What term describes the built-in mathematical edge that ensures the house tends to win in the long run?

What term describes the built-in mathematical edge that ensures the house tends to win in the long run?

• A. House Advantage
• B. House Edge
• C. Payout Ratio
• D. Variance

Answer: (A)

The built-in mathematical edge is called the house edge. It measures the casino’s long-run profitability per unit bet, expressed as a percentage. The edge comes from payout structures that don’t perfectly match the true odds of winning, so over many plays the house expects to keep a portion of each bet. For example, a straight-up bet in American roulette pays 35 to 1 but the chance of hitting that number is 1 in 38. The player’s expected value per dollar wagered is (1/38)*35 + (37/38)*(-1) = -2/38, which is about -5.26%. That negative expectation for the player reflects a house edge of 5.26%. In European roulette (36 numbers plus a single zero), the edge is about 2.70% because the odds differ slightly and there’s only one green pocket. Some contexts use the term house advantage interchangeably, but the standard term in gaming math is house edge. The larger the house edge, the greater the casino’s long-run advantage.

The built-in mathematical edge is called the house edge. It measures the casino’s long-run profitability per unit bet, expressed as a percentage. The edge comes from payout structures that don’t perfectly match the true odds of winning, so over many plays the house expects to keep a portion of each bet.

For example, a straight-up bet in American roulette pays 35 to 1 but the chance of hitting that number is 1 in 38. The player’s expected value per dollar wagered is (1/38)35 + (37/38)(-1) = -2/38, which is about -5.26%. That negative expectation for the player reflects a house edge of 5.26%. In European roulette (36 numbers plus a single zero), the edge is about 2.70% because the odds differ slightly and there’s only one green pocket.

Some contexts use the term house advantage interchangeably, but the standard term in gaming math is house edge. The larger the house edge, the greater the casino’s long-run advantage.