How Does a Casino Calculate the House Edge and Variance of Each Game?


A casino’s house edge is the advantage the casino has over you. It grinds you down to nothing by using a combination of luck and skill. Most casinos don’t have windows or clocks, which is probably why their rooms have such a glitzy appearance. This is intentional to make you unaware of time and place, which makes it all the more exciting to play. Some casinos even offer free drinks to first-time players, which is a nice touch, but it doesn’t help when your judgment is impaired by alcohol.

A casino needs to calculate the house edge and variance of each game in order to know how to maximize profits. The variance of each game tells how much money the casino needs to maintain cash reserves. This work is done by mathematicians and computer programmers known as gaming mathematicians. Most casinos don’t have their own gaming analysts, so they outsource this important work to an outside firm. The outcome of this analysis is an extremely valuable piece of information for a casino.

The study found that nearly one-fourth of Americans have visited a casino in the past year. This is up from 24% in 1989, when only 7% of people had college degrees. Today, almost half of the American population had no college education or no college credits. This shows that education is no barrier to playing at a casino. For example, in a recent survey, 24% of people had a bachelor’s degree or graduate degree, while 27% had no formal education at all.