Question: The house edge in any game of chance is defined

The “house edge” in any game of chance is defined as
E(player’s loss on a bet) / Size of player’s loss on a bet

For example, if a player wins $10 with probability 0.48 and loses $10 with probability 0.52 on any bet, the house edge is
-[10(0.48) - 10(0.52)] / 10 = 0.04

Give an interpretation to the house edge that relates to how much money the house is likely to win on average. Which do you think has a larger house edge: roulette or sports gambling? Why?

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  • CreatedApril 01, 2015
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