29 May

# You Can Beat the Casino, but you Can’t Beat the House Edge!

A philosophical examination of the unassailable casino house edge and how it’s still possible to win at casinos.

They say “you can beat the casino, but you cannot beat the house edge.” A curious statement, is it not? Most would think so. But most aren’t nearly so experienced in the ways of gambling games. As we all know, casinos are in the business of making money. In order to be profitable, they have to make more than they lose – a lot more to cover licensing fees, taxation, payroll, and the ungodly utilities they must incur each month!

Thus we are convinced that the casino’s house edge is unbeatable. If a game boasts an edge of 1%, then each player should expect to lose 1% of their wagers on that game. But thanks to the ever-present and unpredictable nature of deviation, the laws of mathematics are broken every day.

## Why Players Win Despite the Casino House Edge

To explain the reasoning behind this logic, one must first understand how the house edge works, and the impact of volatility’s influence upon it.

The house edge is a figure that denotes what percent of the total wagers a casino is going to make on a specific game. We’ll look at the edge in European Roulette, which carries a static 2.7% edge on all wagers. This means that 2.7% of all collective bets will be won by the casino. The other 97.3% is the RTP; or the amount returned to players as their winnings.

One could theorize that a player who places 200 \$5 bets (total \$1000) on European roulette will win back \$973, and that the casino’s take will be \$27. But if that’s the way it always worked out – each player losing exactly 2.7% of their total wagers on European roulette – I don’t imagine many players would continue to enjoy the game. What keeps them coming back is the reality that some players do win.

We’ve seen it happen time and again. In 1994, English computer programmer Chris Boyd famously wagered his life savings on Red at the old Binion’s Horseshoe Club in Las Vegas. He turned \$220,000 into \$440,000 in a single spin of that thaumaturgic wheel. When it was over, he vowed never to gamble again.

How did Boyd beat the casino if the edge is unassailable? Simple. He knew when to walk away.

## Variance Is the Key to Winning Casino Games

Variance is that deviation in mathematical probabilities I spoke of before. You can call it luck, if you want, but few professional gamblers do.

Like Chris Boyd, if a person only places a single wager on European Roulette, they cannot possibly meet the mathematical assessment of the game’s edge or RTP. They will either lose 100%, or win 100%. What makes the casino’s edge unbeatable is the cumulative total of long-term bets between an untold number of players.

We know that Boyd took the casino for nearly half a million dollars. No doubt, this hurt the Horseshoe’s bottom line when that month’s revenue reports were printed. But in the long term, the casino made its money back, and then some. And that means that many, many more players lost their wagers to cover the casino’s loss and eventually bring them back into the profit margin.

Those who do manage to beat the casino are what we call the lucky ones. They are the players who’s bets fell on the positive side of the unfairly jagged line of volatility. Those that lost – well, they’re the ones who keep the casinos in business.

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