For cashing out a $95 dollar voucher from a slot machine that someone left. The complaint said the person asked me to watch the machine while they go to the bathroom and i felt the person was never coming back so i cashed it out. In early June 2014, accountants at the Lumiere Place Casino in St. Louis noticed that several of their slot machines had-just for a couple of days-gone haywire. The government-approved.
What if someone was building a machine that you can deposit money into and get 96% of it back on average? You'd call that person crazy, right? Who would use the machine?
Add some sound effects, spinning reels and animation; now you've got machines that generate 70% out of $45 billion US gambling industry (video poker, video keno and such are included in that figure).
Slots are a fantastic business for casinos; they have a high house edge and play fast (some play over 800 spins an hour). They cost about $10,000 a piece, so the machine often pays itself back in weeks.
How Big of an Edge Do They Have?
To drive our attention away from the lousy house edge, slots provide the chance to win big-time - in fact, you might become a millionaire playing progressive slots. But the chance to win a life-changing prize comes with costs since progressive slots have the highest house edge out of all slots.
House edge (calculate it by subtracting slot machine's payout percentage from 100%) determines how much of a player's bet goes to the casino on average. For example, with a 5% house edge (in other words 95% payout), casinos make 5% out of your bets in the long run; short-term you may win a jackpot, of course.
Here's what this means: for every $10 bet you make, for example, you'll receive $9.50 of it back because 5% goes to the casino. Of course, you won't lose that 5% with every bet; you either win something or lose the bet. But in the long run, after tens of thousands of spins, you should have lost about 5% per bet.
Beginners often assume that the amount they play with is what they'll lose 5% out of. In reality, what you wager is what counts. You may have only a $100 with you, but if you play a dollar slot for 30 minutes at a rate of 600 spins an hour, you'll have wagered $300, and therefore lost three times what you would lose by just betting that $100.
A typical casino will have slot machine payouts anywhere from 82% to 96% (some online slots have it close to 98%). Real-money slots have minimum payout limits depending on the jurisdiction; 75% in Las Vegas and 83% in Atlantic City, for example.
Unfortunately there's no way of knowing the payout percentage of individual slot machines since casinos aren't required to display them - and rarely has a casino showed slot machine payout figures voluntarily.
Las Vegas casinos are forced to report monthly returns on slots, however, these reports include video poker and video keno machines as well, making it impossible to tell what the returns were from slot machines only. Additionally, mega jackpots, the ones that happen once in several months, may skew the returns.
By the way, 'return' is different from 'payout'
In 2003, Michael Shackleford (also known as 'Wizard of Odds') did a survey on nickel slots in Las Vegas. According to the study, payouts ranged from 85.02% to 93.43% (source).
Watch Out
You may see advertisements for slot machines with 'payback up to 97%' or something similar; beware of these machines, or at least expect not to play with 97% payback because that's not what the advertisement promises.
'Payouts up to' is not the same as 'payout of'. The first suggests that you might win up to that amount, while the second gives a precise stat. If you win a big jackpot, you could have payouts up to 500% or more, but that doesn't mean the payout percentage is 500%. It's an attempt to deceive gamblers, which in itself is a red flag.
The payout you'll really play with is impossible to tell since casinos have no obligations to share that information. You should only trust specific slot machine payouts such as 'payout 97%' but they're rare.
See slots to avoid for more.
A Higher Payout
Using a slots club card is good for you and allows you to get a higher payout in theory. The payout on the slot machine stays the same but you'll get a certain percentage (0.5% is common) of bonus to your slots club account and therefore, in theory, you'll get a higher payout.
And remember: club members get comps.
In addition to being a slots club member, you can use online slots bonuses should you feel like playing at home. Always sign-up for whatever bonuses you can and get (again in theory) a higher payout.
You can often judge a slots' payout (compared to other slots in the casino) based on the appearance; in general, the better it looks, the lower the payout. Nicer-looking slot machines cost more to casinos and players are the ones who pay for it.
Payout Myths
A slot machine myth says that the slots out in the open have a higher payout than the ones out of everyone's sight; according to the myth, this encourages casino visitors to play as they see others winning. According to numerous sources, this seems to be a false assumption.
However, casinos sometimes place popular slots out in the open so that those walk in can see loads of other people playing and having fun (heard this from a slot manager).
If Someone Leaves Money In Slot Machines
Another popular myth says that casinos will switch slot payouts depending on the time of the day or day of the week. This is false according to numerous slot managers. Changing a slots' payout often includes paperwork and you have to get someone to change the EPROM chip inside the machine (unless the casino uses server-based slots, which are currently being tested at several casinos).
By the way, casinos aren't allowed to change a slot machine's payout percentage while someone's playing; in fact, in Nevada the machine has to be idle four minutes before and after the change.
How Much You Will Lose
Regardless of the bonuses or comps you may receive, you'll lose at slots in the long run, and it's important to learn how to calculate probable losses.
Cash Money Slot Machine
First of all, if you think you're playing a slot machine with a 95% payout, and you take $500 along with you, you're mistaken if you think you only stand to lose $25; the amount you take with you is irrelevant, the amount you wager is what counts.
If you play $5 a spin for an hour, and say you 600 spins an hour, you've wagered $3,000. Instead of losing $25, you've actually gone through the $500 six times already, losing $150 on average. That's $150 in an hour.
Say you want to enjoy your night playing slots and only play 200 spins an hour, which is fairly slow. You have a $100 with you and you make $1 bets. The machine has 95% payout (which you almost never know for sure) so every bet you theoretically deposit $1 and get $0.95 back.
