The House Edge and Variance of a Casino Game

Throughout history, gambling in some form has been seen in most societies. From Ancient Mesopotamia and the Greeks to Napoleon’s France and Elizabethan England, people love to have fun with games of chance. Some of the most popular gambling games include keno, blackjack, roulette and poker. While there is no denying that some games are more likely to favor the house than others, these games can also provide some short-term profits to players who possess the necessary skills. These players are called advantage players.

Casinos have a number of built-in advantages that ensure their profitability. These are known as the house edge and variance. The house edge represents the average gross profit that the casino can reliably expect to make from a given game over time. The variance, on the other hand, is the volatility of the casino’s gross profit over a specific period of time. Casinos hire mathematicians and computer programmers to calculate the house edge and variance for their games.

Depending on the game, the house edge can vary widely from one casino to the next. The game with the lowest house edge is probably baccarat (or chemin de fer in French casinos), followed by blackjack, and then craps. Some casinos also offer Asian games such as sic bo (which became a mainstay in American and European casinos in the 1990s), fan-tan, and pai gow. Some have live dealers and special perks for high rollers.