Slot Machine Facts You Should Know
Published on August 24, 2016
Slot machines have become most casinos’ bread and butter.
But they weren’t always.
Just a couple of decades ago, these games were targeted at women and the elderly. Casino managers didn’t take these games or the people who played them seriously.
Most of their money came from high rollers at the blackjack and craps tables.
This all started to change in the middle of the 1980s, but these changes really took off during the 1990s.
Now slot machines and their players dominate the industry.
If you’re interested in gambling and casinos, you should know the following facts about slot machines.
Casinos and gambling machine manufacturers have figured out that the #1 predictor of a game’s profitability is the average amount of time a gambler spends on that device. When designing new games, the slot machine manufacturers (IGT, Bally, WMS, and others) focus on features that will increase this number.
One way to look at a game with a high “Time on Device” is how well it hooks a gambler into “the zone”. This is a state of mind where it’s just the gambler and the machine. According to some anecdotal reports, this type of thinking takes the place of concerns about winning big.
You can think of this zone as a space where time and normal social stresses cease to have meaning.
I’ll leave that for the reader to decide.
All casino games have a house edge that can be calculated if you know 2 things:
Most casino games use a deck of cards or a pair of dice or something comparable to generate their random results. Those are examples of games where you know the odds of winning a bet.
After all, there are 52 cards in a deck, so the odds of getting a particular card are 51 to 1. All the other probabilities can be calculated if you know the make-up of the deck.
There are only 6 sides on a die in a game of craps, so there are a finite number of combinations. Calculating the odds of any given outcome is relatively simple math.
But on a slot machine, you have symbols that pay off at a certain rate when you get certain combinations of those symbols on the screen at the same time in a line. But you have no means of determining the odds of getting a particular symbol on any particular spin.
Without that piece of information, you have no way of telling what the house edge is.
As a result, the house edge for slot machines is often higher than the house edge for other games. Blackjack has a low house edge of between 0.5% and 1% (assuming you play well). Even if you play badly, the house edge at blackjack probably maxes out at 4% or so.
But the house edge for most slot machines is 5% or more. And you have no way of knowing if the game you’re playing has a house edge of 5% or 25%. In fact, 2 identical machines sitting right next to each other can have dramatically different payback percentages.
That’s because the random number generator is inside the machine. You can’t examine it.
Some online slots games have certified payback percentage information posted on the Internet casinos’ sites.
The casino industry changed dramatically in the middle of the 1980s. At that time, slot machines were considered a distraction for women. The boyfriends and husbands were the real gamblers and stuck with games like blackjack and craps.
The slots didn’t even have stools in front of them in those days. They were placed in the hall or near the elevator—the idea was to avoid taking up space on the gambling floor. They were located in spaces where people were moving from point A to point B.
It only took a decade for slot machines to start generating twice as much revenue per year as all the table games put together. By 2003, gambling machines were generating 85% of the casinos’ revenues.
You’ll often see 65% or 70% quoted on various websites, by the way. My best guess is that this number WAS true at one time, but the Internet is like a giant echo chamber. Once someone has written a page somewhere quoting a statistic, other webmasters publish similar pages paraphrasing those earlier pages. Few online writers spend a lot of time doing actual research from legitimate in print sources.
A progressive jackpot game is one in which the size of the top jackpot grows with every spin of the reels. You can find 3 kinds of progressive slots:
A standalone progressive jackpot only grows when you play that individual machine.
A local area progressive is networked with a group of other slot machines within the same casino. Play on any of those machines causes the jackpot for all those games to grow. If the jackpot is hit on any of those machines, the jackpot on all the machines resets to its starting point. (It’s a shared jackpot.)
Wide area progressives are the games that are networked across multiple casinos. These are the games where the jackpots get high enough to compete with lottery games.
The biggest example of a wide area progressive is Megabucks. The jackpot for this game starts at $10 million and grows until it’s hit. The jackpot has grown to over $30 million on at least 2 different occasions.
This kind of jackpot has a couple of significant differences from the lottery:
Even though the odds of winning a progressive jackpot are significantly better than the odds of winning the lottery, a progressive jackpot is still a bet where the odds are stacked against you in an almost comprehensible way. The odds of winning the lottery are about 1 in half a million. The odds of winning the MegaBucks jackpot is about 1 in a quarter million.
Another difference is that you’ll see smaller payouts more frequently when playing on a MegaBucks slot machine. It is a slot machine, after all.
Slot machines were originally made up of a few mechanical parts:
Modern slots are made up of over 1200+ individual components put together by 300+ people from design to the manufacture and assembly of those components. The parts involved now include items that Charles Fey, the inventor of the slot machine, wouldn’t even recognize:
These games used to be straightforward. You inserted coins, pulled a lever, and looked for a combination of symbols across a pay line. Now you have to choose how much to bet, insert paper money or tickets, and press buttons or a screen in order to start the game. You can bet as little as a penny per line per spin or $100 per line per spin—on the same machine.
The reels are 3D animations on a video screen, and instead of a single pay line, you have potentially dozens of ways to win (and/or lose). The pay table is also available on screen, but you have to navigate to another screen to look at it.
