Stake Decay: Why the Tiny Casino Edge is More Than You Realize

Whether you like it or not, the mantra “the House Always Wins” is 100% true. Owning a casino is a lucrative endeavor for the simple fact that the laws of probability favour the house. While players can come in and win big now and then, the odds of anyone recording a profit in the long-term are very long indeed.

While you could make a profit after 100 spins of the roulette wheel, or even 1,000 in theory; it is almost impossible to do so after tens of thousands of bets. The same holds true for any online or in-house casino game. Unless of course, you can get away with card counting in blackjack (and you won’t escape the notice of casino employees for very long).

Examples of House Edge According to Casino Game

The typical house edge varies surprisingly, so it behooves players to locate the most profitable games rather than wasting their money on low probability bets.

The following are typical edges but can vary if the casino in question has a variation of a game. For example, avoid double zero roulette at all costs because the casino’s edge virtually doubles compared to the traditional single zero wheel.

  • Roulette: 2.70% (Double zero roulette has a house edge of 5.26%)
  • Video Poker: 0.46% for full pay Jacks or Better games.
  • Slots: Anywhere from 2% to 15%.
  • Baccarat: 1.06% for Banker rules, 1.24% for Player Rules.
  • Blackjack: Typically, 0.28%.
  • Craps: Varies from 1.36% Don’t Pass/ Don’t Come, to 11.11% Any Craps. Incidentally, Odds 4 or 10, 5 or 9, and 6 or 8 have no house edge.
  • Keno: 25%-29%

The above are the most popular games, and as you can see, Keno is one to avoid. Craps has the potential for minimal edge depending on the game, while the house edge on Blackjack is tiny.

You will doubtless have read articles or books outlining how to “beat” casino games. Most of them either provide you with useless generic information or outright bad advice where the authors show a complete lack of knowledge of the laws of probability.

The most laughable claims usually surround roulette. Staking strategies, such as Martingale or D’Alembert, are worthless! The theory behind such nonsense is that you should increase your stake after a loss because you are more likely to win the next time! What such tactics fail to realize is that the outcome of any casino game bet is completely independent of previous outcomes.

You are no more likely to win on black if the ball fell on red on the last spin than if it had landed on black last time out. These systems all fall prey to gambler’s fallacy.

At the Monte Carlo Casino in 1913, the ball landed on black 15 times in a row. Bettors started piling money on red because they believed it simply HAD to land on red after so many consecutive spins on black. In the end, the ball landed on black 26 times in a row!

How Stake Decay Erodes Your Bank Balance

It is amazing how many bettors believe that a house edge of only 2% or 3% means they have a great chance of making a long-term profit! What they don’t realize is that stake decay could make short work of their betting bank. Let’s use the typical roulette wheel edge of 2.7% as an example.

Let’s say you plan to bet $100 per roulette spin. As far as the laws of probability are concerned, that $100 becomes $97.30 after one spin because the house edge of 2.7%, means you will earn 97.3% of whatever you bet over the long term. You can beat the edge for a while, but eventually, a regression to the mean will occur, and you will lose out.

After ten spins, the laws of probability state you should have just 76.05% of your original stake remaining. We get this figure by multiplying 100 x 0.973 to get 97.30, and then multiplying 97.30 x 0.973 and so on. After 20 spins, you are down to 57.84%. After 50 spins, you are down to 25.44%. After 130 spins, you are down to 3.01%.

If you played a casino game with a hypothetical house edge of 5%, your stake will erode at a frightening pace. After ten bets, you are already down to 59.87%. After 20 bets, you are down at 35.85%. By bet 50, you are at 7.69%. This is just one of the many quick ways to lose money gambling.

Should I Leave Casino Games Well Alone?

Of course not! While there is no sure-fire way to win money in the long-term, you can maximize your chances of winning by choosing your casino game wisely. Blackjack typically offers a house edge of just 0.28% using liberal Las Vegas rules. However, if you can find a Blackjack game with the following rules, the house edge can be narrowed to 0.0428% if the dealer shuffles after every hand, and you know how to play Blackjack to a high level:

  • Four decks
  • Dealer stands on soft 17
  • Players are allowed double after a split
  • Players are allowed double on any first two cards
  • Players can resplit to four hands
  • Players can resplit Aces
  • Players can hit split Aces
  • Players lose only the original bet against a dealer Blackjack
  • Late Surrender Rule is in effect
  • Blackjack pays at odds of 3 to 2

Incidentally, if only two decks are used and all of the above are in effect, the player has an edge of 0.08%!

Final Thoughts

When playing casino games, it is important to remember that the first goal is to have fun. Over the long-term, your chances of beating the house are remote. However, skilled players in specific games can stay ahead of the house for a surprisingly long time.

Stick to Blackjack and Video Poker for the lowest house edges but make sure you understand all of the rules. Above all, know when to walk away, whether you are winning or losing!