Expected Loss

Expected Loss is somewhat of a misnomer.  It's not the value you actually expect to lose.  It's the mathematical average loss.  So whoever came up with the term "expected loss" did a bad job.  They should have called it "average loss".

An example illustrates the difference.  The house edge in roulette is 5.26%.  So for every $5 bet the casino will keep $0.26 on average.  So your "expected loss" on a $5 roulette bet is $0.26.

But if you bet $5 on roulette you can't lose exactly $0.26.  If you bet on red or black, you'll either win another $5 or lose the whole thing.  So you don't really expect to lose $0.26, it's just your mathematical average loss on each $5 bet, if you played the game forever.

So why do we even talk about expected loss if you can't lose exactly the amount it predicts on one play?  Because the longer you play, the closer your actual loss will be to the expected loss.  Let's say you play 1,000 spins on roulette, at $1 a spin, betting on red every time. You win 475 times and lose 525 times.  So you got back $950 (475 wins, plus you get your original wager back), and you risked $1,000.  That means you lost $50. The percentage you lost was $50 / 1000 = 5%, which is pretty close to the 5.26% mathematical average.

Expected loss is good for comparing the risk of various games.  Your expected loss depends on three factors:

1. How much you're betting (the amount per hand)
2. How fast you're playing (hands per hour)
3. The house edge (the average casino profit per bet)

In formula form, it's:

Wager x House Edge x Number of Hands = Expected Loss

As a practical example we'll use blackjack at $5/hand for two hours, assuming you use the proper strategy:

$5 x 0.5% x 60 hands/hr x 2 hrs. = $3

Below is a table showing your expected loss after 16 hours of play, using common house edges and common rates of play

Game	Hands Per Hour (HPH)	House Edge	Expected Loss for 16 hours of play
Slots, 0.05 Slots, 0.25 Slots, 1.00	800	8.0% (5 coins) 6.0% (3 coins) 5.0% (2 coins)	$256 $576 $1,280
Roulette, $5/spin	40	5.26% (American) 2.7% (European)	$168 (American) $86 (European)
Baccarat, $25/hand MiniBaccarat, $5/h.	60 150	1.06% (betting on Banker)	$254 $127
Blackjack, $5/hand	100	0.50% (with perfect play)	$40
Craps, $10/round ($5 Pass, $5 odds)	30 (Pass Line Bets)	1.41% pass line bet	$34

Crash Course in Table Games.  If you're a slot player and wish you knew how to play table games so you could stop losing money hand over fist, then check out our Crash Course in Table Games.

Table Game Speed.  The rate of play at table games depends on the casino's style and how many other players are playing, but the values in the table are good estimates.  Larger casinos tend to make their dealers deal at a fast pace, which not only makes you lose quicker but probably decreases your enjoyment of playing since it's not friendly and relaxed.  If the play in one casino is too fast, try a smaller casino (especially one Downtown instead of on the Strip).  Also realize that the more players at a table, the slower the game.  You'll be playing a lot faster if you're the only one at a table.

Slot speed.  The rate of play on slots, of course, depends on how fast you push the button.  Unlike table games, you're more in control the pace.

Slot returns.  Slot returns in the table are the average for Las Vegas Strip & Downtown casinos as published in the Jan. 2002 Casino Player.  But of course, you'll need to play in a casino which lists its slot returns to make sure you get them.  In fact, you might be able to find better returns than in this table.  On the Vegas Strip, Stratosphere and Riveria have 98% dollar slots (2% house edge).  Downtown, Fitzgerald's has 98% nickel slots.

Blackjack & Craps Edge. The low edge for blackjack assumes that you use proper Basic Strategy. The edge for craps assumes you're taking single odds.

Last update:  2005