And many of these games are now linked to other games and to computer programs which gather data that goes straight into the hands of the casinos’ marketing departments.
Multiple factors have added to the growth of these games’ popularity throughout the United States. Some of this has to do with the economy during the Reagan and Bush administrations.
Those 2 administrations cut federal funding to most states during the recession. The governments of those states needed to find ways to generate revenue without directly raising taxes. Legalizing and taxing gambling proceeds was an easy way to do it.
While this was going on, video games in general were also exploding in popularity. And since most machine gamblers were women and elderly people playing for low stakes, industry spokespeople began discussing their industry using a redefined term—“gaming”, rather than “gambling”.
The combination of these factors with the technological innovations going on at the time created the perfect storm that made slot machines far and away the biggest source of revenue in the United States gambling industry.
In the year 2000, slot machines were only legal in 31 states. They’ve since been legalized and regulated in 10 additional states. Other states are considering legalization, too.
But these close to 1 million machines aren’t the only example of the industry in action. There are countless underground machines available even in states where gambling machines aren’t legal. These games are unauthorized and unregulated—you’ll find them in bars, gas stations, and restaurants in states like Texas, where there are no legal casinos.
These unregulated games are often billed as “amusement devices” or “sweepstakes games”. In Texas, the colloquial term for them is “8 liners”, and entire businesses (“game rooms”) are dedicated to allowing gaming enthusiasts the opportunity to play for prizes you could easily buy at Dollar General. I visited one game room where you could win a dozen cans of creamed corn or some garden tools.
It would seem that 800,000+ slot machines in one country would set a record. But it doesn’t. It just makes the United States #2 worldwide.
The #1 country for slot machines is Japan. They have close to 5 million slot machine games in the country. And considering that Japan has a population roughly 1/3 of that of the United States, the number of slot machines per person is considerably greater.
For every 27 people in Japan, you’ll find a slot machine. In the United States, you’ll find one slot machine for every 350 people.
So, yes, we have a lot of slots in the United States. But we don’t even come close to having the kind of slot machine fever that they have in Japan.
Another example of how the gambling landscape in the United States has changed is the rise of the local gambler. The population of Las Vegas quadrupled from 1980 to 2010, from 450,000 people to 2 million. But 2/3 of Vegas residents gamble.
And 2/3 of THOSE gamblers play at least monthly, for 4+ hours per session. Many of those play twice a week or more. Neighborhood casinos cater to these local players by offering them amenities specific to their needs (like child care).
Between 1984, the number of local gamblers who preferred machine gambling rose from 30% to 78%.
These factors have combined to make low rolling local gamblers a more dominant force in the economy of the local Vegas economy than high roller tourists.
Station Casinos, in particular cater to local gamblers in Las Vegas. They’re known for offering some of the best odds on video poker machines in the world. Their house edge might be lower on these games, but they make up for it in volume.
One of the best examples of the gambler’s fallacy is the belief that a slot machine game gets hot or cold. The idea is that a game which is paying out a lot is somehow “hot” and will continue to pay out. Alternatively, if a game is not paying out much, it will continue to be “cold” and will be less likely to pay out.
The reality is that in any situation dealing with random results, apparent streaks of luck (both good or bad) will happen. But those streaks of luck are only apparent in retrospect. They don’t affect future results in any way.
If you have a 1 in 1000 chance of winning a jackpot on a spin of the reels, you have a 1 in 1000 chance of winning on the next spin of the reels—regardless of whether or not you won anything on the previous spin.
In probability terms, a spin of the reels on a slot machine is considered an “independent trial”. This means that previous results have no effect on future results.
Modern slot machines use a random number generator to determine their results. This is a computer program that generates thousands of random numbers per second, each of which is tied to a particular result on the reels. The split second that you hit the “spin” button (or pull the lever), the RNG (random number generator) stops.
There’s no way to realistically predict which number it will land on. The machine goes through too many numbers per second.
This has been true since the middle of the 1990s, which is a remarkable difference from the decades prior to the 1980s. In previous decades, the majority of attendees at Gamblers Anonymous meetings were sports bettors or card players.
This coincides with another, related historical event. In 1980, the American Psychiatric Association endorsed “pathological gambling” as an official psychiatric condition. It has since been renamed “disordered gambling”.
Here’s an interesting statistic about gambling addicts, too. They have the highest rate of suicide attempts (20%) of any type of addict.
But the percentage of the general population that meet the criteria for this condition is less than 2%. A less serious version of this diagnosis is that of “problem gambling”, which makes up 4% of the general population. But these gamblers make up a disproportionate amount of gambling revenue—possibly 30% to 60%, depending on which estimate you’re looking at.
The percentage of the general population that engages in general gambling, on the other hand, has been estimated to be 20%.
Multiple studies have demonstrated that the nature of slot machines and their design contribute to the rapidly addictive quality of these games. The easy availability of such games also contributes to this figure.
Some people are more likely to develop an addiction than others. But some activities are also more likely to cause an addiction, too.
