How Casinos Calculate the House Edge and Variance


In order to have a fair game, casinos need to know the house edge and the variance of each game. This information will tell them how much they should expect to win, and what percentage of their cash reserves they need to cover their losses. These calculations are done by computer programmers and mathematicians. Most casinos do not have in-house expertise in this area, so they hire outside experts to help them make their decisions. This article will explain how casinos calculate the house edge and variance for different games.

During the late 20th century, casinos began incorporating technology into their operations. Computers and video cameras now routinely monitor the games. “Chipper tracking” involves betting chips with built-in microcircuitry. This technology enables the casino to monitor each player’s wager minute-by-minute. The roulette wheel is regularly monitored and recorded for statistical deviations. Some casinos also have enclosed versions of their games where players place their bets by pushing buttons rather than using a dealer.

Since the mid-1990s, casinos have increasingly relied on technology to keep their establishments secure. The latest innovations include computers and video cameras that regularly supervise all casino games. “Chip tracking” uses betting chips with embedded microcircuitry, allowing the casino to monitor the amount of money that a patron wagers minute-by-minute. The roulette wheel is also monitored to make sure that it doesn’t skew. In some casinos, players can bet with their hands or push buttons to determine the payouts.