Ask the Slot Expert: Do casinos remove machines if they pay too much?

Hi John,

I am trying to better understand volatility ratings of slot games. I understand the basic tenet that volatility is the measurement of how the player’s bankroll is affected for the period of time that it takes to reach the long-term payback percentage. But I don’t understand how to analyze the numbers. Let’s take these stats for example, taken from the PAR sheet for a current slot game

:

				Game Volatility Index @ 90% Confidence
		Var + -		Minimum		Theo Pay		Maximum
1,000		18.82%		73.96%		92.78%		111.60%
10,000		5.95%		86.83%		92.78%		98.73%
100,000		1.88%		90.90%		92.78%		94.66%
1,000,000		0.60%		92.19%		92.78%		93.38%
10,000,000		0.19%		92.59%		92.78%		92.97%
				Standard Deviation		3.62

How can we use this to determine the volatility index? And what is a Standard Deviation? Can you help to demystify this?

Thank you!

Stacey

Dear Stacey,

Let's start with your second question. Standard deviation tells us how widely dispersed data points are from their mean. A low standard deviation tells us that the data points are very close to the mean. A high standard deviation tells us that the data points are widely dispersed from the mean. You can get more information about standard deviation from its Wikipedia entry, which I paraphrased for my definition.

You have everything you need to calculate this machine's Volatility Index (VI). The number in your Var column is VI / SQRT(number of spins). The square root of 10,000 is 100 and you multiply by 100 to convert to percent, so you can read the VI right from the 10,000 spins line: 5.95.

Let's check our work by using another method to calculate the VI. VI is equal to Student's z-score at a particular confidence level times the paytable's standard deviation. The z-score at the 90 percent confidence level is 1.64. Multiplying by the standard deviation (3.62) gives us 5.94, which is the number in the Var column at 10,000 spins allowing for a little difference in rounding.

John

John,

I had been playing a $1 five-coin machine at my local casino and had been hitting it consistently for over $1,000 a visit for four visits in a row. On my next visit I noticed that the casino had been doing some remodeling and had moved machines around all over the casino, including my favorite. I knew the number and searched the entire casino for it but never could locate it. On my next visit I asked one of the supervisors if she could find the location of a machine given the number. She said sure. She called in and mysteriously walked away while talking on her unit and then came back and said the "machine was in for servicing." The last two times I've been to the casino, the machine is still MIA. Do casinos ever take a machine out because it's paying too well or do I just have a conspiracy complex?

Thanks,
Lee

Dear Lee,

It's possible that a casino will remove a machine from its slot floor because it's paying too well, but you still may have a conspiracy complex.

You have no idea how other players who played your machine fared. They may have done very poorly and the machine actually won money for the casino over the time period in question.

Some players win, some players lose. You were just lucky to be a big winner multiple times. And your play is probably a very small part of the total play the machine received in the time period.

As a rule, players can't tell if a machine has paid out too much money because they don't see the whole picture of a machine's performance. They only see their small slice.

Now, if a machine has paid out significantly more than is predicted by the amount of play the machine has received, the casino will take the machine off the floor and check to see if it is operating properly. The programs in the slot machines have all sorts of safeguards to check that they haven't been tampered with and they're operating properly, so having an improperly operating machine on the slot floor is a rare occurrence.

I don't know why your machine is still "in for servicing," but the most likely explanations are that the casino decided to permanently remove it from slot floor or there's some sort of mechanical, electrical, or electronic problem with it -- not that you won too much money from it.

Jackpots to all,
John