How Do Casinos Make Money On Slot Machines
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- Indian Casino Slot Machine Secrets
- How Do Casinos Make Money On Slot Machines Real Money
- How Do Casinos Make Money
Some casinos place a plate or sticker on their slot games with a notice. Other casinos leave it to the game help screens (thus, the manufacturers) to inform players. The games’ odds may be reported as a theoretical RTP percentage, but they could also be reported as a ratio, similar to the way lottery games declare chances of winning a prize. Manage your bankroll. To built up a gaming strategy, the slot player must first of all decide on the. When casinos look at how a slot machine is performing, the most basic number they look at is the drop. That is the money deposited by the player in the machines. Another number you might hear is. Choosing the Casino Slot Machines with the Highest Payouts It is only apparent that to win big; you will need a tool that pays out more than the rest. Find out the return to player (RTP) percentage on the machine you would like to play on. The RTP is the percentage of all the wagered money that a slot pays back to its players. In order to maximize profits, the casinos will then dial down the payout rate on these machines so they still make enough money on them. Immersive video slots are a huge moneymaker for the casino, so don’t go in thinking you have the same chance of winning on these compared to traditional old school slots.
The gaming industry is big business in the US, contributing an estimated $240 billion to the economy each year while generating $38 billion in tax revenues and supporting 17 million jobs.
What people may not realize is that slot machines, video poker machines, and other electronic gaming devices make up the bulk of all that economic activity. At casinos in Iowa and South Dakota, for example, such devices have contributed up to 89 percent of annual gaming revenue.
Spinning-reel slots, in particular, are profit juggernauts for most casinos, outperforming table games like blackjack, video poker machines, and other forms of gambling.
What about slot machines makes them such reliable money makers? In part, it has something to do with casinos’ ability to hide their true price from even the savviest of gamblers.
The Price of a Slot
An important economic theory holds that when the price of something goes up, demand for it tends to fall.
But that depends on price transparency, which exists for most of the day-to-day purchases we make. That is, other than visits to the doctor’s office and possibly the auto mechanic, we know the price of most products and services before we decide to pay for them.
Slots may be even worse than the doctor’s office, in that most of us will never know the true price of our wagers. Which means the law of supply and demand breaks down.
Casino operators usually think of price in terms of what is known as the average or expected house advantage on each bet placed by players. Basically, it’s the long-term edge that is built into the game. For an individual player, his or her limited interaction with the game will result in a “price” that looks a lot different.
For example, consider a game with a 10-percent house advantage — which is fairly typical. This means that over the long run, the game will return 10 percent of all wagers it accepts to the casino that owns it. So if it accepts $1 million in wagers over 2 million spins, it would be expected to pay out $900,000, resulting in a casino gain of $100,000. Thus, from the management’s perspective, the “price” it charges is the 10 percent it expects to collect from gamblers over time.
Individual players, however, will likely define price as the cost of the spin. For example, if a player bets $1, spins the reels, and receives no payout, that’ll be the price — not 10 cents.
So who is correct? Both, in a way. While the game has certainly collected $1 from the player, management knows that eventually 90 cents of that will be dispensed to other players.
A player could never know this, however, given he will only be playing for an hour or two, during which he may hope a large payout will make up for his many losses and then some. And at this rate of play, it could take years of playing a single slot machine for the casino’s long-term advantage to become evident.
Short-Term vs. Long-Term
This difference in price perspective is rooted in the gap between the short-term view of the players and the long-term view of management. This is one of the lessons I’ve learned in my more than three decades in the gambling industry analyzing the performance of casino games and as a researcher studying them.
Let’s consider George, who just got his paycheck and heads to the casino with $80 to spend over an hour on a Tuesday night. There are basically three outcomes: He loses everything, hits a considerable jackpot and wins big, or makes or loses a little but manages to walk away before the odds turn decidedly against him.
Of course, the first outcome is far more common than the other two — it has to be for the casino to maintain its house advantage. The funds to pay big jackpots come from frequent losers (who get wiped out). Without all these losers, there can be no big winners — which is why so many people play in the first place.
