Betting Margins Vs. Casino House Edge: Key Differences

By: Sam Smart, Guest Contributor
February 23, 2023

Naturally, understanding the odds and advantages the house has over the player means making informed decisions and improving your chances of success.

Two terms generally used to describe and measure the advantages are "betting margins" and "casino house edge." Within this article, we will define both terms, exemplify them, and explore the differences between these two concepts.

We recommend this article both to newer players who still need to accumulate a large amount of information and to seasoned gamblers because it highlights valuable insights into the gambling and betting industries.

Betting Margins Definition and Fairness

In casual terminology, you might have heard betting margins as "bookmaker's edge" or "over-round." These betting margins are the difference between the actual probability of an event occurring and the odds you're offered by a bookmaker.

If the betting margins are "high," the difference described earlier is more significant; therefore, it's less favorable for the bettor. Yes, betting margins are a profit strategy for the bookmaker and often bring profit regardless of the event's outcome.

So, are they fair? Well, the fairness here is subjective since some players consider them to be fair as they reflect the risk taken by bookmakers. However, some people view them as unfair for reducing the payout for bettors and thus reducing their expected return on investment.

Their Influence on Betting Outcomes

As we established above, betting margins influence the bets and the returns once the bets are settled. Remember, if the margins are high, it means the odds of winning for you, the bettor, are lower. This also lowers the potential return, and you earn less money.

Let's take a coin flip as an example with betting margins. A coin flip had two outcomes, heads or tails. If the natural probability of getting tails is 0.5 and the bookmark offers 2.0 odds, the betting margin is 0.

If within the same example, the bookmaker offered odds of 1.90, then the betting margin would be 5%. This means that you would lose 5% of your money from every coin toss with bookmaker odds of 1.90.

How Does Casino House Edge Work in Online Casinos?

House edge is very similar, or identical, to betting margins. A house edge is defined as the advantage casinos have over players in specific games. As bookmakers change odds for different bets, even online casinos change the house edge for different games to ensure profit.

Generally, games have different house edges due to various factors like the rules of the game and the offered payouts. For example, games with simpler rules and straightforward gameplay, like Blackjack, have a lower house edge. In contrast, games like Craps have higher house edges due to the complexity of bets.

It's essential for players, especially newer players, to be aware of the house edges when choosing a casino game. This applies to internet-based punting platforms because the house edges can vary from website to website.

Although most people prefer games with lower house edges since it increases their chances of winning, some experienced gamblers want to risk it all for bigger payouts.

Slots, Roulette, Blackjack & Baccarat, House Edges

Slots have some of the most irregular house edges in all casino games. Although the house edge generally falls between 2% and 10%, some slot machines can reach a 15% house edge. However, most one-armed bandits record a payback percentage anywhere from 90% to 98%.
The Roulette has various wheels to play on, but they all have different house edges. For example, the American Roulette includes two green pockets with 0 and takes the house edge to 5.26%. At the same time, European Roulette contains only one zero, so its house edge is 2.70%.
As I mentioned above, Blackjack has a lower house edge than expected. Even so, with the right strategies, you can lower it even more. In a best-case scenario, you can bring the house edge to a mere 0.5%.
In the game of Baccarat, things are more complicated. The house edge here largely depends on what types of bets you choose. For instance, betting on the banker's hand has a house edge of a little over 1%, but betting on a tie will take the house edge to 14%.

Before playing, always make sure you've done your research, especially for games like Baccarat. To know how to play it smartly, you need to know its rules and bets inside out.

Is Hold similar to House Edge?

In casinos, "Hold" refers to the amount of money the casino keeps from the total amount gambled by players. This means it represents the profit a casino can make from particular games in the long run. It is often called the Hold percentage, as its numbers are always expressed as percentages.

Hold and house edge are often confused even by casino employees. However, although the house edge can be used to calculate the hold, they are not the same. To find the value of the hold, simply multiply the house edge by the total amount wagered.

In addition, casinos can choose to manipulate the hold percentage to minimise their losses and further increase their profits. If specific games are not gaining enough hold, casinos may change the rules or the payouts to ensure increased profitability.

Remember the Main Differences

House edge and betting margins are similar concepts that imply an advantage the casino or bookmaker has over a player or bettor in specific games or bets. Even so, there are a few slight differences between the two:

The first difference concerns the way they are calculated. Although the concept is the same (true odds vs offered odds), betting margins are calculated with the total odds provided for an event, not a single bet. In contrast, the house edge is calculated straightforwardly for each wager.
The second difference is the type of wagering we use them for. As you know, the house can only be found in physical and virtual casinos, while betting margins are often tied to sports or future betting.

Conclusion

Understanding the odds and advantages of the house over the player is essential for making informed decisions and improving one's chances of success in gambling. Betting margins and casino house edge are two terms used to describe and measure these advantages. Betting margins reflect the difference between the actual probability of an event occurring and the odds offered by a bookmaker, while the house edge is the advantage that casinos have over players in specific games. It's crucial for players to be aware of the house edge when choosing a casino game, especially on internet-based platforms, as it can vary from website to website. Research and knowledge of the game's rules and bets can help players play smartly and improve their chances of winning.