On the house is an expression Americans use to indicate that a drink is free of charge for the customer. The expression originated in England in the late 19th century where pubs (public houses) would offer a drink to an unsatisfied customer, or as a courtesy or donation. Sometimes in movies you will notice a known customer goes into a bar and orders a drink. The bartender would say: "Here you go. It's on the house".
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If it is free for the customer, it is figuratively "paid" by the establishment, meaning that the establishment covers the cost. That is how the expression came to be known: on the house. The house or establishment does not charge the customer, thus the drink is "on the house".
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