Specifically, the sum of all the individual losses is used to fund the big jackpots. Therefore, to provide enticing jackpots, many players must lose all of their Tuesday night bankroll.
What is less obvious to many is that the long-term experience rarely occurs at the player level. That is, players rarely lose their $80 in a uniform manner (that is, a rate of 10 percent per spin). If this were the typical slot experience, it would be predictably disappointing. But it would make it very easy for a player to identify the price he’s paying.
Raising the Price
Ultimately, the casino is selling excitement, which is comprised of hope and variance. Even though a slot may have a modest house advantage from management’s perspective, such as four percent, it can and often does win all of George’s Tuesday night bankroll in short order.
This is primarily due to the variance in the slot machine’s pay table — which lists all the winning symbol combinations and the number of credits awarded for each one. While the pay table is visible to the player, the probability of producing each winning symbol combination remains hidden. Of course, these probabilities are a critical determinant of the house advantage — that is, the long-term price of the wager.
This rare ability to hide the price of a good or service offers an opportunity for casino management to raise the price without notifying the players — if they can get away with it.
Casino managers are under tremendous pressure to maximize their all-important slot revenue, but they do not want to kill the golden goose by raising the “price” too much. If players are able to detect these concealed price increases simply by playing the games, then they may choose to play at another casino.
This terrifies casino operators, as it is difficult and expensive to recover from perceptions of a high-priced slot product.
Getting Away With It
Consequently, many operators resist increasing the house advantages of their slot machines, believing that players can detect these price shocks.
Our new research, however, has found that increases in the casino advantage have produced significant gains in revenue with no signs of detection even by savvy players. In multiple comparisons of two otherwise identical reel games, the high-priced games produced significantly greater revenue for the casino. These findings were confirmed in a second study.
Further analysis revealed no evidence of play migration from the high-priced games, despite the fact their low-priced counterparts were located a mere three feet away.
Importantly, these results occurred in spite of the egregious economic disincentive to play the high-priced games. That is, the visible pay tables were identical on both the high- and low-priced games, within each of the two-game pairings. The only difference was the concealed probabilities of each payout.
Armed with this knowledge, management may be more willing to increase prices. And for price-sensitive gamblers, reel slot machines may become something to avoid.
This article was originally published on The Conversation by Anthony Frederick Lucas. Read the original article here.
The first time I saw people use member cards for slot games, I didn’t know what they were. I asked the man sitting next to me and he explained a few details about the rewards club. But he wasn’t using a card himself.
When I asked him why, he said he once had a card but stopped winning when he played with the card. He thought the casino was monitoring his playing and adjusting the slot game results.
This rumor has circulated both online and offline for many years. It’s normal for people to hear something repeatedly and wonder if there is truth to it. But I’ve never found any proof that casinos can change the way slot games play by flipping a switch.
What makes it difficult to combat this idea and other rumors about slot machines is the many different markets where you find them. Slot machine games are regulated by each country. Complying with different regulations may mean that a slot maker must change how its games work.
The clearest example I can give is how slot games are decided in the United States. Class II slot games decide the outcome on the basis of one random number then configure the display to match that result. Class III games use several random numbers to control the reels.
How Modern Slot Machine Games Work
There aren’t many physical slot games left. They’re all electronic now, and the electronic machines use random number generator chips to decide results.
But there is more involved than just generating a random number. The “slots” in the slot games are spaces on reels. The computers now simulate these reels.
Former and current slot machine manufacturing employees answer questions about game design on several websites including Quora. This answer was posted in September 2014, and it explains how the simulated reels are managed by software.
The programs to simulate the reels and assign the random numbers are etched into ROMs, Read-Only Memory chips. These ROMs must be physically changed by a technician to change how the game payout percentages work.
Legitimate Online Casino Operators Lease Games From Service Providers
There are over 2,000 online casinos. It’s impossible to be sure about how they all manage their slot games. But what is known about the most popular casinos is that they don’t run their slot games from their own servers.
Instead the online casinos lease game services from secure data centers. These gaming platforms are run by companies like Blue Ocean and EveryMatrix. Some of the game design companies also run their own servers, leasing resources to online casinos.