After 200 spins, you've wagered your bankroll a little more than twice and have $90 back (after the first 100 spins, you should have $95 back; after the next 95 spins, you should have $90.25 back; after five more spins you should have $90). In other words, on average, you'll have lost 10% of $100 after playing slots slowly for an hour.
Here's the calculation: (wager)*(payout %)-(wager) = (loss).
In the example above: $200*0.95-$200 = -$10.
Also see online slot payouts.
Back to Slots Terminology.
The gaming industry is big business in the U.S., contributing an estimated US$240 billion to the economy each year, while generating $38 billion in tax revenues and supporting 17 million jobs.
What people may not realize is that slot machines, video poker machines and other electronic gaming devices make up the bulk of all that economic activity. At casinos in Iowa and South Dakota, for example, such devices have contributed up to 89 percent of annual gaming revenue.
Spinning-reel slots in particular are profit juggernauts for most casinos, outperforming table games like blackjack, video poker machines and other forms of gambling.
What about slot machines makes them such reliable money makers? In part, it has something to do with casinos’ ability to hide their true price from even the savviest of gamblers.
The price of a slot
An important economic theory holds that when the price of something goes up, demand for it tends to fall.
But that depends on price transparency, which exists for most of the day-to-day purchases we make. That is, other than visits to the doctor’s office and possibly the auto mechanic, we know the price of most products and services before we decide to pay for them.
Slots may be even worse than the doctor’s office, in that most of us will never know the true price of our wagers. Which means the law of supply and demand breaks down.
Casino operators usually think of price in terms of what is known as the average or expected house advantage on each bet placed by players. Basically, it’s the long-term edge that is built into the game. For an individual player, his or her limited interaction with the game will result in a “price” that looks a lot different.
For example, consider a game with a 10 percent house advantage – which is fairly typical. This means that over the long run, the game will return 10 percent of all wagers it accepts to the casino that owns it. So if it accepts $1 million in wagers over 2 million spins, it would be expected to pay out $900,000, resulting in a casino gain of $100,000. Thus from the management’s perspective, the “price” it charges is the 10 percent it expects to collect from gamblers over time.
Individual players, however, will likely define price as the cost of the spin. For example, if a player bets $1, spins the reels and receives no payout, that’ll be the price – not 10 cents.
So who is correct? Both, in a way. While the game has certainly collected $1 from the player, management knows that eventually 90 cents of that will be dispensed to other players.
A player could never know this, however, given he will only be playing for an hour or two, during which he may hope a large payout will make up for his many losses and then some. And at this rate of play it could take years of playing a single slot machine for the casino’s long-term advantage to become evident.
Short-term vs. long-term
This difference in price perspective is rooted in the gap between the short-term view of the players and the long-term view of management. This is one of the lessons I’ve learned in my more than three decades in the gambling industry analyzing the performance of casino games and as a researcher studying them.
Let’s consider George, who just got his paycheck and heads to the casino with $80 to spend over an hour on a Tuesday night. There are basically three outcomes: He loses everything, hits a considerable jackpot and wins big, or makes or loses a little but manages to walk away before the odds turn decidedly against him.
Of course, the first outcome is far more common than the other two – it has to be for the casino to maintain its house advantage. The funds to pay big jackpots come from frequent losers (who get wiped out). Without all these losers, there can be no big winners – which is why so many people play in the first place.
Specifically, the sum of all the individual losses is used to fund the big jackpots. Therefore, to provide enticing jackpots, many players must lose all of their Tuesday night bankroll.
What is less obvious to many is that the long-term experience rarely occurs at the player level. That is, players rarely lose their $80 in a uniform manner (that is, a rate of 10 percent per spin). If this were the typical slot experience, it would be predictably disappointing. But it would make it very easy for a player to identify the price he’s paying.
Raising the price
Money Slot Machine
Ultimately, the casino is selling excitement, which is comprised of hope and variance. Even though a slot may have a modest house advantage from management’s perspective, such as 4 percent, it can and often does win all of George’s Tuesday night bankroll in short order.
This is primarily due to the variance in the slot machine’s pay table – which lists all the winning symbol combinations and the number of credits awarded for each one. While the pay table is visible to the player, the probability of producing each winning symbol combination remains hidden. Of course, these probabilities are a critical determinant of the house advantage – that is, the long-term price of the wager.
This rare ability to hide the price of a good or service offers an opportunity for casino management to raise the price without notifying the players – if they can get away with it.
Casino managers are under tremendous pressure to maximize their all-important slot revenue, but they do not want to kill the golden goose by raising the “price” too much. If players are able to detect these concealed price increases simply by playing the games, then they may choose to play at another casino.
This terrifies casino operators, as it is difficult and expensive to recover from perceptions of a high-priced slot product.
Getting away with it
Consequently, many operators resist increasing the house advantages of their slot machines, believing that players can detect these price shocks.
Our new research, however, has found that increases in the casino advantage have produced significant gains in revenue with no signs of detection even by savvy players. In multiple comparisons of two otherwise identical reel games, the high-priced games produced significantly greater revenue for the casino. These findings were confirmed in a second study.
Further analysis revealed no evidence of play migration from the high-priced games, despite the fact their low-priced counterparts were located a mere 3 feet away.
Importantly, these results occurred in spite of the egregious economic disincentive to play the high-priced games. That is, the visible pay tables were identical on both the high- and low-priced games, within each of the two-game pairings. The only difference was the concealed probabilities of each payout.
Armed with this knowledge, management may be more willing to increase prices. And for price-sensitive gamblers, reel slot machines may become something to avoid.