# How House Edge Works

> Learn house edge calculation, RTP limits, expected loss, and how to compare casino game rules.

- Source: https://toolsgambling.com/blog/house-edge
- Author: Evgeniy Volkov (ToolsGambling)
- Published: 2026-03-18
- Updated: 2026-10-04
- Cite as: "House Edge: Calculator and Game Comparison", ToolsGambling, https://toolsgambling.com/blog/house-edge

## TL;DR — what house edge tells you

**House edge is the casino's expected profit as a percentage of the reference amount wagered over the long run.** It is not the probability of losing a specific bet, and it is not a deposit fee.

A 2.7% house edge on \$1,000 of turnover means an average expected loss of about \$27.

| Turnover | House edge | Expected loss |
|---:|---:|---:|
| \$100 | 2.7% | \$2.70 |
| \$1,000 | 2.7% | \$27 |
| \$5,000 | 2.7% | \$135 |

Expected loss is not a maximum loss, a budget, or a forecast for one session. For standard roulette, this model uses equal independent bets; other games can have different rules and additional wagering.

## House edge, RTP, observed hold, and gross returns

**RTP and house edge add to 100% only when they use the same wager denominator and the same assumptions about rules, payouts, and strategy.** An RTP of 97.3% does not mean a 97.3% chance of winning.

On \$1,000 of recycled turnover at 97.3% RTP, expected **gross return** is \$973. That is not a promised ending bankroll, because the same funds can be wagered repeatedly. The [UK Gambling Commission's RTP guide](https://www.gamblingcommission.gov.uk/public-and-players/guide/return-to-player-how-much-gaming-machines-payout) describes RTP as a long-run theoretical return.

| Measure | Meaning | Example on \$1,000 turnover |
|---|---|---:|
| RTP 97.3% | Theoretical player return | \$973 gross return |
| House edge 2.7% | Expected share of turnover retained by the casino | \$27 expected loss |
| Win probability | Chance of one outcome | Depends on bet and payout |
| Observed hold | Actual aggregate result over a period | Can differ from theory |

**Observed hold** is the empirical share of turnover retained by an operator over a period. Variance, game mix, and betting volume can make it differ from theoretical house edge.

For slots, RTP and volatility are different measures: equal RTPs can still produce very different win frequencies and swings. See [RTP versus slot volatility](https://toolsgambling.com/blog/rtp-vs-volatility-slots).

> Expected loss is not a suitable budget, a maximum loss, or a point at which a game “should” pay back.

### Key terms and denominators

**The wager denominator determines what a percentage measures.** Use the same denominator before comparing RTP, house edge, or two games.

| Term | Scoped meaning |
|---|---|
| Reference wager | Initial or stated wager used as the basis for a percentage |
| All wagers | Total money staked, including side bets, doubles, splits, and odds |
| Gross return | Payouts including returned stake |
| Net result | Gross return minus all money wagered |
| Observed hold | Empirical turnover retained by an operator over a period |

## How to calculate house edge

**First calculate the expected value of the bet's net outcome, then express it as a percentage of the selected reference wager.**

$$
EV = \sum\bigl(\text{probability of outcome} \times \text{net outcome}\bigr)
$$

$$
\text{House edge} = \frac{-EV}{\text{reference wager}} \times 100\%
$$

For a simple two-outcome bet:

$$
EV = P(\text{win}) \times \text{net profit on win} + P(\text{loss}) \times \text{loss}
$$

### Example: betting red on European roulette

**A \$1 red bet on standard single-zero roulette has 18 winning pockets and 19 losing pockets out of 37.**

- Win: `18/37`, net result `+1`
- Loss: `19/37`, net result `−1`
- `EV = 18/37 × 1 + 19/37 × (−1) = −1/37`
- House edge: `1/37 × 100% = 2.7027%`

The win probability is approximately **48.65%**. A 1:1 payout means a \$1 net profit on a \$1 winning bet; the gross payout is 2× the stake because it includes the returned \$1 stake.

