Definition
The house edge is the casino's expected profit, expressed as a percentage of the amount wagered, on each play of a game. American roulette has a house edge of about 5.26%, European roulette about 2.7%, blackjack (with basic strategy) under 1%, slot machines anywhere from 5% to 15% or more.
The house edge equals the negative of the player's expected return per unit bet. Over many bets, the law of large numbers guarantees that the casino's actual take converges to this expected value.
Why it matters
How it works
To compute a house edge, enumerate the possible outcomes of one play of the game, weight each by its probability, and sum the net payout. For American roulette betting on a single number: you win 35 to 1 with probability 1/38 and lose 1 with probability 37/38. Expected payout per unit bet is (35 × 1/38) + (-1 × 37/38) = -2/38 ≈ -5.26%. The casino keeps about 5.26% of every dollar wagered, on average.
For card games like blackjack, the edge depends on player strategy. With basic strategy, the edge is under 1%; with poor strategy, it can exceed 5%. Card counting can flip the edge in the player's favour — which is why casinos exclude counters.