The House Edge Across Products

Different industries use different words for the same idea. A sportsbook calls it the vig. A casino calls it the house edge or the hold percentage. A slot machine calls it the RTP (return to player) or the house return. A state lottery calls it the takeout rate. A mobile gacha calls it the drop rate (which is a probability rather than a margin, but we will translate it).

Underneath the vocabulary is one number: the percentage of every dollar wagered that the operator keeps over the long run. Knowing the four words is half the lesson. The other half is calibrating what counts as a small edge versus a large one.

The four most common terms

Vig (sportsbook). The implied-probability gap above 100 percent on a two-sided line. -110 / -110 sums to 104.8 percent. The 4.8 percent over 100 is the vig. Per-attempt expected loss for a -110 bet is roughly 2.4 percent of the stake.

Hold percentage (casino). The percentage of total cash-in that the casino keeps after all bets are settled. Casinos report hold percentages publicly. Different table games hold different amounts. Blackjack played with basic strategy holds 0.5-1 percent; American roulette holds 5.26 percent; some carnival games hold 10-15 percent.

RTP (slot machine). Return to Player. The percentage of every dollar wagered that the slot pays back over the long run. A 95 percent RTP slot keeps 5 percent on average; a 92 percent RTP slot keeps 8 percent. RTP is the inverse of the house edge. U.S. casino slots typically sit between 85 and 96 percent RTP; online slots run higher (often 94-97 percent); the gap reflects different operating costs, not different generosity.

Takeout rate (lottery / pari-mutuel). The percentage of total ticket sales that the lottery commission keeps for prizes withheld, administration, and state revenue. State scratch-off games typically have takeout rates of 35-50 percent. That means the average dollar spent returns 50-65 cents in prizes. Lottery is by far the worst common consumer bet on a per-dollar basis.

Drop rate (gacha / loot box). The probability of receiving a specific reward from a randomized purchase. Drop rates are not a margin number directly, but they translate to one. A 0.6 percent base rate for a featured five-star character means a player needs roughly 167 pulls on average to get one - and at typical pull pricing, that is well over $100 of expected spend per featured character.

A common scale

Once you have the vocabulary, you can put the numbers on a single scale. Per-attempt expected loss as a percentage of the amount wagered:

• Blackjack with basic strategy. ~0.5 percent.
• A -110 single-leg sportsbook bet. ~2.4 percent.
• A 5-leg sportsbook parlay built from -110 legs. ~20 percent expected loss per stake.
• U.S. casino slot machine. ~5-15 percent.
• American roulette. ~5.3 percent.
• State lottery scratch-off. ~35-50 percent.
• Loot box / gacha pull priced at typical rates. Highly variable; often equivalent to 30-60 percent expected loss per dollar of currency spent, depending on the player's value of the rewards.

The two ends of this scale are striking. Basic-strategy blackjack costs the player about half a percent per attempt. A scratch-off costs the player 35-50 percent per attempt. The same student might believe blackjack is "the casino's game" and the lottery is "harmless fun," when the math runs in exactly the opposite direction.

This page is the vocabulary; the next two pages walk concrete worked numbers for each category.

A teaching note

Avoid the temptation to call any of these "the worst." Each product has a distinct profile. A small per-attempt edge can produce huge total losses if the player makes thousands of attempts (the slot case). A large per-attempt edge can produce smaller total losses if the player makes few attempts (the once-a-week scratch-off case). Both matter; the math is the same; the structure of harm is different. We will treat that distinction directly on Page 4.