Playing for Pennies

The gaming industry has watched revenues decline for over a year. Poker, table games and slot machines are all generating less money than they did in the past but there is one small segment where there has been an increase in revenue. While overall slot revenue is down, the penny slot machines are bringing in a bigger percentage of the profit from the slot machines.

Traditionally the lower denomination slot machines are tighter and payback less to the players. If you look at the at the Slot Payout Percentage chart in the back of Strictly Slots, you will see that in most jurisdictions listed the difference in the payouts between the penny and quarter machines is about four percent.

Theoretical Loss vs Fun Factor

The average payouts around the country seem to be about 88 percent for penny and nickel machines and 92 percent for the quarter slots. A majority of the penny video slot machines have nine to twenty play lines. Some have more of course but for this example let's use a 20-line machine that you play at the rate of 500 spins per hour. If you were to wager a penny on each line per spin you would be betting $100 per hour (.20x500). With a payout percentage of 88 percent on the penny machine, your theoretical loss would be $12 per hour.

If you were to play a regular three-reel quarter machine for a single coin you would be risking $125 per hour. With a payout percentage of 92 percent your theoretical loss would be $10 per hour.

This slight difference in return has not stopped the players from switching from the quarter slots to the penny machines because most of the players are looking at the entertainment value they get from the new video slot machines. Players are willing to give up a little in return to play an entertaining game. Playing a single coin in a reel machine is about as exciting as watching paint dry.

Many of the new slot machines resemble video games that offer interactive active screens, high resolution graphics and bonus rounds that allow players to win additional money while they interact with the game. Players are finding that they are more fun to play because they have a much higher hit frequency than the standard reel machines. Even though you might win back less than the amount of your initial spin, you are getting something back that enables you to play longer.

Players who want to risk less can always choose a game with fewer pay lines, such as the five or nine line games, but not all players switching to the penny machines are looking for bargains. Over the last few years, the slot makers have been adding more lines and increasing the number of coins that can be played on each line. The new games can take so many coins per spin that it has become cost prohibitive for many players to play maximum coins at the quarter or even nickel level, so they choose to play the penny machines.

A Wolf in Sheep's Clothing

The cost of playing the maximum coins per spin on some of the new penny slot games can far exceed playing maximum coins in an old three-coin dollar machine. This is especially true of some of the new progressive penny games that offer million-dollar, life-changing jackpots. You are only eligible for the jackpot if you are playing the maximum amount of coins. I call these penny machines "wolves in sheep's clothing" because even though the denomination is a penny, you have to risk several dollars per spin.

A perfect example of this is the penny Megabucks game that advertises that you can win millions for playing pennies. If you look at the machin,e you find that you must bet the maximum 300 coins ($3.00) per spin to be eligible for the jackpot. If you play the dollar Megabucks machine, you must bet the maximum three dollars per spin to collect the jackpot. Your cost is the same regardless of the denomination of the machines.

Most players however are not switching to the penny machines and playing maximum coins in search of a progressive jackpot. They are looking to stretch their dollars on a game that will allow them to play longer and get the most entertainment from a small initial investment. With the casinos seeing an increase in profits from these machines, you will see even more of them on the casino floor in the future.

Until next time
"Luck comes and goes...Knowledge Stays Forever!"