Not every game fits a two-outcome formula. A push has a net outcome of 0, and games with several payout levels require every outcome. In blackjack, doubles and splits raise all wagers placed; in craps, odds have separate mathematics. A percentage based on the initial wager can therefore differ from one based on all money wagered. General reference calculations are available from [Wizard of Odds](https://wizardofodds.com/gambling/house-edge/).

This inline calculator accepts win probability and a **net** 1:1 payout. Entering 48.65% produces a rounded 2.70%, not the exact 2.7027%; it cannot represent pushes or multiple-payout games.

## Casino game house edge comparison

**A comparison is useful only when its rules, payout table, and strategy assumptions are stated.** The same game name does not guarantee the same edge everywhere.

| Game or bet | House edge | Calculation condition |
|---|---:|---|
| Blackjack | 0.28% | Wizard of Odds liberal-rules benchmark: S17, double any two cards, DAS, resplit aces, late surrender |
| Jacks or Better video poker 9/6 | 0.46% | Optimal strategy; full house pays 9 and flush 6 per coin; royal flush 800:1 with a qualifying maximum-coin award |
| Baccarat — Banker | 1.06% | Eight decks, 5% commission, ties push the main bet |
| Baccarat — Player | 1.24% | Eight decks, 1:1 payout, ties push the main bet |
| Craps — Pass Line | 1.41% | Pass Line flat bet without odds |
| European roulette | 2.70% | One zero and standard payouts |
| American roulette | 5.26% | Zero and 00 with standard payouts |
| Baccarat — Tie | 14.36% | Eight decks and net 8:1 payout |

S17 means the dealer stands on soft 17; DAS means double after split. This is a favourable-rules benchmark, not a figure for every blackjack table: its summary does not supply enough detail, including deck count, to reconstruct a particular table. See Wizard of Odds' [baccarat analysis](https://wizardofodds.com/games/baccarat/basics/) and [9/6 Jacks or Better table](https://wizardofodds.com/games/video-poker/tables/jacks-or-better/).

Fair craps odds have a 0% edge as a supplemental wager, but they do not remove the expected loss of a fixed Pass Line bet; they increase total exposure and turnover. See the [Pass Line and odds appendix](https://wizardofodds.com/games/craps/appendix/1/).

For European roulette with **La Partage**, even-money bets mathematically have a 1.35% edge when zero returns half the stake. This is conditional on that rule, not a claim about a particular operator.

Slots have no universal house edge. A 96% RTP configuration has a 4% house edge, but that is an example for one configuration, not every slot. In the [RTP directory](https://toolsgambling.com/rtp), select the exact title, provider, and version, then confirm RTP in the game's actual rules; stored data may not match an operator's current configuration.

**House Edge: Selected Games and Bets**

|  | Game or bet |
|---|---:|
| Jacks or Better 9/6 | 0.46 |
| Baccarat — Banker | 1.06 |
| Baccarat — Player | 1.24 |
| Craps — Pass Line | 1.41 |
| European roulette | 2.7 |
| American roulette | 5.26 |
| Baccarat — Tie | 14.36 |

The chart compares only these stated conditions. It does not assign one edge to every blackjack table or slot.

## Calculate your own session with the house edge calculator

**The calculator converts a percentage into turnover and average expected loss; it does not calculate loss distribution, ruin probability, or a guaranteed session result.**

Open the [house edge calculator](https://toolsgambling.com/casino/house-edge-calculator). In the separate preset selector—not the RTP game search—choose **“Roulette (European, single zero)”**. Then:

1. Set **“Bet Size per Round”** to 10.
2. Click **“By rounds”** first.
3. Set **“Number of Rounds”** to 100.
4. Keep **“Rounds per Hour”** at 40 as a chosen setting.

Turnover is `10 × 100 = 1,000`. The rounded 2.7% setting gives \$27 expected loss and \$973 expected gross return; the exact European roulette value is about \$27.03 at 2.7027%.

