Ask The Slot Expert

Dear John,

I am amazed at how you respond to readers' questions even if they've asked you questions before. I guess I'm a repeat offender. :-)

Here's a super easy question for you. When they say that a 9/6 Jacks or Better game yields 99.5%, assuming the person playing hit the jackpot after the average 40,000 hands, wouldn't that person actually post a profit? I mean the 99.5% he or she gets back is on money wagered, not money lost from bankroll, if you know what I mean. In other words, a fair amount of the money being put through the machine is being financed through wins, such as through full houses, flushes and four of a kinds. So in a sense, some of the money being wagered is really "the house's money" (as much as I hate to use that expression). Or I am I totally wrong about this and what is meant when they say 99.5%.

What threw me into confusion about this is something I read on an Australian video poker site. Here is an excerpt explaining some of the math involved and what to expect from a 102% machine (remember, though, he's dealing with Australian money):

"On the positive side, though, the 102% figure often quoted (e.g., about $5200 jackpot on a 20c machine) is return per dollar bet, not per dollar lost prior to the jackpot (i.e., invested). If the break even point is $3,900 and the jackpot is at $5200, then if you hit the jackpot after the average amount of time (and money) you will net $1300 for your $3,900 investment, for a 33% return on investment (but 2% return on total money through the machine)."

So wouldn't that mean that a 99.5% machine, or even a 97% machine be "profitable", or at least "break-even-ish" considering the above?

Hope you find this a good question. I have a feeling many readers may be confused about this. I certainly am!

Sincerely,
Vladimir

Dear Vladimir:

The answer to your first question is maybe and the answer to your second question is no. You might be ahead on a negative expectation machine in the short run, but not in the long run. A negative expectation game cannot be profitable in the long run.

The only way you can be ahead is if you cash out more money than you put in. What you do in between putting money in and cashing money out generates action. Long-term payback is based on action, and the math doesn't care whether you replay winnings or take more money out of your wallet to generate the action. In fact, there's no such thing as "playing with the house's money." Once you win, the money is yours.

The more hands you play, the closer your payback will be to that of the strategy you're playing. Depending on the paytable and your strategy, there might be a good chance that your payback will be over 100% after only 40,000 hands because the cards are dealt at random. If your payback is over 100%, you cashed out more money than you put in overall. If it isn't, you cashed out less than you put in.

Your bankroll is less than your action, so your winnings or losings will be a greater percentage of your bankroll than of your action. But you can't show a profit in your bankroll without also showing a profit on your action. You can't lose money on your action and show a profit in your bankroll.

For example, suppose you put $100 in a dollar video poker machine. You play 100 hands at full coin before running out of credits. The return on your investment is -100%, but the payback you experienced was ($5000 - $100)/$5000 = 98%. If you cash out $100, the return on your investment is 0% and your payback is 100%. And if you cash out $200, the return on your investment is 100% and your payback is 102%.

Best of luck in and out of the casinos!
John

Send your slot and video poker questions to John Robison, Slot Expert, at slotexpert@home.com.

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