Ask the Slot Expert: Do casinos change slot machine paybacks when revenue is down?

I live in Connecticut where there is no state supervision of the two largest casinos in the country, Foxwoods and the Mohegan Sun. The agreement between the state and both tribes was that part of the revenue generated by slots would be given to the state and that each casino would have complete jurisdiction over their casinos. The controls that exists in other states are not present here. The casinos change the long term payout chips several times a year. They have lost revenue for the last year for a lot of reasons but when their revenue goes down, they change the chips. You can tell when it has been done because they usually do it late at night and block off blocks of machines and have boxes of computer boards stacked in the area. Techs work on the machines replacing the boards.

Once thing I haven't seen you talk about is the pay tables. It is my understanding that each machine has a database (the pay table) that contains an entry for every number the RNG can produce. The entry tells the machine what to display and other information including what to pay. The pay table can be controlled by the main system so it is subject to change, at least in Connecticut.

I used to go frequently to both casinos but no longer since I believe that having the fox watching the hen house is not good for consumers.

I don't think it's correct to say there's no state supervision of Foxwoods and Mohegan Sun. Each tribe has a compact with the State of Connecticut so it can offer Class III slot machines. The website for the Gaming Division of the Department of Consumer Protection says that it "works to ensure the highest degree of integrity in the conduct of all forms of legalized gambling within the State of Connecticut and the federally recognized Tribal Nations within the State... by monitoring and educating to ensure compliance with the gaming laws and the Tribal-State agreements."

The data available on the website does not support your assertion that the casinos lower paybacks when revenue goes down. Looking at the PDF entitled Foxwoods Casino Schedule of Selected Video Facsimile/Slot Machine Data, it is true that there has been a decline from over 92 percent payback to about 91.6 percent from 1995 to 2013. It's also true that the payout reported for April 2014 (92.17 percent) is higher than that reported for Fiscal Year 1992/1993 (91.45 percent), FY 1993/1994 (91.66 percent), and FY 1994/1995 (91.79 percent).

Now, we have to be careful looking at this data. The number for the first fiscal year is an estimate because the tribe did not report numbers for its first two months. There was also a change in August 1997 from basing the numbers on cash removed from the machines to basing the numbers on data recorded in the slot accounting system. Nevertheless, if you look at the overall trend, the payback rises up to and stays at about 92 percent a few years after Foxwoods opened and then starts to decline around 1998 to about 91.6 percent.

I can explain the decline starting in 1998. The late 1990s was when video slot machines started taking over the slot floor. Many of these machines allowed players to bet as little as a nickel -- or even a penny -- per spin. As a result, many slot directors ordered very low paybacks for their video slots, despite the fact that players could bet a dollar or more per spin. The overall payback on the slot floor decreased because higher-paying machines were replaced with lower-paying machines, not because paybacks were changed on machines.

The numbers for the Mohegan Sun actually show an increase in payout over the last three years.

There are many other things that the slot techs could have been doing when you saw them swapping circuit boards. It's possible they were upgrading the machines to the latest version of the software, either because vulnerabilities were discovered with the old version, or the casino wanted features available with the new software. It's possible that the boards are used by the slot club or slot accounting system or bill acceptors, and not the slot machine itself.

Casinos don't change paybacks on machines as often as people think -- if even at all. Changing payback is labor-intensive, takes machines out of service, runs the risk of damaging chips or boards, and has to be reported to the state. In addition, the new payback program has to be purchased or leased from the slot manufacturer. Most of the time, casinos replace machines rather than change paybacks on them.

The paytable on a slot machine lists the winning combinations and tells how much each is worth. The paytable has nothing to do with how likely it is to hit each winning combination. The virtual reel layouts tell how many times each symbol appears on each reel and, thus, determines how likely it is to hit each winning combination.

The slot machine does not have a table that maps each number that could possibly be generated by the RNG to a combination of symbols. The RNG used by IGT is said to generate a number between 0 and about 4,000,000,000. It takes two bytes to encode the stop for each reel on a three-reel machine. Eight gigabytes is a lot of memory to devote to this function. And IGT has used an RNG with this range long before thatmuch memory became cheap.

Rather than a table that has an entry for each number from the RNG, slot machines have the virtual reel tables. Each virtual reel table has between 32 to 256 (or maybe more) entries. The machine gets a number from the RNG for each reel in the machine. It scales each number down to the number of stops on each reel using modulo arithmetic. It uses the scaled number as an index into the virtual reel table. The entry in that table tells the machine which symbol will land on the payline. It takes a fraction of the memory (e.g., 96 bytes for three virtual reel tables with 32 stops each) that the whole RNG table requires to store three virtual reel tables.

Finally, Connecticut has approved downloadable games, so some slot machines can have their long-term paybacks changed from a central server. Changes can't be made to a machine while it is in use. Most states follow Nevada's regulations, which require that a machine be idle for four minutes before a change can be made and then display a message indicating that it is being reconfigured while the change is being made.

Even though downloadable games makes it easier for casinos to change long-term paybacks, they still have to report the change to the state and they still have to license the new payback programs from the manufacturer. Even with downloadable games, casinos don't change paybacks on a whim.