Then why, if you run those numbers as you have, and then change the drop down from "win prob" to "edge" does it show an edge of 1.54% and not 1%?
Because while the player loses 1% of everything the player risks, the house wins 1.54% of everything the house risks. See, the house wins the same amount as the player loses, but the house is paying out 1.65x, ie. the house is risking less than the player for the same return.
We advertise as having "1% house edge" because the player loses 1% of everything they risk. But from the house point of view, some bets are better than others.
Consider the bet where the player has a 98% chance to win, and gets a payout of 1.010204x when they win. It looks vastly different from the two sides:
From the player's point of view, every 100 times they play they can expect to lose 1 unit twice, and win 0.010204 units 98 times. Total winnings: 1. Total losses: 2. Net loss: 1. Total risked: 100. Net loss = 1% of amount risked. House edge = 1%.
But from the house point of view, the house is only risking 0.010204 units each time, for a total risk of 1.0204 units. Net profit = 1, as above, so net profit = 98% of amount risked.
