Do slot machine paybacks really matter to players?

The Cash Spin slot machine from Bally Technologies at their headquarters in Las Vegas Monday, May 9, 2011

KSNV: Liz Benston Discusses Slot Machines

KSNV: Liz Benston Discusses Slot Machines

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Las Vegas Sun reporter Liz Benston discusses slot machines on KSNV, 12 p.m., May 11

Bally Slot Machine

The Hot Spin slot machine from Bally Technologies at their headquarters in Las Vegas Monday, May 9, 2011 Launch slideshow »

If local slot players could create a public-service message for the casino industry, it might be: “I want my money to last longer.”

That’s the view of Sandy Sherlock, a Sun City Summerlin resident who has played slots at least once a week since moving to Las Vegas 14 years ago. For Sherlock and many gamblers like her, winning the elusive jackpot is beside the point. Instead, they seek enough small wins to keep the action going — and losses that don’t bust them out too early.

“I never seem to win anyway, so I’d rather sit there for 15 or 20 minutes and get a little entertainment out of it. My $10 might only last a few minutes. Then I’ll get mad and leave.”

In a fantasy world, slot machines would play longer while paying big, frequent jackpots. In reality, slots are built with a house edge and a trade-off: the chance to win smaller amounts more frequently or the opportunity to win the rare jackpot. Most local gamblers would prefer the former, which stretches playing time for casino regulars on a budget, according to Tony Lucas, an associate professor at UNLV’s Harrah College of Hotel Administration.

Casinos and manufacturers aren’t necessarily delivering because they incorrectly label machines as “loose” or “tight” based on what the machines give back to players over time, said Lucas, a statistician and marketing consultant who has spent most of his career studying how slot machines work.

Slot machine volatility — a separate, programmable feature — primarily determines whether players will win or lose money and therefore, how much playing time they will have.

That is the conclusion of a study co-authored by Lucas and UNLV professor A. K. Singh in this month’s UNLV Gaming Research & Review Journal that uses results from dozens of simulated slot machines to challenge the widely held theory that payback percentages matter.

Slots are usually defined by the industry and the public in terms of payback percentages. A machine with a 95 percent payback theoretically returns to the player 95 cents out of every dollar wagered. By law, slot machines in Nevada must pay back at least 75 percent.

The study says a low volatility machine extends playing time by yielding smaller wins and losses while a high volatility machine will yield bigger losses and the opportunity to win a higher jackpot. Because big jackpots are rare, high volatility games won’t play for long relative to lower volatility games, Lucas said. One simulation involving thousands of spins of a 97 percent game and an 88 percent game found those percentages had little correlation with play time. Lucas reached similar conclusions after an accelerated simulation that ran for the equivalent of 10,000 days in a row, or about 27 years’ worth of play.

The results, bolstered by previous studies he and others have published, have big implications for how the industry makes and markets slot machines, Lucas said.

Because local players generally seek more playing time, they may end up disappointed if they play highly volatile machines — especially those advertised as loose, he said. Knowing which machines were more volatile might soften the blow, while seeking out less volatile games that don’t pay out as much might satisfy conservative players, he added.

“Casinos need to better match their product to their message. This could be a win-win for casinos and players.”

Although players might say they want more gambling time, they also want to win, said Michael Shackleford, a mathematician and slot machine consultant known locally as the “Wizard of Odds.”

Casinos would probably be uncomfortable with steering players toward conservative games that are unlikely to pay out anything of substance, Shackleford said.

“That’s kind of like rubbing it in the player’s face,” he said. “Imagine a game in which, every time you press a button, it takes away 1 percent of your bet. You could play for a long time, but nobody would play it.”

As a rule, gamblers who want more playing time should stick to simpler games that appear less expensive to build, he said.

Disclosing how slots will perform seems contradictory for a business that thrives on mystery and excitement.

Most casinos don’t disclose the payback percentages or, conversely, their “house edge” on slots. By contrast, some Nevada casinos use such figures as a marketing tool to say their slots pay back more wagers, on average.

Casino bosses aren’t deceiving players so much as they are ill-informed, said Lucas, who consults for casinos and slot manufacturers. The captivating bells and whistles of modern slots don’t necessarily translate into greater playing time, he added.

“Unless you test the math, you’re not going to know.”

Payback percentages also are easier to explain than other components of a slot machine, Lucas said.

Mike Mitchell, vice president of game development at Bally Technologies, can relate.

“When I mention ‘volatility’ to people, I can see the blank look on their faces,” he said.

Still, frequent gamblers can begin to get a sense of whether a machine pays out more or less often, he said.

Slot payback percentages play an important role alongside volatility, which determines how much players can win, and “hit frequency,” which determines how often a machine will hit, Mitchell said.

Although conservative games appeal to some gamblers, many prefer the chance at a big jackpot, he said. Over time, players in older gambling regions gravitate toward riskier, high-jackpot games, he added.

