no house edge but commission fee question

hi

I have no clue but was asked the following question.

lets say I have a casino with a game that has zero house edge. now I take from every win a user is withdrawing a 1% fee. only from the winning every time a user withdraws. not from initial deposit and winning.

now what is the difference to a game with 1% house edge? which game will bring more money? the zero house edge game or the game with 1% house edge?

any help is very much appreciated. it is an interesting question but I have no clue :(

In other words, the game can be this:
The player bets $100 and the dealer tosses a coin
If it is heads, the player wins $100, minus 1%, so the player wins $99.
If it is tails, the dealer wins $100.

Assuming this is correct, for every $200 bet, the player is expected to win $99 half of the time and lose $100 the other half, or lose $1 overall; the house edge is 1/200 = 0.5% instead of 1%.

Quote: ThatDonGuy

In other words, the game can be this:
The player bets $100 and the dealer tosses a coin
If it is heads, the player wins $100, minus 1%, so the player wins $99.
If it is tails, the dealer wins $100.

Assuming this is correct, for every $200 bet, the player is expected to win $99 half of the time and lose $100 the other half, or lose $1 overall; the house edge is 1/200 = 0.5% instead of 1%.

thank You very much for trying to help. Your sample is right for the game with an house edge of 1%

"The player bets $100 and the dealer tosses a coin
If it is heads, the player wins $100, minus 1%, so the player wins $99.
If it is tails, the dealer wins $100."

= 0.5% instead of 1% = why should the house be 0.5% as the house is taking 1% from each bet?

now You missed the second game I meant and that is the same game without 1% house edge = sero or no house edge. but the winner for example won 200$
and want to withdraw the win and then the house takes 1% from the winning. but this only when a player wants to withdraw winning.

Quote: seven

which game will bring more money? the sero house edge game or the game with 1% house edge?

The 1% HE game will definetly bring you more money. You get the withdrawing fee at the end, when most of the wins and losses have canceled each other. In contrast, on a 1% HE game you would collec each and every bet.

Another equivalent viewpoint: As long as a player stays ahead, he truely plays a zero edge game - even if you collect 1% at the end. The reason is: If the player loses the next bet, he loses 100% of his bet, but saves 1% in your comission. If he wins the bet, he gets 100% return, but has to pay 1% comission. Effectively, he is just playing with 99% of his original bet on a zero edge game. The only point the player effectively pays to the house, when he potentially crosses his zero mark by the bet - then he doesn't "save 1% on his comission" when he loses (since he doesn't pay comission on a net loss). The potential zero crossing (where the house earns money) is quite rare, especially if the session is long.

Definetly go for the 1% HE game instead of 1% withdraw comission.

It's the same as wagering on football.

You pay on "losers" the books will tell you but that is false. It lures the ignorant in.

You pay on what you wager, as in the example. You wager 110. to win 100. on both sides but there is no "house edge" on either side. Hence, as I've explained elsewhere, the bookie makes five percent on the about wagered. $10usd on the $200.usd wagered.

Quote: MangoJ

The 1% HE game will definetly bring you more money. You get the withdrawing fee at the end, when most of the wins and losses have canceled each other. In contrast, on a 1% HE game you would collec each and every bet.

Another equivalent viewpoint: As long as a player stays ahead, he truely plays a zero edge game - even if you collect 1% at the end. The reason is: If the player loses the next bet, he loses 100% of his bet, but saves 1% in your comission. If he wins the bet, he gets 100% return, but has to pay 1% comission. Effectively, he is just playing with 99% of his original bet on a zero edge game. The only point the player effectively pays to the house, when he potentially crosses his zero mark by the bet - then he doesn't "save 1% on his comission" when he loses (since he doesn't pay comission on a net loss). The potential zero crossing (where the house earns money) is quite rare, especially if the session is long.

Definetly go for the 1% HE game instead of 1% withdraw comission.

thank You very much for Your opinion. in my opinion it doesnt matter if the player stays ahead or is losing he always has a sero HE (in the sero HE game)and in the long run it should end 50/50. please correct me if I am wrong.

a casino has many players, some win some lose. and at the end it should be even for the house. in a sero HE and taking 1% only from the winning if a winner withdraws, I thought it is like this. the winner withdraws and pays 1% commission. so at the end in the long run at least a given amount = 1% commission will give the casino some earnings. for me the question is if one could know how much this could be over a given wagered bets? because I want to go with the sero HE and 1% commission game to attract customers.

Quote: NokTang

It's the same as wagering on football.

You pay on "losers" the books will tell you but that is false. It lures the ignorant in.

You pay on what you wager, as in the example. You wager 110. to win 100. on both sides but there is no "house edge" on either side. Hence, as I've explained elsewhere, the bookie makes five percent on the about wagered. $10usd on the $200.usd wagered.

hmm I think You cant compare it with bookies. the game I mean is like a coin toss 50/50 and if a bet is 100$ he will win 100$ and not 90 or 110

Quote: seven

hmm I think You cant compare it with bookies. the game I mean is like a coin toss 50/50 and if a bet is 100$ he will win 100$ and not 90 or 110

No, he doesn't win $100.usd on a $100.usd wager. With an "illegal" bookie he, the player, has credit and therefore as I indicated is sometimes naive enough not to realize he is wagering $110.usd to win the $100.usd. When you have to pay cash in advance you do in fact lay down $110.00 to win $100.usd, either side, of as you say a coin toss with no house edge.

