How Casinos Make Money – House Edge, RTP & Variance Explained

How casinos make money

Online casinos are profitable businesses because of the house edge — a mathematical advantage built into every game that ensures the casino profits over time. The house edge doesn't mean the casino wins every hand or spin. It means that over millions of rounds, the casino retains a percentage of all money wagered.

What is the house edge?

The house edge is the mathematical advantage the casino has, expressed as a percentage of each bet. A slot with 96% RTP has a 4% house edge — for every $100 wagered, the casino expects to keep $4 over millions of spins. For players, this means losing $4 on average for every $100 bet — but individual sessions can vary wildly in either direction.

House edge by game type

Game	House Edge	RTP
Blackjack (basic strategy)	0.5%	99.5%
Baccarat (Banker bet)	1.06%	98.94%
Video Poker (Jacks or Better)	0.46%	99.54%
European Roulette	2.7%	97.3%
American Roulette	5.26%	94.74%
Craps (Pass line)	1.41%	98.59%
Online slots (average)	4%	96%
Keno	25–40%	60–75%

What is variance?

Variance (also called volatility) describes how much individual results deviate from the expected average. Low variance = frequent small wins, steady bankroll. High variance = rare large wins, long losing streaks. The house edge is the same regardless of variance — but high variance slots can feel very different from low variance ones.

Why players can win short-term

The house edge operates over millions of rounds. In a single session, random chance can produce results far above or below the average RTP. This is why players win sometimes — the math only reliably applies over an enormous number of bets. The longer you play, the more your results converge toward the expected house edge.

How bonuses change the math

Welcome bonuses give you extra money to wager, effectively changing your expected value. A $100 bonus at 35x wagering with 96% RTP slots: expected return from wagering = $3,500 × 96% = $3,360 returned (expected loss $140 from wagering, but you started with $100 bonus). If wagering completes above zero, you've profited. See our bonus calculator guide for the full math.

Responsible gambling

Understanding the house edge helps you make informed decisions. Gambling is entertainment, not investment. 18+ only. Help: Responsible Gambling.org, ConnexOntario.