Although it would be simple for online gaming companies to switch things up, they would risk losing independent certifications if they allowed the games to be rigged.
There’s no need for casinos to adjust the percentages. They can order the percentage breakouts for house edge and return to player that they want to offer. This way, they maintain competitiveness and support long-term profitability.
Many Games Publish the Theoretical Return to Player
Some slot games include the theoretical return to player in their help screens.
If the players see that RTP has been adjusted downward, they can play elsewhere. If players only suspect that the RTP has been adjusted without proper notification, they might still leave.
Casinos need players. The best strategy to grow their customer base is to keep game rewards high enough to make the risk worthwhile.
Some Governments Regulate Return to Player Percentages
Licensed gaming casinos must comply with local laws governing their businesses. Some countries provide more regulation than others.
In the United States, commercial land-based casinos are regulated by their states. However, Native American casinos are mostly regulated by the tribal governments that own them. Each jurisdiction has the authority to set minimal RTP percentages to ensure the casinos don’t make too much money.
The 1988 Indian Gaming Regulatory Act creates the legal framework used by tribes to protect their traditional gaming activities from state regulatory laws. The act also defines the three classes of gaming and how they are to be regulated.
Class II games are regulated by the tribes but only in states that allow any kind of gaming. Only Class III games are subject solely to state regulation.
True slot machine games are Class III games. Native American casinos offer Class II bingo games that are made to look like slot games. The game cabinets must display the casino bingo games that are used to determine wins.
Class II slot machines may have reels and bonus games but they’re not really slot machine games as defined by federal law.
How Do You Determine the Odds That a Slot Game Pays?
Casinos may or may not be required to declare the return to player for their slot games. Some casinos place a plate or sticker on their slot games with a notice. Other casinos leave it to the game help screens (thus, the manufacturers) to inform players.
The games’ odds may be reported as a theoretical RTP percentage, but they could also be reported as a ratio, similar to the way lottery games declare chances of winning a prize. Either way, these games don’t have to tell you how often to expect to win a prize of any amount.
Some players merely judge the looseness of slot games by how much money they win or how often they win as they play the games.
Some players judge the looseness of slot games by how popular they appear to be. This observational strategy assumes that the crowd knows more than the individual.
One of my friends tells me he only plays slot games with low jackpots. His reasoning is that players need to lose less money for someone to win $10,000 than for someone to win $20,000.
Slot Machines May Have Programmed Payout Limits
In another post on Quora from 2016, someone claimed to have industry experience in the Caribbean.
In his post, he said that a machine won’t pay more than it has accumulated after the first month of operation. That first month establishes the limit based on the profit the machine made.
The system is designed to be random within a range of percentages. The software decides when and how much to pay but won’t go over the monthly limit.
It should be obvious that this limit could be reset.
The Games Are Designed to Be as Random as Possible
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People who design and repair slot machine games express much trust in the random number generator chips these games use. The RNGs, as they are called, use the latest available algorithms at the time they are manufactured.
Math has not yet progressed to the point where truly random numbers can be generated. Mechanical devices require input from an outside source to be truly random.
The way slot game designers handle this limitation is they design the chips to generate thousands of random numbers every second. The random numbers each take a turn at being available for use by the game.
Because of the percentage payouts and internal limits they use, slot machine games don’t have to be reprogrammed to improve casino profits. Everything is designed to run with as little intervention as possible.
And that is better for the casino because the more they can intervene in a game’s function, the more likely they’ll face regulation over that intervention.
Casino game techs often say that replacing chips in slot machines must follow a special procedure (in the United States). They are closely monitored and every part must be accounted for. So, it’s less expensive for casinos if they don’t tweak the games.
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Conclusion
How Do Casinos Make Money On Slot Machines Real Money
An honest casino doesn’t need to control who wins at a slot game. They already control who can play a slot game. They can ask anyone to leave for any reason.
Naturally, casinos don’t do that. Instead. they purchase gaming systems that are designed to create an entertaining experience for patrons while legally retaining a profitable percentage of wagers.
How Do Casinos Make Money
No matter how much one’s frustration tempts a player into wondering about Big Brother Casino tweaking the game, it’s more profitable for the casino to let nature take its course.