![House edge calculator settings for European single-zero roulette, stake 10, and 100 rounds](https://toolsgambling.com/media/article/2026/10/3d3eff5b-eaac-4d82-8120-57ec2cf96489.webp)

*Example settings: 10 per round, 100 rounds, and 40 rounds per hour. Pace is a chosen setting, not a measured player average.*

![House edge calculator result showing 1,000 turnover and 27 expected loss](https://toolsgambling.com/media/article/2026/10/a31ba3dc-bd4e-40a7-8111-ca6b3009dc6d.webp)

*This is an average expectation for entered settings, not a forecast of the next session.*

For comparison, set each row to a stake of 10 and use the shared 100 rounds. At 2.7%, expected loss is \$27; at 5.26%, it is \$52.60. The \$25.60 difference on equal \$1,000 turnover is an expectation difference only.

![House edge calculator comparison of European and American roulette at stake 10 and 100 rounds](https://toolsgambling.com/media/article/2026/10/38848438-d0b6-45a5-b1d3-2e3da3f47a8f.webp)

*The extra 00 pocket raises expected loss at equal turnover.*

The calculator does not automatically add doubles, splits, side bets, or changing stake sizes, and it does not guarantee a session outcome.

## Pace, rules, and strategy

**A lower house edge does not always mean a lower hourly expected cost: faster betting can outweigh the percentage difference.** These are hypothetical chosen rates, not measured typical speeds.

| Scenario | Stake | Bets per hour | House edge | Hourly turnover | Expected hourly loss |
|---|---:|---:|---:|---:|---:|
| Faster game | \$5 | 300 | 1% | \$1,500 | \$15 |
| Slower game | \$5 | 40 | 2.7% | \$200 | \$5.40 |

Progressions, including Martingale, change stake amounts and exposure to large swings; they do not improve payouts or remove underlying house edge. In blackjack, basic strategy and rules for payout, doubling, surrender, and splitting matter. Use [blackjack basic strategy flashcards](https://toolsgambling.com/blog/blackjack-strategy-flashcards) for decision practice. A low edge still means negative expectation.

Set an actual spending limit based on what you can afford to lose, independently of expected loss.

## Tools: hourly loss and bankroll erosion illustration

**With a \$10 stake, 40 bets per hour, and European roulette, expected loss is \$10.80 per hour.** Over two hours, that is \$800 turnover and \$21.60 expected loss.

The tool uses the selected stake, edge, rounds, and pace. It gives a deterministic average, not a simulation of random wins and losses.

**The bankroll erosion chart is a linear illustration of average expectation at selected percentages.** It is not a simulated path, a prediction of time to bankruptcy, or a promise that balance falls in a straight line. Its 8% slot preset is illustrative, not a value for all slots.

## Bonuses, casino cards, and terms

**Assess a bonus with its wagering requirement, game contribution, maximum bet, expiry, withdrawal cap, and eligibility rules.** For example, a \$100 bonus with 40× wagering creates \$4,000 turnover; at a 4% edge, rough expected wagering cost is \$160.

$$
4{,}000 \times 4\% = 160
$$

This does not promise profit or a specific promotion result: terms can change eligibility, game contribution, and value. The cards and reviews below are editorial reference material; ratings are editorial, bonus estimates are simplified, and the site may receive affiliate compensation. For further reading, see [best-paying online casinos](https://toolsgambling.com/blog/best-paying-online-casinos).

## Practical takeaway

**House edge helps compare the expected cost of games; it does not turn negative expectation into an income method.** Check the exact game's rules and RTP, calculate full turnover, consider pace, and set comfortable money and time limits before playing. If you feel pressure to chase losses, take a break instead of increasing stakes.

## FAQ

### Why can my session result differ from the calculation?

House edge describes an average result across a large number of bets. In a short session, variance can produce a win or a loss much larger than the expected amount.

### Can I add the house edge of a main bet and a side bet?

No. Calculate each bet's expected result, then divide combined expected loss by total money wagered. This matters especially for blackjack doubles and splits, and craps odds bets.

### Does a slot's RTP show its current payout?

No. RTP is a theoretical long-run figure for a particular game version. Check the title, provider, version, and RTP in the actual game's rules.