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What the House Advantage Really Means for Players

By: Mark Freedman, Friday May 15th 2015
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If you're the type of player who cares a lot about maximizing your chances of winning, then you need to know about the house advantage, payout rates and what they mean for your opportunities to win. Volatility comes into the equation as well, and it can affect the types of wins you get even if the house advantage stays still. What we want to do here is walk you through all of these terms and figures so that you know exactly what it means when you read about the house edge on different games and bets.

On the most basic level, the house advantage is the average amount of money that you'll win or lose on a certain bet based on a percentage of the size of that bet. For example, a game with a five percent house advantage will pay out $0.95 on average of a $1 bet or $4.75 of a $5 bet because both of these are five percent of the bet size in question. The higher the house advantage, the lower the chances you have of coming out on top because you're losing more money on average with each bet, and you'll come out with fewer bets before going bust. This means lower chances of hitting a jackpot.

If you subtract the house advantage from 100, then you get the payout rate. For example, a game with a five percent house advantage will have a 95 percent payout rate. The payout rate is like the percentage of the bet you expect to get back on average. For example, a European roulette evens bet has a house advantage of about 2.7 percent, so the payout rate is 97.3 percent. Note this is higher than a lot of slots, but you still have better chances of winning a major amount of money on slots because you can do so on a single spin. In roulette, however, it would require several good spins in a row, which is less likely.

This is where volatility comes into play. Volatility is how "spread out" from the average your possible results are. In roulette, the volatility is extremely low. However, some slots like progressives can have very high levels of volatility, and this is how you can have some major swings while the house advantage stays the same as it does normally.

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