How slots are programmed

17 September 2019

By Frank Scoblete

Slot machines do not pay out their wins smoothly. It isn’t as if the player wins one, the slot machine wins one or the player wins two and the slot machine wins two or any type of sequence based on close to a 50-50 game. For slot players, such a 50-50 game would be boring. If they wanted that, they would play baccarat.

Instead, slots are explosive. The player can lose a long sequence of decisions (which is usual), win a little and lose a little here and there (which is also usual), and then kaboom! a big win appears (which is what the slot player has longed for). It is the promise, the dream, of a big hit that drives the slot players’ fantasies.

But how does the casino allow these big hits and still make money? In fact, how do the slots make so much money for the casinos?

The slots are programmed to keep a certain percentage of all the money put into them. Let us say that percentage is 10%, which means the machine will keep $10 for every $100 bet by the player thereby returning the rest of the player’s $90 in wins. The actual range of return can be as little as 83% (casino keeps $17 out of every $100 played) and as high as 98% (casino keeps $2 of every $100 played).

So the machine is going to pay back $90 in our example. How does it do that? Sporadically.
Most of the decisions, the overwhelming majority, will be losers for the player, a few spins will be little wins, or even fewer will be medium wins and every once in a while the machine will pay off big.

But . . . and this is an important “but” . . . the machine is only returning on average $90 of the $100 the player put into it. Those little, medium and big payouts will simply equal $90 in the long run. And that is how the casino makes its money; it gives you back less than what you originally put into the machine. You get the thrill of playing and hoping you can win; the casino get the pleasure of taking your money over time.

Obviously the amazing amount of money the players put into the machines allows for monster jackpots in the millions and tens of millions of dollars. But the idea above, while simple, is actually what occurs; only it happens in a bigger and more complex way when you deal with the masses of people playing the machines.

As I wrote, slot machines pay off in explosive ways. The slot player has been trained to handle long losing streaks in the hopes of winning a big one. And most slot players have won enough big ones over time that they are satisfied with losing streaks to get to those big wins.

What is a big win? I’d say any win that makes the casino give you a W-2G IRS form is a big win. Going from a $1,200 win, the minimum for a W-2G IRS form, the player can sail into the multiple thousands, tens of thousands, hundreds of thousands, millions, and tens of millions of dollars. And those numbers, across that monetary continuum, are the bread and butter the casino serves to its slot players. And the slot players find such a meal delicious.

All the best in and out of the casinos!

Visit Frank's website at www.frankscoblete.com.