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7craps
7craps
Joined: Jan 23, 2010
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January 11th, 2014 at 11:55:03 AM permalink
what is the truth about the casino house edge?
vote

from
http://wizardofvegas.com/forum/info/help/16436-going-on-tilt-and-losing-regaining-heart-seeking-a-good-read/24/

Quote: EvenBob


Surely you know that manifests itself in the long term only.
It has no effect on the next spin.
If I win 10 times in a row, how much did the casino make on their HE?
Zero.

If I lose 10 times in a row, how much did the casino make on the HE from my bets?

The HE only works on thousands and 10's of
thousands of bets. It has no effect on a bet
to bet basis.



Quote: sodawater

In fact, since the house edge comes from short payouts, you can say the casino "makes its money" when you win a bet, by shorting your payout from true odds.

sure.
This is 10 year old math stuff.

win 10X in a row with $18 on Red.

you had $18*2*10 returned to you ($360)
a fair payoff would have returned
$18*10 + $20*$10 = $380
(every $18 should pay $20 to be fair ($1 pays $1 1/9) - the bet is a dog here)

that $20 difference in what the casino short payed over 10 wins
divided by
what they should have returned to the player $380 IS the house edge.
20/380
They saved themselves $20

no trick accounting here

the player IS very happy he kicked the casino's ass ("what HE? there is none!")
The casino IS very happy it short paid the player because of the house edge. It is always there.
a win - win
Quote: sodawater

When you lose a bet, nothing happens.
But really, that's all semantics -- the house edge affects every hand equally, whether you win, lose, or tie.

depends how you look at it.
I say when you lose the bet (example 00Roulette even money)
the casino is taking too much and should give some back
IF the game was fair.
in other words, when the casino wins, it wins too much.

The probability to lose an even money bet is 20/38
so one should lose 18/20 of each bet in a fair game when they short pay an even money bet
(18/38 * 1) + (20/38 * -18/20) = 0

that percentage is 90%
Bet $20 on Red and Black wins
the casino should only take $18, they took $2 too much
I see that house edge again, even on a player loss.

Good Luck
win or lose
winsome johnny (not Win some johnny)
sodawater
sodawater
Joined: May 14, 2012
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January 11th, 2014 at 12:42:22 PM permalink
You should also quote my next lines where I say of course that is all semantics, and the house edge is the same every hand, win, lose, or tie.
EvenBob
EvenBob
Joined: Jul 18, 2010
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January 11th, 2014 at 1:06:44 PM permalink
If the house edge manifests itself
on every bet and not just in the
long run, the casino should make
a profit every day, every week,
every month, every quarter. And
they don't, because the HE only
manifests itself after thousands
and thousands of bets. Theoretically
you think you see it on every bet, in
actual play you don't.

Anything can and will happen to the
player and the casino in the short
term because the HE is irrelevant at
that point. Talk to the guys who used
to own the GN until the craps player
came in one day took a few mil from
them and they had to sell the place.
Where was HE that day. In the long
term, where it always is.
"It's not enough to succeed, your friends must fail." Gore Vidal
AxelWolf
AxelWolf
Joined: Oct 10, 2012
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January 11th, 2014 at 1:16:56 PM permalink
Quote: EvenBob

If the house edge manifests itself
on every bet and not just in the
long run, the casino should make
a profit every day, every week,
every month, every quarter. And
they don't, because the HE only
manifests itself after thousands
and thousands of bets. Theoretically
you think you see it on every bet, in
actual play you don't.

Anything can and will happen to the
player and the casino in the short
term because the HE is irrelevant at
that point. Talk to the guys who used
to own the GN until the craps player
came in one day took a few mil from
them and they had to sell the place.
Where was HE that day. In the long
term, where it always is.

They have other costs that affect the profits, they have to pay dealers and management Promotions . The only time they lose In a quarter is if some wale gets lucky on hi-limit BAC.
♪♪Now you swear and kick and beg us That you're not a gamblin' man Then you find you're back in Vegas With a handle in your hand♪♪ Your black cards can make you money So you hide them when you're able In the land of casinos and money You must put them on the table♪♪ You go back Jack do it again roulette wheels turinin' 'round and 'round♪♪ You go back Jack do it again♪♪
EvenBob
EvenBob
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January 11th, 2014 at 1:59:27 PM permalink
Quote: AxelWolf

The only time they lose In a quarter is if some wale gets lucky on hi-limit BAC.



If the HE manifested itself on every bet,
that wouldn't happen. The key word here
is 'manifest', which means to show evidence
of. You can't see the evidence of the HE on
a single bet, the house can win or lose, it's
gambling in the short term just like you are.
"It's not enough to succeed, your friends must fail." Gore Vidal
rainy
rainy
Joined: Dec 19, 2013
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January 11th, 2014 at 3:20:03 PM permalink
In terms of the question for "When does the house edge work for the casino?", my answer would be all the time.

