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Gambling Probability, Odds and House Edge Explained

To be smart in gambling, you need to know about probability and odds. These mathematical concepts show the chances of winning and losing in any given gambling game or sport. Understanding them is what distinguishes the intelligent player from the gambler who relies on pure luck. In fact just about all professional gamblers in the realm of blackjack, video poker and sports gambling had some sort of background in mathematics before turning into full-time gamblers.

Gambling Probability

Probability is how the likelihood of something occurring is measured. To compute the probability of an event, you just set the chances of the event happening against it not happening. For example, a die has 6 faces numbered 1-6. The probability of rolling a 4 is 1 in 6. You have 1 way to roll a 4, but you have 5 ways to roll any number other than 4.

Gambling Odds

Odds are the same as probability stated in a different way. Using the above example, the odds of rolling a 4 would be 5 to 1 against it.

There are true types of gambling odds. The first is the odds of a thing happening or not, which is what we describe above. For instance, in roulette, there are 38 numbers so you have a 37 to 1 chance of winning if you bet on a single number.

The second type of gambling odds is the payout. In roulette, the payout for winning a 37 to 1 single number bet is 35 to 1. That means a $1 bet is paid out at $35.

The House Edge

You might wonder, "If the odds of hitting are 37 to 1, why do I get paid at only 35 to 1?"

The answer is, it's how casinos make money. If they were to pay you at true odds, they would only break even. By paying out at less than the real odds, casinos are guaranteed a profit no matter what game it is or who plays it or how often. In the long run, the difference in the odds will be felt. They win more money than they have to pay for, and there lies the house's profit.

The difference between the true odds and the payout is known as the house edge. It is this house edge that advantage gamblers try to overcome through various techniques. When the house edge is neutralized or offset, the casino loses its advantage and it's the player who profits.