06/01/2022

An Introduction to Deduction Rate and the Casino House Edge

Something you might have wondered is how casinos make money, and whether they cash in on your losses? The quick answer here is, surprisingly, no! Casinos don’t make money if you lose, and instead, their profits come from the house edge (also known as deduction rate) set for each individual game. Would you like to know more about the casino house edge and how it could potentially affect your gambling?

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Introduction

About the Casino House Edge

Every casino game has a house edge, and this is the advantage the gambling site has over the player. It is not unusual to think that casinos would be making big money on their players when they lose, and that it’s the reason for the saying “the house will always win,” but that’s not how it works. The casino doesn’t benefit from your losses, but from the house edge.

The house edge is a small percentage of the total incoming bets that is kept by the casino. It doesn’t matter if you win or lose as this percentage always goes straight to the house, and how big the house edge is depends on the game. In general, slots tend to have a higher house edge than, for example, table games like Baccarat.

Games with a high house edge means that the casino will keep a big percentage, which indirectly reduces your chances of winning, and it is commonly known that the lower the house edge, the better for the player.

House Edge aka Deduction Rate

RTP & House Edge Correlation

The Correlation Between RTP and House Edge

When you gamble online, you can use the house edge to calculate your chances at winning, thanks to the correlation between the house edge and the game’s RTP (return to player). It is not necessary to know or understand the concept of a deduction rate to play casino games on the internet, but it could help if you are looking to make strategic gambling choices.

RTP stands for ‘Return to Player’, and it is a term that refers to the total payout of a game during its entire lifetime. The RTP should usually be above 90% to be considered good, and it can often range somewhere between 93-97% on top games. You can find RTP’s listed for games at most reputable online casino sites.

If the RTP is 96%, it means that the game will give back 96% of the total bets made from the moment the first bet was placed and until the last bet is placed. Keep in mind that it doesn’t mean that you will personally get 96% back on your bets, as you could either be lucky and win, or lose and have your investment go to another lucky player.

The correlation is that the RTP and the house edge always make up 100%. If the RTP is 96% as in the previous example, then the house edge is 4%. This little trick allows you to calculate the house edge on all your favourite games, as it is rarely announced the way casinos announce their return to player rates.

How to Leverage the House Edge

Using the House Edge to Your Advantage

Is a game worth your time and your money? This is where the house edge comes in, and experienced players use this knowledge to decide whether to play a game or if they are better off moving on. Logically, it wouldn’t be too beneficial to play a game where the casino has a giant advantage over the casino player.

If the house edge is high, then the casino’s advantage is also high, and a lower house edge means a smaller advantage where your odds to win are bigger. Most casino games such as slots won’t let you affect the outcome of a game, but you can learn these things to make smart choices that could increase your chance to win.

House Edge on Different Games

House Edge on Different Games

There is no such thing as a set house edge that applies for all games, and instead, different game types have different house edges. All games do have a house edge that is set by the game developer, and it isn’t something the individual casino has any control over.

Casino GameHouse Edge
Slots2 - 15%
Video Poker0.46%
American Roulette5.26%
Texas Hold'em2.36%
Blackjack0.5%
Baccarat1.01% - 15.75%
Caribbean Stud5.22%
Keno20 - 40%
Sic Bo2.78 - 33.33%
Craps0 - 16.67%

As you can see, the house edge can vary greatly, and we can see that Keno has a very high house edge, while Blackjack has one of the absolute lowest house edges out there. This doesn’t mean you shouldn’t play Keno, and just that you should be aware and comprehend what your chances to win are versus the risk to lose.

  • Slots

You might be surprised to learn that the house edge is quite high on slots, especially considering how popular slots are in Asia and all around the world. The reason for the high house edge is very simple, and it has everything to do with paylines.

Slots can have anything from 1-50+ paylines, and you choose how many you want to bet on in each round. Let’s say your favourite game has 30 available paylines. If you bet on all 30 lines, then your chances to win are higher than if you only bet on 15 paylines.

Now, let’s think about this for a moment! See, 15 is only half of the total number of paylines, and many players don’t realise that this move actually reduces their chance to win by 50%—hence the casino has a big advantage and a high house edge.

  • Progressive Jackpot Games

Progressive jackpot games are, in many ways, enhanced slots, where you can also win big prize pots that grow as players continue to place bets. In terms of house edge, however, they work similarly to slots, and you get the lowest house edge and the biggest chance to win by betting on the fill number of available paylines.

  • Roulette

There are many different types of Roulette, and here the house edge depends on the type of game you play. Popular Roulette types are European Roulette, French Roulette and American Roulette, and out of the three, American Roulette tends to have a somewhat higher house edge than the other two.

  • Blackjack

The house edge in Blackjack can go up and down a little, and a lot depends on how well you know the game. If you know what you are doing and know how to play strategically, then the house edge can be as low as 0.5%. A 0.5% house edge equals a 99.5% RTP, but again, if you are a beginner, the RTP drops and the house edge increases.

  • Baccarat

One of the number one tips when playing Baccarat, and especially if you are aiming for a low house edge, is to back the banker with your bet, but also to avoid taking the tie bet. To increase your chances of winning by keeping the house edge low, you can also consider gambling on as few decks as possible.

  • Video Poker

Video Poker is the kind of casino game where your decisions can actually affect the outcome of a game, and where knowledge ends up being power. In these cases, playing smart can improve your odds against the casino. The best way to play if you want to lower the house edge is to bet the maximum bet, but this also comes with its own set of risks.

Conclusion

Worth Keeping In Mind

There is nothing you can do to avoid a house edge, as most (if not all) games have it. However, it also shouldn’t be feared. In a way, it is true that the house always wins, as the house always wins something—the small percentage that makes up the house edge. The house doesn’t always win more than you, though, and you have a perfectly fair chance to win when you gamble online.

How big are your chances? Use the house edge and the RTP to get a better idea.

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