An Introduction to Casino House Odds

Gambling odds appear in many different ways to predict the occurrence of an event, such as whether the horse you've betted on will place first, or if the roll of your dice will come out with the right number, or if you'll draw a royal flush. Aside from these general odds, there are special kinds of house odds used in casinos that affect the amount that will be paid out to the winning bet. It is anchored on the law of averages and human nature which postulate that over long haul, the casino will win more money than it will lose. The so-called "house odds" taken together with the general odds are what compose the more common term of "house edge," or "house advantage," which are built into every betting procedures and payoff policies to ensure a profit for the casino.

To illustrate how house odds work as applied to payoff, let's take as an example two bettors who play coin flipping. If heads turn up, bettor A wins but if it is tails, bettor B wins. We know that it's a fair game because both players A and B each enjoy a 50 percent probability of winning. Assuming that both players wagered a dollar each, then if heads turns up, bettor A wins a dollar but if tails turns up then he losses a dollar. Now, assuming that bettor A is the casino and that it has a 10 percent house odds in its payoff policy, then when heads turns up, it wins one dollar, yet if tails turns up, it pays only 90 cents to bettor B. Since bettor B's winnings is 10 cents short every time it wins, the longer he plays the more the casino earns. Because of this built-in 10 percent commission from bettor B's winnings, casinos work hard to keep their customers playing longer at the tables and slots.

You may be wondering why in heaven's name would bettor B keep coming back to the casino if he knows that he is playing at a 10 percent disadvantage every time he sits at the tables or plays slots? The answer lies with Lady Luck. Regardless of the odds, there is always the possibility of a lucky hit, a lucky hand or a lucky roll of the dice - or whatever you call it in the game you're playing. This is the stuff that dreams are made of, and which accounts for your Aunt Martha's tale of winning $10,000 after dropping three quarters in the slot machine and making the first pull in her life on the slots lever. If after winning that one bet, Aunt Martha walked away never to return and play slots again, she would have beaten the law of averages and the casinos' house advantage. But it's not in the nature of human beings to walk away after winning - especially after winning big. As the casino was counting on, Aunt Martha stayed on to play, and as expected, she lost back to the casino all her winnings---including her bankroll.