How House Edge Works in Roulette

The house always wins.’ Whether you’re an experienced gambler or a complete newbie, you’ve probably come across this expression. But have you ever wondered why the house always wins? And before you ask – no, it’s not because casinos cheat or scam. The reasons why the house always wins are always right there in front of your eyes in the form of RTP rates.

The house edge is a statistical advantage the casino has over players in all casino games. There are complicated mathematical explanations, of course, but let’s look at it in layman’s terms.

What is the House Edge?

For starters, let’s look at the broader picture. The first thing we need to examine is a mathematical concept simply referred to as expected value. In gambling circles, this is often called betting value, but the underlying ideas are the same. Don’t worry – this post won’t get into probability theory too much, but understanding these can be key to developing a good roulette strategy.

Think of it this way – how ‘good’ a bet is is not decided solely on how much it pays out. After all, a bet with a payout of 100:1 is nothing impressive if it barely has a chance of winning. The likelihood of a certain outcome is just as important, if not more. As such, whether a bet is a good one to take is decided by the ratio of the potential profits versus the probability of winning.

Let’s look at a simple example. Say you’re wagering on the outcome of a coin toss. Now, there is always a 50% chance of winning and a 50% chance of losing. If you want any bets on the outcome to be fair, the payout would have to reflect this. Since the probability here is 1:1, that means that a ‘fair’ payout would also be 1:1.

A casino, however, would not pay you 1:1. Instead, they would pay out, say, 0.95:1. However, if you lose, you’re still giving up the same stake, meaning you’re paying the casino 1:1. As you can see, this means that the ratio of profit vs. probability is slightly skewed in the casino’s favor. This 0.05, or 5% difference is the house edge.

Win or lose, the casino always has a slight advantage because they get a bigger payout for the same risk.

The More You Play, the More the House Wins

So now you might be thinking that this advantage would be meaningless if you just win every coin toss – or at least more than you lose. There’s truth to that, but the fact is that not even the best players win every round of any game. This is true even for skill-based games such as poker and blackjack, let alone luck games like roulette (or tossing coins.) Moreover, with thousands of players playing thousands of rounds at online casinos, the rule of averages comes into play.

Let’s explain. Say that you toss 10 coins and win 7 wagers. Technically, you won more money than you lost, so you beat the house despite the house edge. That’s quite true, and not that unlikely in this scenario. However, if you keep playing, the outcomes will keep coming closer to what probabilities predicted. In this example, the more coins you toss, the closer the results are going to be to a 50/50 split between two possible outcomes. When this happens, the only one who won is the casino because of the 5% house edge.

Multiply that by thousands of bets and thousands of bettors, and you can see why gambling is a multi-billion dollar business.

How House Edge Works in Roulette

Now let’s bring the discussion back to our favorite casino game. Now, the basic European roulette wheel has a fairly solid ratio of risk-to-return. For example, there are 36 pockets, meaning that winning a straight-up bet has a probability of 36:1 – exactly the same as the payout. Similarly, even money bets such as red/black or odds/evens all have a 50% chance of coming true and payout at odds of 2:1.

There’s one small problem, though. The roulette wheel doesn’t have 36 pockets – the green zero brings the total count to 37. That single zero is the sole reason behind the roulette house edge and why the house always wins.

And so, your chances of winning a straight-up European roulette bet are actually 37:1. Now, remember, the betting odds still pay out at 36:1. Even money bets actually have a 48.65% chance of winning. To save you the math, that means that the house edge in European roulette is 2.7%.

We keep stressing European roulette because American roulette has two green pockets – the ‘0’ and the ’00’. If you’ve been following along, you should know that this is strictly and always worse for the player. In fact, it doubles the house edge to 5.3%. That’s why our advice is to always play European roulette online.

Actually, the French roulette wheel has an even lower edge of 1.25% because of special rules. That, however, is a topic for a different day.

What is RTP in roulette?

Lastly, let’s give a quick answer to this question. The RTP in roulette, sometimes referred to as roulette ROI, is simply a different way to express house edge. It stands for Return To Player, or Return On Investment. It represents the percentage of their stake players are statistically expected to retain.

This implies that the player plays enough rounds for the rule of averages to kick in. Let’s go back to the coin toss example. Without the house edge and given enough rounds, the player and casino would win or lose nothing. That would be an RTP of 100% – players are given back all their money. With the 5% house edge, players would eventually walk away with 95% of their money.

In other words, the RTP is just 100% minus the house edge. This means that the RTP in European roulette is 97.3%. In American roulette, the RTP amounts to 94.6%.