Bally makes all kinds of slots because “there’s no one answer” as to what players want, he said.

Manufacturers in recent years have built interactive features into their machines to give players more control over their gambling experience.

One example is a new Bally game called “Hot Spin” that lets players select how often they want to receive a bonus round. Players can select whether they prefer to spin a bonus wheel more frequently for smaller amounts of money or less often for higher jackpots.

Players can change their selection as frequently as every hand “based on their bankroll and how they are feeling at the time,” Mitchell said.

Lucas said many slot players get turned off if they don’t win often enough. Those kinds of complaints are rising, he said, as new machines have become more volatile.

“A slot machine is really a unique animal and is something so important to Nevada that it’s worth understanding,” he said.

Sherlock is baffled by slot machines that seem to gobble her money while others sitting next to her win big.

Which is why she has switched to video poker.

“At least you can use your brain to try and pick the cards,” she said. “After 20 to 25 minutes playing, I’m happy because I feel I’ve earned some points. I don’t want to lose my money in five or 10 minutes. Then I feel cheated.”



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Discussion 9 comments

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  1. By law, slot machines in Nevada must pay back at least 75 percent.

    That statement proves that slot machines are not random, If they have to be SET to payback at least 75%.

  2. Paragraph 9 seems to have somewhat inconsistent statements. It states that the study shows that low volatility games allow the player to stay longer, but later it states that there was no apparent correlation in play time between a 97% game and an 88% game. The latter statement seems logically false, although I interpret it to suggest that the set percentage is totally separate from the volatility issue (an 88% machine can be either a high or low volatility slot).
    Having said that, the gist of the article is that some players (like myself) like to play longer so over time are drawn to low volatility machines (those with no huge jackpot available), while other players prefer slots which have a theoretical chance of a large payout.
    Winning, although rather rare, is exhilarating. Losing slowly is also a lot of fun. Losing quickly is the pits.

  3. for casinokid: If, by law, slot machines in Nevada must pay back at least 75 percent, I have not been to a casino in Las Vegas that isn't breaking that law.

  4. We are spending $2 billion a week on senseless wars so every government level is trying to raise taxes. Like the mob, of years past they prey on the citizens for more revenue. Casino executives facing competion from almost every state in the union should make the Las Vegas slot machines more attractive to small players. "You have a better chance of winning in LV" Make this a destination for players not a succors paradise.
    First, they should fight for NO 1099's on wins less than $10,000. Second, they should convien a Las Vegas only meeting of slot executives to make city wide machines more competitive with Indian and small town casinos.

  5. would like to have seen Lucas comment on the difficluty of play buttons inside the machine which are set by casinos - this would affect the payback where some machines could be 75% and others much higher - it would be refreshing if a casino would offer a section of slots that are a return to truly random payouts without electronic brains - slot mfgrs would make less $ but the casinos and customers would benefit - the larger strip casinos had a win % of 7.77 % in March - thats just not worth the effort and cost for a casino so they can have pinpoint control and tracking of slot action




  7. High-volatility, combined with TITO technology, makes people spend less time in a casino. You not only lose more, you lose faster. I remember having $25 worth of quarters (in the pre-TITO era) and it would last an hour or more, and sometimes I'd quit with close to what I'd started with, maybe a little more. The slots were full of people, and everybody was laughing and talking and having fun. AND during that time I would spend more time in the casino, buy more drinks, eat at the restaurant, wander around and try different games, etc. Or go dive into the $5 buffet, then play some more afterwards. You could easily spend an entire afternoon in a casino, just enjoying yourself and having a good time. And the casinos made warehouses full of money. Billions and billions and billions of dollars.

    Now that's all gone. Put $25 in any machine, and it vanishes in 5 minutes. How incredibly boring. Bugsy Seigel must be rolling over in his grave.

  8. If you really think about it there is a big difference in payout and payback. If you play a dollar and win a nickel, technically that is part of the 75% payout but not 75% of what you actually spent. The payout encourages you to keep trying, but the payback insures you will keep playing on that or a different machine in the same casino. The player wins, stays longer, and the casino wins. I think this concept was lost since the mob days when any player, big or small, was important and were treated that way. It is hard to believe that your chances are better in casinos off the strip where there is less focus put on the bling and more on the entertainment of the games.

  9. the 75% payback is the theoretical payback based on the various probabilities and frequencies of the various combinations possible , not the actual payback which could be anything depending on luck of the players and casino.

    For example a slot could be set to return 75%, but if on the first spin a player bets $1 and gets back $2 and nobody else plays the machine for the rest of the month that machine had an actual return of 200% even though it's set to return 75%.

    By the way, a 25% edge for a slot machine is obscene and would wipe out almost every player in very short order regardless of the variance of the game. Think about how fast the drain is on Video Poker and most of those games return at least 97%. The most popular Video Poker game is 9/6 Double Double Bonus and it returns 98.9% yet your bankroll drains away amazingly fast with only a 1.1% house edge.