How casinos make money: why the house always wins, even on the nights you win
The house edge: how one zero on a roulette wheel pays the casino
A bet on red at roulette looks like a coin toss: win, and your money doubles. It is not quite a coin toss. Where does the casino hide its share of every bet?
-
1
On Friday night, you and Miva visit Rono, an old school friend, at a casino hotel by a lake. Rono is a croupier: he runs the roulette table, spins the wheel and pays the bets. You buy $100 of chips and put $10 on red.
-
2
The ball stops on red. Rono pushes your $10 back to you, with $10 more. Red or black, win or lose: it looks just like a coin toss.
-
3
Then you look closer. The wheel has 36 numbers, half red and half black. And it has one more pocket, the zero, which is neither red nor black. When the ball lands there, every bet on red loses, and so does every bet on black.
-
4
So count over 37 spins, one for each pocket. On average, red comes up 18 times, and you win $180. It misses 19 times, and you lose $190. You bet $370 in all, and you are $10 short.
-
5
That $10 out of $370 is 2.7 cents of every dollar you bet. It is called the house edge: the part of each bet the casino keeps, on average. Every bet on this table has it, not only red.
-
6
At midnight you stop, $60 up. The house edge takes only 2.7 cents of each dollar, on average, and tonight your luck beat it. Yet Rono smiles as he closes the table. He is not worried at all.
-
Quick check
A wheel with two zeros.
Show the answer
The casino. Red now wins 18 times in 38, so the house edge almost doubles, to about 5.3 cents per dollar.
-
Go further
The wheel you saw has a name.