House Edge vs. RTP

By Wagercomms

Understanding the Difference – and Why It Matters

There’s a persistent misconception in the gaming industry — particularly among the younger generation — and since I can no longer claim membership in that demographic, I thought I’d offer some clarification. I’ve seen too many articles, even from reputable sources, incorrectly stating that House Edge and RTP (Return to Player) are simply two sides of the same coin. That’s not only inaccurate — it undermines a fundamental distinction in how casino games operate.

Take, for example, a game with a house edge of 5.22%. That doesn’t automatically imply an RTP of 94.78%. Anyone claiming this needs to revisit the maths. Even if one argues they are “more or less the same,” they are still fundamentally not the same thing.

Passive vs. Strategic Play

House Edge is typically used in the context of table games, where it represents the built-in advantage the casino holds over the player — assuming the player is using optimal strategy. In contrast, RTP is associated with passive games — most commonly slot machines or video poker — where the player takes no strategic decisions. It's a term that describes the fixed return percentage that the game is set to pay out over time.

RTP reflects games where player interaction is limited to pressing a button: spin, spin, spin. For example, a slot with an RTP of 96% means the machine is designed to return £96 for every £100 wagered over a very long period of play. This concept dates back to classic physical slot machines, often with three reels containing a specific mix of symbols and blank spaces. The predetermined distribution of these reel positions sets the game's payback — the Return to Player.

The Role of Player Decision-Making

House Edge, however, is theoretical and dynamic. It’s a statistical measure of the casino’s advantage if the player makes perfect decisions throughout. In table games like blackjack, poker variants, or bespoke games such as Draw Sevens™, the actual edge the casino enjoys can shift dramatically depending on how the game is played.

Let’s take Blackjack

— Under the London deal, a six-deck shoe at optimal play results in a house edge of 0.55%. 

— With a Peek deal using the same conditions, the edge drops slightly to 0.46%.
 

That may seem minor, but small changes in game rules — or player behaviour — quickly add up. The critical factor is that optimal play requires the player to make mathematically correct decisions at every turn. Deviating from those decisions increases the house edge. For instance, hitting on 15 in the wrong situation, or splitting two 10s against a dealer’s 10, can cost more than just a single hand — it alters the long-term expectation.

Why It Matters

Some might say the difference is negligible — and perhaps it is if you're playing only ten hands with small bets. But once you’re in for a few hundred hands over an evening, especially with larger stakes, the impact of poor decisions compounds. You're no longer playing blackjack at a house edge of 0.46% — you're playing with a significantly higher disadvantage, self-imposed by deviation from optimal play.

— RTP is a fixed, passive metric that describes what a game is set to return.
 

— House Edge is a variable, strategic metric, contingent on player behaviour and decision-making.
 

They are not interchangeable. And in a professional gaming context — understanding the difference isn’t just important, it’s essential.