Quote: NokTang

No, he doesn't win $100.usd on a $100.usd wager. With an "illegal" bookie he, the player, has credit and therefore as I indicated is sometimes naive enough not to realize he is wagering $110.usd to win the $100.usd. When you have to pay cash in advance you do in fact lay down $110.00 to win $100.usd, either side, of as you say a coin toss with no house edge.

I understand but still it doesnt answer my question. I know now that taking 1% each coin toss for example is better than taking 1% from the winner at the time he withdraw winning.

but how much could be the difference here for the house comparing both payment options?

thanks

I am still confused and any help is very much appreciated. please have patience with me.

lets say the house edge is 1% and they have the following rule:

"When you play the 50% game like coin toss and win, you receive 1.98 times your stake as your payout. If there was no house edge, you would receive 2 times your stake. 1.98 is 1% less than 2."

is this right? because I would see this as 2% house edge because I thought if a player puts his bet and wins in a 50% coin toss game he will get 1 unit to his one unit bet he placed minus 1% that would be 1.99. if the house is now paying 1.98 the house takes 1% off the 1 unit the player is betting and the one unit he gets paid. what did I miss here?

example: I bet 1 unit on a coin toss and win. now the house with 1% edge will pay me 1.98

Commission != House Edge.

House Edge also has to factor in the probability of winning.

Quote: seven

I am still confused and any help is very much appreciated. please have patience with me.

lets say the house edge is 1% and they have the following rule:

"When you play the 50% game like coin toss and win, you receive 1.98 times your stake as your payout. If there was no house edge, you would receive 2 times your stake. 1.98 is 1% less than 2."

is this right?

Look at it this way.
You were shorted .02 from $2.
you expected $2 total payout (including your original wager. this would be the case for a fair bet)
You only received 1.98
That difference of .02 / 2 = .01
there is the 1% HE

Quote: seven

because I would see this as 2% house edge

This is not correct.
There are many ways to calculate the house edge of a simple bet.
Here is one
EV = expected value
EV = (WinProb * NetWin) - (LossProb * NetLoss)
HE = EV / Bet

In short, the house edge is not a percentage of a true odds payoff

The house edge can be calculated by many different ways, here are a few examples
try these using the method above
1)
bet wins 49% and loses 51%
pays even money
HE = 2%
In this case the HE is just the LossProb - WinProb = HE

2) coin toss 50%/50% (win/lose)
Payoff is 0.9:1
player expected 2 from a win but only returned 1.9
that difference of .1 / 2 = HE (5% not 10%)

3) coin toss 50%/50% with a 5% commission
payoff = even money less 5% of the winning bet
Bet $100 win = $100 - 5% or $5 less than $100
Player expected $200 but received only $195 total
was shorted $5 / $200 expected to receive = HE
you should get 2.5%

you should be able to figure out the rest.
work with a few examples and you will get it down pat

@7craps

thank You very much for taking the time and detailed explanation so even I can understand it now :)

thanks

Quote: seven

lets say the house edge is 1% and they have the following rule:

"When you play the 50% game like coin toss and win, you receive 1.98 times your stake as your payout. If there was no house edge, you would receive 2 times your stake. 1.98 is 1% less than 2."

There are three equivalent ways to see why it's 1%:

1) If you wager $100, half the time you lose the game and get nothing. Half the time win and get $198 in return. So the average return of the game is $99 per $100 bet. Thus the house edge (defined as the average hold per bet) is 1%.

2) There is a 1% comission payment before you play the game. So you wager $100, from this wager $1 is going to the game provider before the coin toss. The remaining $99 is wagered on the (fair) coin, which either doubles it ($198 in return for you) or nothing.
The $1 comission is 1% of your original wager, which is $100.

3) There is a 1% comission on all return for a fair coin bet. You wager $100 on a coin toss. If you win, you would like to get $200, but 1% of that ($2) goes for the comission. Your return is $198. If you lose the bet, then 1% of $0 goes for the comission (which still gives you a return of 0).

Quote: MangoJ

There are three equivalent ways to see why it's 1%:

1) If you wager $100, half the time you lose the game and get nothing. Half the time win and get $198 in return. So the average return of the game is $99 per $100 bet. Thus the house edge (defined as the average hold per bet) is 1%.

2) There is a 1% comission payment before you play the game. So you wager $100, from this wager $1 is going to the game provider before the coin toss. The remaining $99 is wagered on the (fair) coin, which either doubles it ($198 in return for you) or nothing.
The $1 comission is 1% of your original wager, which is $100.

3) There is a 1% comission on all return for a fair coin bet. You wager $100 on a coin toss. If you win, you would like to get $200, but 1% of that ($2) goes for the comission. Your return is $198. If you lose the bet, then 1% of $0 goes for the comission (which still gives you a return of 0).

@MangoJ

also to You a big thank You. Your samples telling me that I didnt think about the initial losing bets.

I saw now that there are online casinos with sero HE roulette and they take 10% form each winner the moment he wants to withdraw his winning. this seems a lot to me. what is Your opinion? I am asking because I want to offer a game with sero HE and dont know what percentage to take in case a player withdraws the winning.