Short-coin, full-coin and profit

Hello, John Robison, from Canada -- enjoying your articles.

Question: If I play a buck, say, on a Triple Diamond and win the big prize of $1,000 instead of the $4,000 that would have been paid out with the max three-coin play, does the $3,000 difference go into the profit of the casino?

I know it's the old myth of one coin or three coins that makes no difference — but the computer chip is so sophisticated now that when it reads only one coin it could activate the top jackpot more often than three coins in a random manner! For example, one of the Vegas casinos a few years ago never let the Royal Flush come and were charged.

Yes, it's the old suspicion that casinos cheat us, but that's because when millions of dollars of profit are at stake, it's easy to get that attitude.

(Also, just a note. I was reading an earlier article here of yours regarding payback of slot machines and you went into detail of counting how many of the same bars on each wheel and multiplying, etc. But with virtual reels and computer chips that doesn't work anymore — as John Grochowski says, they can program the blank space to come on the third reel a million times, etc., so you can't calculate by symbols on reels, etc. Maybe you were just giving a concrete example for discussion's sake?)

Seasons Greetings,
Jake

Dear Jake,

You're right that a company did monkey with the programs in their video poker machines. If I remember correctly, it wasn't impossible to hit any royal flush, just a royal flush in one suit. I do remember that it was not a Las Vegas casino, but a route operator. Those machines weren't in a casino; they were in bars and other non-casino locations.

Back to my hazy recollection, I think Ron Harris (the slot tester with the Nevada Gaming Control Board who turned slot cheat) investigated the case and uncovered the gaffe. In order to prosecute, the Board needed the programmer who altered the code to testify, but he was killed before he could testify and the Board had to abandon the case. Harris says that the ineffectiveness of his division in being able to bring criminal charges in this case is one of the reasons he turned to the dark side.

In any case, the company that altered the video poker machines is long out of business. And any slot that let the number of coins played influence the outcome would be illegal.

Now, you asked if the $3,000 difference between the value of the one-coin jackpot and the three-coin jackpot goes into the profit of the casinos? Yes, but only in the sense that money you don't spend is profit.

The accounting equation is Revenue - Expenses = Profit. In the three-coin case, we have $3 in revenue and $4,000 in expense, for a profit of -$3,997. In the one-coin case, we have $1 in revenue and $1,000 in expenses, for a profit of -$999. There's no recognition of the money that could have been paid had the player played additional coins. If you looked at a Profit and Loss statement from a casino, you wouldn't see a line listing the extra profit the casino won due to short-coin play.

You didn't give the context of the statement, but I think it might have been used in the context of justifying full-coin play. The key thing to look at in jumping from one coin to full coin is whether the long-term payback increases enough to offset the extra risk.

As for counting the number of times each symbol appears on the reels, you're right that with virtual reels, the number of times a symbol appears on the physical reel has no relation to the number of times it appears on the virtual reel. You can't just count the number of times the symbols appear on the reels to figure out how likely they are to land on the payline.

You can, however, estimate the probabilities by playing a machine many times (a few thousand or more) and counting the number of times each symbol lands on the payline. That's what I said, not that you could just count the symbols on the physical reel.

Best of luck in and out of the casinos,
John

I live in the Pittsburgh area and am just curious about how much a slot machine costs to buy and place in a local bar or club and how you go about doing so!

A new slot machine will cost you about 7 to 10 thousand dollars and 5 to 10 in your local penitentiary.

You'll have to check Pennsylvania's laws to know for sure, but I'm pretty certain the state doesn't allow you to run your own mini-casino in a bar.

Best of luck in and out of the casinos,
John

John:

Saw your column of letters on slot payouts (casino hold). Specifically the person claiming that the casino was holding 19% (or rather "pays 19%" as the person said). The specific casino they cited was the Hard Rock in South Florida . . . owned by the Seminole Tribe of Florida.

A good part of that floor is filled with IGT Class II (bingo server) machines. Those machines, unlike standard commercial or Indian Class III machines, do not have a flexible way of controlling the hold. In fact, they have three settings and that is it. The most hold that can be set on those machines is 14% and I don't think ANYONE is doing that.

As you know, of course, a 14% hold means an 86% payout.

As an operator I would LOVE to have machines that hold those absurdly high numbers like 80-something percent HOLD, but we all know that if machines only paid out so poorly, no one would ever play them. The delightful thing for operators is that we don't NEED those huge holds that people imagine. The IGT industry standard 8.5% is a delightful number that pleases me well.

Finally, as you know, some Class II machines (like those manufactured by VGT and AGS) have manufacturer-set holds and they are as low as 3.5% with the casino (or tribe) having no control whatsoever. Hence, of course, the perception that times-of-day or even one tribe to the next having "better" payout is pure mythology. But then again, THAT is why I love this business. As long as there are "believers," my machines will keep making money!

Gary Green

Dear Gary,

Thank you very much for sharing your inside information about the slots at the Hard Rock in Florida and the casino industry.

Gary Green is a casino marketing guru and you can learn more about him at his website, www.garygreengaming.com.

John

Hello,

Is a double up on video poker considered a W-2G reportable item? I ask this because I have had to fill them out at some locations in Vegas and others they are not required. Why the difference at some locations?

Thank you,
Tamara

Dear Tamara,

According to the Instructions for Forms W-2G and 5754 document I found on the IRS's website, you should have gotten a W-2G for every double-up win of $1,200 or more. Are you sure that you had some wins in the locations that didn't give you a W-2G for $1,200 or more?

Best of luck in and out of the casinos,
John

Hey, John:

You will be happy to learn that this question IS NOT about the RNG.

Question is: Knowing that casinos can do mostly what they want to vis a vis the slot machine locations, is it fair to say that most slots of same denomination have the same payouts without regard to their location in casinos?

Thanks,
Earl

Dear Earl,

I think that's a fair assumption to make, especially in a casino with thousands of slot machines. According to the slot directors I've heard speak at seminars, they're too busy to play loose-machine-placement games. I just ran a multi-part series in Strictly Slots about this topic.

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 send a reply to every question. Also be advised that it may take several months for your question to appear in my column.