You could draw a comparison between marijuana use and heroin use. One is clearly more addictive than the other. Slots are almost certainly more prone to cause addiction than blackjack or craps.
Brick and mortar slot machines might look and sound a little bit different from the games you play at online casinos, but in reality, they’re actually quite similar in how they work under the hood. The big difference is the technology you’re using to access the results.
Online casinos use the same kinds of random number generator programs as land-based casinos. They just serve up your results via animation that is sent to your computer via the Internet.
Land-based casinos are using slightly different hardware to give you your results, but the games actually work the same way in terms of how the random number generator works.
What is it about slots that make them more addictive than other kinds of gambling?
Multiple factors contribute to this:
You’ll find plenty of snake oil salesmen on the Internet who claim to have some kind of inside insight into how these games work and how you can win at them more often. But they’re all equally worthless.
Many of them like to share the idea that you can get a clue as to which machines are ready to pay out based on the symbols that are showing on them while they’re at rest. This is called the “zig-zag” system.
The reels are just for show. The actual results are determined by the random number generator inside the slot machine.
This kind of thinking MIGHT have had some relevance in the 1970s, but modern slot machines don’t have mechanical parts and aren’t subject to this kind of prediction.
Other systems have to do with using the gambler’s fallacy to predict which games are hot or cold. Gambling author (if you can call him that) John Patrick promotes several nonsensical (and complicated) systems that try to predict whether a machine is hot or cold. One of his theories is that you should stop playing a game if you’ve had 7 spins in a row with no winnings.
These systems and strategies can make for an interesting way to pass the time and play, but they don’t do anything in terms of increasing your chances of walking away a winner.
If you are going to try some kind of betting system when you’re playing slots, please don’t spend money buying someone’s system. Those kinds of gurus are preying on the weak-minded and uninformed. You shouldn’t support such business practices, online or off.
B.F. Skinner was a behavioral scientist who studied how motivated animals became when they got rewards from a box. He learned through his experiments that animals were more motivated by a box that gave our periodic rewards than they were by a box that gave out consistent rewards.
If you think about the implications of that for a minute, you’ll see the obvious application to slot machine technology. If you won on every spin, you’d be less motivated to play than if you won on occasional spins.
Slot machine designers and casinos can test various hit frequencies to see which games generate the highest TOD figures. (Remember “TOD”? It stands for “time on device”.)
This kind of testing is comparable to split testing in the world of marketing. It’s a simple task to put 10 almost identical slot machines on a casino floor, but have half of them with a 60% hit frequency and half with a 70% hit frequency. All you have to do is track which game has the higher average TOD, then adjust the parameters accordingly.
Copy writers have used a similar approach with sales letters for decades. They’ll write 2 versions of the game letter, but they’ll change a single word from one letter to another. Then they’ll send out 1000 versions of each letter and see which letter generated the better response rate. They use that as their new control letter to beat by changing another word.
You can find plenty of slot machines with original themes. Lucky Larry’s Lobstermania is a good example of such a game.
But you’re more likely to find games which are based on other intellectual properties. The most famous example of this is the Wheel of Fortune slot machine game.
You can find multiple variations of this game, and all of them are hugely popular. IGT was so interested in the popularity of this game that they actually did surveys to find out why customers like it so much.
Here’s what they found out:
Most of the people playing Wheel of Fortune slots on a regular basis said it reminded them of watching television with their grandmother.
These kinds of positive associations are used to create games which are more enjoyable for the gambling public.
Game shows are a popular source of intellectual property that is used to create slot machine games. Wheel of Fortune is just one example. You’ll also find slot machines based on Jeopardy, The $20,000 Pyramid, and Who Wants to Be a Millionaire. Many of these are available both online and off.
Television shows are also a popular source for slot themes. The Beverly Hillbillies, Gilligans Island, and Bewitched are just 3 examples of this kind of game. You can find plenty more by visiting any nearby casino. Baywatch is a more recent example.
Movies are also ripe for adaptation into a gambling game. Titanic is one of the more popular slot machine games based on a movie, but you can find games based on The Terminator and Aliens, too. There are countless examples, in fact.
Even individual celebrities often lend their names and personalities to these games. Some of the more popular ones include Elvis Presley and Dolly Parton.
In fact, anything you can think of that people are interested in can (and probably has been or will be) converted into a slot machine game. Online games inspired by other intellectual properties often include superhero based games like those from Playtech, which holds the license for online gambling games based on Marvel Comics characters like Captain America and Iron Man.
You might think that slot machines are a relatively uncomplicated subject, but the reality is that they’re a fascinating phenomenon. Enormous amounts of revenue are generated for companies worldwide by these machines and the people who play on them.
Casino management and the companies designing these games understand how they work better than almost anyone.
But you owe it to yourself to know about slot machines, too, especially if you’re a gambler who’s going to play them.
Some anti-gambling activists argue against slot machines in the same way that gun-control activists argue against guns.
Admittedly, some of their arguments are compelling. The nature of these games seems to be significantly different from the nature of other games.
I still don’t think there’s anything wrong with enjoying slot machine games responsibly, though.