower due to the house's odds of winning on a ‘seven out’).
• Other Bets: Bets like ‘Any Seven’ carry a significantly higher house edge of 16.67%.

• House Edge for Blackjack: Blackjack’s house edge varies based on the rules of the table and the players’ skill and strategy.

For example:

• With Optimal Skill and Strategy: As low as 0.5%.
• Rule Variations: For example, tables that pay 6:5 on blackjack instead of 3:2 increase the house edge by about 1.39%.

Sports Betting

In sports betting, the house edge comes from the vigorish (commission, juice, or margin), a fee embedded within the odds that allows the operator to profit regardless of the outcome. 

In a typical two-outcome event, the ‘fair odds’ for both teams might be 2.00 (or even money). However, sportsbooks adjust the odds slightly, often to around 1.90 on each side. This means a successful €100 bet at 1.90 would return €190 (including the original stake), but the probability of each outcome is higher than 50%, adding up to more than 100%. The difference is the sportsbook's house edge.

The house edge can vary depending on the type of event and market:

Straight Bets (Moneyline or Point Spread): Typically 4% to 5%, but can vary based on the odds structure.

Parlays: A much higher edge due to the cumulative impact of combining multiple bets.

Live Betting: Often carries a slightly higher edge due to the dynamic nature of odds and increased operator risk.

Bettors will often shop around for the best odds across multiple sportsbooks, focusing on those with lower volatility. Operators must, therefore, carefully manage the balance of odds and the house edge to ensure long-term profitability while maintaining competitive offerings.

Calculating House Edge

Understanding the gambling mathematics behind the house edge is crucial for operators:

• Example: European Roulette:
  • Players bet €1 on a single number.
  • Probability of winning: 1/37.
  • The house edge is calculated as follows: 
  • House Edge=(House Profit/​Player Bet)×100
  • A Guide to House Edge in iGaming for Operators
  • For European roulette, this equals 2.7%.

This calculation highlights the importance of balancing the house edge with player expectations. For operators unsure of the complexities of gambling mathematics and house edge calculations (and those less keen on maths at school!), a reputable iGaming solutions provider with an exemplary sportsbook team, such as WA.Sports, can be the difference between a lacklustre offering and a premier sportsbook, leagues ahead of the competition.

House Edge vs RTP

As we covered previously, the house edge represents the operator’s return, while RTP reflects players’ potential returns. Balancing RTP and the house edge is essential to appeal to casual players seeking frequent wins and high-stakes players chasing jackpots. 

The house edge and RTP metrics are interconnected:

• A slot with 96% RTP has a 4% house edge.
• For example, if a game has a house edge of 4%, the operator is expected to keep €4 for every €100 wagered, with the remaining €96 returned to players as winnings.

However, players must remember that the RTP percentage reflects long-term outcomes over thousands of games, not individual player sessions. If a player wagers €100 on a game with a 96% RTP, they are NOT guaranteed a €96 win.

The RTP is a mathematical average calculated to reflect long-term outcomes over a long period. Where one player may win big, the next may—and probably will—win nothing. The house edge ensures the operator consistently achieves its built-in advantage over time across all players and games.

The random nature of game outcomes is typically determined by a Random Number Generator (RNG), provably fair games, or similar mechanisms that ensure fairness but also mean that individual results vary widely. This unpredictability is a point for operators to always keep in mind and a cautionary tale for players.

House Edge for Operator Success

Operators can use house edge strategically to build profitable and engaging platforms:

1. Game Portfolio Management:
   • Offer a mix of high and low house edge games to cater to different player segments.
   • Use analytics tools to identify popular games and adjust offerings accordingly.
2. Promotions and Bonuses:
   • Bonuses can encourage play on games with higher house edges, increasing profitability.
   • Transparent terms and conditions build trust, avoid alienating players, and ensure compliance with regulations and Responsible Gaming practices.
3. Player Education:
   • Highlighting house edge information demonstrates fairness and integrity.
   • Linking to educational resources, like WA.Technology’s blog guides enhance brand credibility.

Responsible Gaming & House Edge

Understanding the house edge is vital for promoting Responsible Gaming. Players should know and understand that the house edge ensures the operator’s long-term advantage, meaning losses are a natural part of gambling. Operators are responsible for setting clear terms and conditions that comply with Responsible Gaming practices and are fully compliant with regulations and laws. Operators can support players by offering realistic expectations and encouraging them to engage in play responsibly while minimising the risk of harm. Operators should actively educate players on the house edge and other rules and offer tools, like self-exclusion and time, deposit, and other limits, to support safe gambling practices.

House Edge in Conclusion

Understanding and optimising the house edge is a large part of successful iGaming operations. By balancing profitability and fairness, operators can create a brand that satisfies players while providing long-term business viability. 

Explore more of WA.Technology’s blog guides on RTP, Provably Fair technology, UX and UI design, gamification, VIP programs, RNG, and more for further insights into iGaming fundamentals. Learn the meanings behind the terms in our helpful casino and sports betting glossaries.

WA.Technology is committed to Responsible Gaming practices. Read our Responsible Gaming Statement to learn more.

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