Topic: Beginner's guide to House Edge and RTP (Read 293 times)

Well, this is a very impressive thread of you. For me, a house of edge hit frequency and return to player are terms that is new to me. When I play gambling I just played it because I just want to and it helps me lessen boredom but not knowing these terms anymore. However the calculation made to explain these terms was also discuss in school I believe most of us here know "probability" during our discussion we only use a deck of cards as example but it is also the same so for me, --the idea is already there. But still at the end of the day, it is still our luck that will make us win.

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Indeed, thank you for this information.

Thus information would help gamblers understand how house edge and rtp works. In that way, gamblers will know which gambling site is best to choose to gamble where the gambling site have much lower house edge than the other gambling sites. It's good that you think of creating a thread about it.

There are a lot of gamblers who are not aware of the house edge.

Like me, when i was new, I think I could easily win in dice games by just adjusting my winning chance to a higher rate, but without realizing the return is also lower, and the catch here is, no gambler would succeed in the long run, they just lose because of the house edge, regardless of how small the edge is.

It's important that gamblers has to understand the game they are playing, including the house edge of course.
some of us, just gamble right away, without educating ourselves on our real chances, that's why we lose because we have wrong belief.

I will keep an eye out for it.

I came across a topic here on bitcointalk discussing the distinction while I was searching for topics on house edge.
In technicality it's still an edge, but it really functions as a fee for organizing the games for the players (as you say).

Oh ok, you said in first post, that you are "new to gambling", but were referring to games like dice etc, which is a good distinction. Sportsbetting and Poker are not gambling, but more skill-based realms and thus I would always call them something like investing instead.


Poker should suit you well, if you are into odds and probablities; there is a lot to learn and discover. The good thing with poker is, that you can often re-evaluate certain situations (e.g. hands), with the exact odds at hand and figure out, what you should have done better. Another advantage is, that you don't have to play against the best of the best like you have to do in sportsbetting. You can just choose to play in different limits, which suit your skill level and what you are comfortable with.

Some weeks ago a poker series was launched here in this forum, where fellow forumites play each other on the weekends: Bitcointalk SwC Championship Poker Series(50 mBtc added by SwC)

Don't be shy or afraid to join, there are players with all kind of skill levels and everyone is welcome. A new series for May will get announced soon.

House edge, in regards to this topic, is not often talked about when it comes to poker, since it's not that much of a factor. Poker sites just take their fees (rake) from you to use their platform and bring poker players from all over the world together at the tables.

I'm technically not new to gambling (I see how that could be inferred from my op), have been into it for a couple of years, mostly sport betting. But I didn't take much of an interest in how it works and how odds are decided, that's what I want to learn more about, especially as I'm getting more into online gambling games with an obvious edge.

The absence of sports is the main reason I'm looking into other gambling options. I'll surely be looking into poker.

Well, this is a well-written and informative post, but not a lot to add or discuss for us With you being new to gambling, it's probably not worth to spend (read: waste) your time looking into dice and similar games, where you just can't win longterm. It's ok to play them, if they entertain you, but don't expect any profits. Your post helps with finding a site with low house edge and thus minimizing your losses, but just minimizing losses would not satisfy me personally. I would look for another hobby instead then.

If you are interested in gambling and have a goal of maybe making some money with it longterm, look into poker and sportsbetting. You have a house edge there as well, but it's a house edge, that is beatable, if you put in the work

I think these are good basic advice to newbies.However even experienced gamblers can have this as a review.Personally I enjoyed the explanation of Hit ratio percentage as I see it different on many slot machines and I always pick the ones with higher frequency hit ratio.I didn’t take the time to think that those lower percentage hit frequencies could offer high payouts and I thought that these games are not good.

There are quite a number of articles and videos discussing it, I combined the knowledge I've gotten from different sources and chose to make it as basic as possible, so it'll be much easier to understand.
It has also been discussed in parts on the forum, but I couldn't find a comprehensive topic on it, why I chose to create one.

Do you have reference for this OP? Or it is all based on your acquired knowledge?

Sharing below some sites discussing house edge and RTP.

https://www.gamblingsites.com/online-casino/introduction/house-edge/

https://math.info/Misc/House_Edge/

https://www.gambling911.com/House-Edge-and-RTP-of-All-Forms-of-Gambling.html

Most gamblers here will be familiar with the terms in the title, but beginner's may be yet to grab the concept of house edge and Return to Player.

I've been taking more of an interest in gambling and how it works. As someone who is new to gambling, there is a large variety of games available to play and each offers different RoI (Return on Investment). However, it's important to understand how each game works and weigh your chances of winning, this would help you properly manage your gambling activity and minimize losses.

Each gambler wants to get profits off their wager and so also do the gambling platform (online or in house). So while the gambler looks for the best strategy to win, the house sets the best algorithm to ensure that they stay profitable while allowing enough winnings to keep gamblers coming back. This is done through the house edge (or percentage)

What is House Edge?

This can be said to be the edge the gambling platform has over the players, it entails that even though players would win in the short run the house would make more profit in the long run. The house edge is the statistical advantage the house has over the players to ensure profitability.

How is it calculated?

The house edge is calculated by finding the product of the the probability of winning and the total pay out.
Let's use a dice as an example; a standard dice is in the shape of a cube with 6 sides each having different number of dots, from 1 to 6. If a player bets that on a roll of the dice it would land with the number 2 topside and wagers $1 to win $4 (+their deposit = $5). The probability of winning is 1/6 or 0.1666, and the total winning is $5. So the house edge is calculated by multiplying the probability by the payout and then subtracting it from 100% = 1/6 × $5 = 0.8333 or 83.33%; this is the return to player percentage, i.e the possibility of the player winning.

The house edge is calculated by subtracting it from 100%.
So an RTP of 83.33% would give a house edge of 16.67% of the wager. So even with a couple of winnings by players, the house has a predictable advantage in the long run.

Another example would be a flip of a coin. The probability of landing a head is 1/2 or 0.5. If the house pays $0.80 on each successful bet of $1, that means a total payout of $1.80 (the profit + the wager amount)
The RTP would be equal to the probability multiplied by the payout = 1/2 × $1.80 = 0.9. Giving an RTP of 90% and a house edge of 10%.

So the house edge can be said to be the reverse of the RTP.
Another notable term when discussing fairness in gambling would be the Hit frequency:
Hit frequency is an algorithm used by gambling houses to ensure profitability. It is the number of times or the frequency at which a gambling machine would give a winning combination. So if it gives a winning combination 20 times on each hundred trials then it has a hit frequency of 20%. It's worthy to note that machine games which has a lower hit frequency offers a lower winning potential but usually gives a higher payout (jackpot) than those with a higher hit frequency which offers a higher winning potential but gives a lower payout.

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Also note that gambling houses do not have arbitrary power to set this percentages, it has to within the accepted range in their location to ensure fairness.