RTP vs House Edge: Where is the Difference?

RTP vs House Edge: Where is the Difference?

I have noticed that RTP and House Edge concepts cause a lot of confusion among beginner players of online casino (both video slots and classic games). But those two are the most important parameters of every online casino game. Hence, it is quite essential to learn about them since they influence the financial aspect of online gambling in a big way.

That’s why I had decided to write an article about it, in which I am going to explain:

  • an underlying concept behind House Edge and RTP

  • how House Edge and RTP is measured

  • how House Edge and RTP interact with each other

  • what are the best online casino games in terms of House Edge and RTP

So to say, let’s get in deeper and discuss each item in details.

The house always wins concept

You have probably heard this statement many times, but what it actually means? To make things more clear, I would modify this sentence and say “The house always wins, but it is only true in the long run”. And that would be a quite important supplement, which makes a big difference.

It is the case because online casino players can (and they actually often do) win in casino games in a short distance. But as they are continuing to gamble, they have less and less chances to end up with a profit.

So to speak, the house always wins concept comes down to that:

  • all casino games cause losses to online casino players in the long run

  • the online casino player can win in a short term

  • House Edge and RTP determines how much online casino player is going to lose

For example, you can win a lot during 1,000 spins in online slots (or wager in any other casino game), but you have zero chances to profit after 1,000,000 spins or wagers.

“The house always wins” is a rather long and not too handy expression, and gambling community come up with shorter terms for it. That is how “House Edge” or “RTP” had appeared. Those two are the exact synonyms of “the house always wins” concept. I will talk about each of them in further chapters.

How House Edge or RTP is getting measured

House Edge or RTP is not some abstract thing, and it can be measured quite precisely most of the time in percentages. It becomes possible, because in every online casino game (in both slots and table games) there is some computer program behind the scenes. This program determines basically everything including chances to hit a winning. Thus, influencing chances to hit a winning, software providers can set House Edge or RTP at a certain percentage level.

Moreover, it is always necessary for each online casino game to disclose what the House Edge or RTP is set in order to obtain a gambling license. License commission tests each licensed casino game to verify that claimed House Edge or RTP is true. That is how we can be sure that asserted House Edge or RTP percentage is honest.

So every time you see some percentage in front of some casino game, you are probably looking at its House Edge or RTP level. And this percentage is the most important parameter of every online casino game since it determines exactly how much you are going to lose in the long run.

RTP vs House Edge

RTP and House Edge represent the same concept (“the house always wins”), and they are basically the same things with the only one difference. The only difference between them is how they are calculated.

House Edge is calculated pretty much straightforward, and when you see, let’s say, House Edge of 2,7%, it means that an online casino player loses 2,7% on average each bet (wager) he/she makes. In practice, an online casino player could win a lot or lose 100% of the particular bet, but after millions of bets, the average loss would be 2,7%.

You can usually come across House Edge only regarding online casino games other than video slots.

RTP (return to player) means how much of player’s bet is returned on average, and, as I have said before, RTP does not differ from House Edge on the conceptual level. However, in comparison with House Edge, RTP is calculated in reverse order. So, if an online casino game has House Edge of 2,7%, then the RTP for this game would be 97,3% and vice versa.

Now you can see how House Edge and RTP are very similar.

Summing up, online casino players usually reference casino’s advantage as House Edge when they are talking about table games (Blackjack, Roulette, Baccarat etc.) and they reference it as RTP (return to player) when they are talking about online slots.

The Best casino games in terms of House Edge or RTP

House Edge (RTP) could vary pretty significantly from one online casino game to another. Given that, let’s rank the most popular online casino games in terms of House Edge (RTP):

  • Blackjack: approx. 0,5% at best (depending on how good you use basic strategy)

  • Craps: approx. 1% at best (depending on what kind of bets you are making)

  • Baccarat: 1,06-1.24%

  • European and French Roulette: 2.7%

  • Slots in online casinos: 3-4% on average (or 96-97% RTP)

  • American Roulette: 5,26%

  • Slots in Vegas land-based casinos: 4-12% (or 88-96% RTP)

Also, you can come across ROI

ROI (return on investment) is rather a financial term and you can meet it in the online gambling field relatively rare. ROI is exactly the same as House Edge with the only difference that it has a negative sign of a number.

So, if an online casino game has the House Edge at 2,7%, then the ROI of this game would be -2,7%. It is quite logical since every casino game cause return on investment at negative levels.

Conclusion

I would highly recommend to establish House Edge (RTP) of a casino game in which you are planning to gamble. Because nothing is going to affect your gambling experience more than this crucial parameter.