How Are Slot Machines Programed
by John Grochowski
- If a paytable displayed 8 coins for a house and 5 coins for a flush, know that it is a 97.4 percent machine. Conversely, in slot machines, you will not have any clue on the payout you are getting. And in cases where the return is usually displayed, it is more likely lousy. In fact, the slot machine is the only casino game with very bad odds.
- How Slot Machines & Coin Slots Work Slot machines are the most popular games in any casino, but a lot of people don’t have a clear understanding of how they work. In fact, some people have an out-and-out misunderstanding of how they work, while others are more than willing to take advantage of the gambling public’s ignorance in such matters.
- Slot machines are programmed in such a way to give the player a remarkable experience. It involves a computer chip that is optimized to deliver a specific payback rate that has been determined by the casino. In some casinos, it may be higher, while others may have it lower. Still, certain things would be programmed into the slot machine.
Slot Machines May Have Programmed Payout Limits In another post on Quora from 2016, someone claimed to have industry experience in the Caribbean. In his post, he said that a machine won’t pay more than it has accumulated after the first month of operation. Slots and table games both arrive at expected results through normal probability. It’s that last part that gives many slot players trouble. They see that a slot game has an expected payback percentage – usually less than 90 percent on penny slots but more on higher denominations. And they hear that results are random.
At first glance, there’s a large gap – or is it a gaping chasm? Dark and stormy slot machine. – between slot machines and table games.
You can see cards being dealt and dice being rolled, but you can’t see random numbers being generated. That leads to the impression that slots can adjust on the fly, making sure players can’t win too much in ways that can’t be done with cards, dice or roulette wheels.
Nonetheless, slots and tables share common ground that makes them more similar than players realize. Both give the house an edge by paying less than true odds on winning bets. The casino share comes from losing bets, of course, but the winners don’t quite offset the losers because they’re paid at less than the true odds.
Not only that. Slots and table games both arrive at expected results through normal probability.
It’s that last part that gives many slot players trouble. They see that a slot game has an expected payback percentage – usually less than 90 percent on penny slots but more on higher denominations. And they hear that results are random.
That leads to the question, “How can slot results be both programmed and random? If there are big wins, doesn’t it take cold streaks to get back to the programmed percentage? That doesn’t sound very random to me.”
Some answers:
Slot Machines Don’t Work Like That
Game designers set the odds so that normal results will lead toward an expected average payback percentage.
That’s the same situation you face on a table game.
Take roulette. On an American double-zero wheel, the game is “programmed” with 38 possible results — 1 through 36 plus 0 and 00.The numbers come up randomly, and when you win on a single number, you’re paid at 35- 1 odds, a bit less than the true odds of 37-1. That gives the house an edge of 5.26 percent. That’s the same as saying a payback percentage of 94.74 percent.
There is nothing to keep your number from coming up two or three times in a row, and nothing that says it has to come up within several dozen spins or more. But given enough trials, the random results and the odds of the game will lead to something very close to roulette’s expected percentage.
Slots work the same way, except there are thousands of possibilities instead of 38. For regular play on the reels, randomly occurring numbers are programmed, each corresponding to a reel symbol. To make up an example, the programmer might write it so that every time the random number one shows up, the reel shows a jackpot symbol; with numbers two, three or four, it shows a seven, with numbers five through nine, a triple bar, and so on. The possibilities are programmed, but when they turn up is random, just as it’s random when a 17 turns up in roulette.
After a big win, the machine doesn’t go into makeup mode. Over a long period of time, normal results according to the odds of the game will yield a normal payback percentage, and your big win fades into statistical insignificance.
Just as when a table games designer sets the rules of a card, dice or wheel game, the slot programmer sets the possible outcomes, and the pay table gives you back a little less than the true odds of hitting the winners. You can hit several winners in a row, or none, for a number of spins.
Results are random, but over hundreds of thousands of plays they will lead to something very close to the programmed payback percentage.
Cold Streaks After Jackpots Are a Myth
Casinos are there for the long haul, and they know that normal results in line with the odds of the game will take care of the percentages.
Imagine you’re betting three coins at a time at a dollar machine with a top jackpot of 10,000 coins, and that the machine is programmed to pay 95 percent in the long run. We hit the jackpot on our first pull. How low must the payback be over the next 999,999 spins to bring the overall percentage back to 95 percent for 1 million reel spins?
Would you believe a drop to 94.7 percent would do it? And if those 999,999 spins brought 95 percent, the overall payback including that first jackpot would be only 95.3 percent.
Normal results bring the overall payback percentage into normal range. The game doesn’t have to force any cold streaks.
That’s the same situation table players face. If I’m playing craps, betting on 12 and collect 30-1 payoffs several rolls in a row as the shooter rolls an unusual number of boxcars, does the casino have to force other numbers to come up for a while to make up for my streak? Of course not.
Someone might congratulate me on a nice win, but operators know that the 35-1 odds against rolling 12 coupled with day after day after day of play and normal probability will lead my streak to fade into statistical insignificance.
On a roulette wheel, if red numbers come up half a dozen or more times in a row and the whole table is betting with the streak, does the casino panic? No, because normal probability will lead the streak to fade into statistical insignificance and the game will pay something close to its normal percentage.
There is no mechanism to force cold streaks after big wins on tables, nor is there any such mechanism on slots. Forced results on slots are illegal in all American jurisdictions. Results have to be random, just as they are on tables.
But odds of the game can be set so that winners are less frequent than losers, and winners pay at less than true odds. Slots work that way, and so do table games. That’s enough for random results to give the house its edge.
John Grochowski has been covering casinos and casino games for nearly 40 years. He is the author of six books and his work appears in newspapers, magazines and websites around the world.
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The gaming industry is big business in the US, contributing an estimated $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
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 four 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.
How Are Slot Machines Set
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.
How Are Slot Machines Controlled
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 three 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.
How Are Slot Machines Programmed
This article was originally published on The Conversation by Anthony Frederick Lucas. Read the original article here.