online casinos and house edge...

#1
so it's been a while and maybe I just need to look at my copy of Theory of Blackjack but, how do online casino's calculate house edge?

It seems to me that since online casinos shuffle after every hand that the conclusion you draw is:

Online casinos have X% advantage over you in the long run ON YOUR INTIAL HAND.

I have always understood house edge to be an average of your basic strategy plays vs. a diminishing deck of a fixed size.

For example, if you play perfect basic strategy forever vs. a complete (no cut card) 6 deck shoe than you will realize a 1/2% house edge.

But if you play with this understanding then there is no beating an online casino since you aren't playing to a DIMINISHING DECK where your odds are evening out (averaging out).

I imagine that I have mis-stated what basic strategy actually is so if someone out there could explain it to me, then I would be much obliged.

I feel like I have steped into consipiracy theory territory since I know that the casinos have to rake in a certain percentage (otherwise why be in buisiness?) and I am wondering where it actually comes from.
 

Gregory

Well-Known Member
#2
Actually, you have the idea down very well, but you're missing (or you didn't state) one key point: Bonuses.

so it's been a while and maybe I just need to look at my copy of Theory of Blackjack but, how do online casino's calculate house edge?
The house edge remains the same for online casinos and land based casinos. The numbers never change as long as the game itself never changes. You can calculate the house edge simply by filling in the appropriate blanks at Ken's basic strategy engine:
http://www.blackjackinfo.com/bjbse.php

It seems to me that since online casinos shuffle after every hand that the conclusion you draw is:
Online casinos have X% advantage over you in the long run ON YOUR INTIAL HAND.

The house advantage remains the same, no matter how many hands. You already stated why ... the deck never diminishes. The same 2 of clubs you just had could be back again next hand. This is similar to a CSM (constant shuffling machine) that many land based casinos are bringing to the pit.

But if you play with this understanding then there is no beating an online casino since you aren't playing to a DIMINISHING DECK where your odds are evening out (averaging out).
There is no beating any casino where it's impossible to use skill rather than dumb luck. Luck alone may carry the day, but relying on that is a bad idea. You don't try to beat the online casino ... you try to lose very slowly so you clear the withdrawal requirement with a good chunk of the bonus money.

I feel like I have steped into consipiracy theory territory since I know that the casinos have to rake in a certain percentage (otherwise why be in buisiness?) and I am wondering where it actually comes from.
The online casinos make plenty from the slots and other poor EV wagers. Even in Blackjack not following basic strategy will cost you. But rather than explain something that others have spent hours researching, I'll supply a link that explains it:
http://www.bonusbug.com/cgi-bin/yabb/YaBB.cgi?board=casino;action=display;num=1109632125 (Archive copy)
I hope this answers your questions. Good luck if you decide to travel the bonus money path. It can be very profitable with little risk.
 
#3
noshoes said:
Online casinos have X% advantage over you in the long run ON YOUR INTIAL HAND.

I have always understood house edge to be an average of your basic strategy plays vs. a diminishing deck of a fixed size.

These 2 statements contradict each other. So which statement is wrong? Is house edge determined by a deck that diminishes vs. your BS play or by your odds on one random hand vs. your BS play?

PS. thank you for your explanation of bonuses. I understand how they give you a big advantage, even with their seemingly outrageious wagering requirements.
 

Gregory

Well-Known Member
#4
noshoes said:
Online casinos have X% advantage over you in the long run ON YOUR INTIAL HAND.

I have always understood house edge to be an average of your basic strategy plays vs. a diminishing deck of a fixed size.

These 2 statements contradict each other. So which statement is wrong? Is house edge determined by a deck that diminishes vs. your BS play or by your odds on one random hand vs. your BS play?

PS. thank you for your explanation of bonuses. I understand how they give you a big advantage, even with their seemingly outrageious wagering requirements.
Your first statement that online casinos have an advantage over you in the long run on your initial hand is correct, simply because every hand is your initial hand. There is no reason to expect to receive different cards from one hand to the next since all the cards are returned to the shoe after every single hand. Therefore, the casino will have the same advantage on your initial hand as well as your tenth hand.

This is a bit tricky. The house edge is a percentage of the amount lost compared to the original wager. Basic strategy will minimize that amount, but not eliminate it. The house edge is not based on a diminishing deck, nor does it fluctuate with percentage of penetration. You'll find additional information at the following link:
http://wizardofodds.com/gambling/houseadv.html
 

aussiecounter

Well-Known Member
#5
noshoes said:
I have always understood house edge to be an average of your basic strategy plays vs. a diminishing deck of a fixed size.

WTF is that supposed to mean? :confused: I'm lost.

The house edge is the difference between the odds of a certain game, and the actual return to players.
i.e. If a you have a side game that you get 20x your side bet if you get blackjack, but the odds say blackjack comes once every 21 hands.
The odds of getting a blackjack are 21-1, but the casino only pays out 20-1 if you win. Thats their house edge.
I can't be bothered working the figures., but this would be about 5% I think.
 
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