Ask the Slot Expert: How does the casino pay for prizes?

John, here's a question I would like answered.

More and more casinos are giving away gifts, cars, cash and drawings, etc. Where does the money come from? Is it from their net profit (i.e., the 10 percent on slots) or gross money taken in? If it's gross then a player doesn't really get the 90 percent on paybacks.

Keep up the good work.

Hope you can understand the question.

KY slot player

Dear KY:

Thanks for the kind words.

I think I understand your question. Let's distinguish between prizes that are awarded when a combination lands on a payline and prizes that are awarded from drawings or players' club points.

If a prize appears on the pay table of a slot machine, then its value is part of the long-term payback for the machine. Instead of a $40,000 car, the prize could be $40,000 in cash and the machine would have the same long-term payback. You can consider these prizes to be paid from the casino's bankroll.

Prizes that are awarded from drawings or player's card promotions are usually charged against a marketing budget.

Prizes that are awarded to a random player currently playing a machine can go either way. When Mandalay Bay first opened, the machines were a little tighter than the strip norm, but the casino made up for the tightness with random bonuses. Making up the numbers, the machines may have paid back 90 percent on their own, but an additional 2 percent was given in random bonuses, so the overall payback percentage was 92 percent. Alternatively, the prizes can be charged against a marketing budget.

However the prizes are awarded, they have no effect on slot payback percentages. A 90 percent long-term payback machine is a 90 percent long-term payback machine regardless of whatever prizes the casino is giving away.

Best of luck in and out of the casinos,
John

Send your slot and video poker questions to John Robison, Slot Expert, at slotexpert@comcast.net. Because of the volume of mail I receive, I regret that I can't reply to every question.