For example, if a casino wins every single bet the player has made in a casino for 1 full day, the casino would have made money. The house edge, would show that the casino made MORE money then if the house didn't have an edge calculated.

Now, on the flip side. If the casino lost every single bet the player has made for 1 full day, the casino would have lost money. The house edge would show that the casino lost LESS money then if the house didn't have an edge calculated.

The reason the odds bet in craps is considered the best bet in a casino is because there is NO house edge calculated. Meaning, it isn't about winning or losing the odds bet, but of the pay-out/pay-ins.

So, in actuality, the house edge DOES manifest itself in every bet.
example - Baccarat since it's a heads/tails game essentially. On the banker bet, the house edge comes from the commission. On the player bet, the house edge comes from the fact that banker wins more then player. Since the player bet has a 1.2% House edge, when a player bet wins, the house should pay more then even money. But, they don't, which is why the house has a 1.2% edge on every single player bet.
skrbornevrymin
skrbornevrymin
Joined: Jun 24, 2011
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January 11th, 2014 at 3:22:48 PM permalink
Each time a bet is resolved, the house edge is applied to the bet because the games are rigged/designed to be that way. The house edge is small and sometimes (in the short run or on an individual bet) the amount paid out is more than the amount taken in, but overall (in the long run) more money will be taken in than is paid out - the difference being the house edge. Over time the actual house edge will become the same as the mathematical house edge (or very close to it, depending on how well the math was done, and if it took in to account ALL of the factors including random bias, cheating, bet/bankroll limits, etc.), The variance between the actual application of the house edge and the mathematical house edge may allow a gambler to be ahead or behind in the short run, but over the long run the actual and the mathematical should come into allignment with each other.

Also, the gross profit that a casino makes from gambling is probably higher than the mathematical edge applied to the actual bets that were made because most gamblers will quit or be forced to stop betting when the variance is in the casino's favor. In other words, they quit when they are losing or run out of money. Granted, there are a few casino patrons who will quit after a big win or at least while they are ahead, but I would be willing to bet that most do not.
FleaStiff
FleaStiff
Joined: Oct 19, 2009
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January 11th, 2014 at 3:32:17 PM permalink
The house edge exists at all times and is applied to the wagers when bets are resolved. To a curious spectator, the house edge is nothing more than what a casino does so as to be profitable versus some sort of neutral charity that pays out at true odds for an event. To a bettor, the house edge has a more effective application to his bankroll. If the bettor loses, the croupier takes the bettor's five dollars if the bettor wins the croupier pays five dollars but takes the bettor's Twenty-Six Cents.

The bettor focuses on the five dollars, the green eye shade mathematician for the casino focuses on the twenty-six cents.
Each is correct. Each is incorrect. The man who won the five dollars focuses on his winnings and his new girl friend's boobs as she happily jumps up and down exclaiming "We Won". The green eye shade guy may be happier when the house takes the bettor's five dollars but he is quite happy focus on the twenty six cents because its that green eye shade guy who knows that one night's numbers mean very little. The relentless munching of twenty six cents is what keeps the casino in business. All a casino needs is customers with wads of cash and time.

The Bettor and the Accountant are each aware of other "thumbs on the scale": alcohol, females, music, social groups, festive atmospheres.... these are all house edges that lack precision measurement.
EvenBob
EvenBob
Joined: Jul 18, 2010
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January 11th, 2014 at 3:53:35 PM permalink
Quote: FleaStiff

The house edge exists at all times .



Yup. But it doesn't make money (manifest itself)
for the casino on every bet, only in the long term
on thousands of bets. If it made money on every
bet, the casino would never have a losing month
on gaming, and they do all the time.

Like Tongni said on the 9th:

"You can bring down the house edge in most of these games to razor thin margins. Depending on how you structure your play, it can basically be 0%. I don't see why it's unreasonable to think someone working against a small house edge can go on a long sustained run, especially when the bulk of his results will be decided by a few large bets...The "long run" can be a very long time, even on a low variance game like baccarat. Just depends on how you structure your play and wagers."

Even with the HE in place, it can be worked around
if you know what you're doing. And many do know
exactly what they're doing.
"It's not enough to succeed, your friends must fail." Gore Vidal
MangoJ
MangoJ
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January 11th, 2014 at 4:06:04 PM permalink
There are different views on that question, and both could be true:

You could view a specific casino bet as a "fair bet" (with no HE) with an implied "ante" (which is kept in any case). The ante is implicitel deducted from your bet each time you bet, but is collected only after the bet resolved - win or loss. Here the ante is the HE, and applies win or loss.

A different view is: the casino short-pays you in less-than-fair payouts. Every time you win, a HE-proportional amount is deducted from your "fair win". Here, the HE applies only to the loss.

Both descriptions are equivalent. Getting odds 1.95:1 of an 50% event is either an implied $.25 ante on a $10 bet paying ag 2:1, (i.e. betting $9.75 for a potential $19.50 payoff). Or a $.50 deduction from your win at $20.

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