How Do Casino Slot Machines Work

21-05-2021 admin

Years ago, all slots in casinos were mechanical powered by gears and levers, while a braking system stopped the reel and sensors informed the machine what to pay out according to the symbols. The mechanical slot machines have now been replaced with video slots powered by microchips, controlling the process via a motherboard.

How Do Casino Slot Machines Work Video
How Do Casino Slot Machines Work
How Does Casino Slot Machines Work
How Do Casino Slot Machines Works

The gaming industry is big business in the U.S., contributing an estimated US$240 billion to the economy each year, while generating $38 billion in tax revenues and supporting 17 million jobs.

Years ago, all slots in casinos were mechanical powered by gears and levers, while a braking system stopped the reel and sensors informed the machine what to pay out according to the symbols.
How Do Slot Machines Work In A Casino? Anas Bouargane 3 While you may have taken just a handful or a whole heap of slots for a spin in the past, unless you look into the matter a little further, you might not have the first clue about how they actually work.

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 4 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 3 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.

If you’re going to play slot machines, you should understand how slot machines work.

That sounds obvious, but you’d be amazed at how many people have no idea how these games really work.

In this post I explain how slot machines work in simple terms that anyone can understand.

What Is a Slot Machine?

Real money slot machines are the basic gambling machine at most casinos, and slot machines generate 70% to 80% of most casinos’ revenue. In some casinos, they make up even more than that. They’re called slot machines because you used to put coins in a slot to play them.

Slot machines differ from other gambling machines because of the way the outcomes are generated. A video poker game is also a gambling machine, but it’s not a SLOT machine. Neither is a video blackjack game.

What makes a slot machine game a slot machine game are the spinning reels.

In early mechanical versions of the games, you literally had big metal reels powered by springs and levers. They spun and landed on various stopping points when the kinetic energy that caused them to spin was all faded.

Modern slot machines use a computer program to determine the outcomes. The spinning reels are just for show, even on machines that LOOK like they’re using physical reels.

But many – if not most – modern slot machines just use a computer monitor with animated reels to determine outcomes.

How Does a Slot Machine Come Up With a Random Result?

Modern slot machines used a computer program to determine the outcomes. This program is called a “random number generator” or “RNG.”

Here’s how the random number generator works:

It constantly “thinks” of a range of numbers. Each number corresponds to a combination of symbols on the slot machine reels and the payline. When you press the spin button, the random number generator stops on that combination.

The manufactures are also able to use this technology to “weight” certain combinations more than others. When mechanical slot machines were all the rage, the odds were easy to calculate. If you had 10 stops or symbols on a reel, the probability of one of those stops landing was easy to calculate. It was 1/10.

But with a computer program, you could easily have a symbol that comes up once every 20 spins, another that comes up once every 5 spins, and another that comes up once very 10 spins.

These changes in probability can even happen from one identical machine sitting next to the other.

I’ll have more to say about that in this next point:

How Slot Machines Make Money for the Casino

All casino games give the house a mathematical edge. This is usually based on something simple – in blackjack, for example, the player has to play her hand first. In roulette, you have two green numbers, but the payout odds would be break-even if all the numbers were black or red.

With a slot machine, the house makes its money simply by paying out at lower odds than the odds of winning.

Each prize amount on a slot machine has a probability of happening. When you multiply that probability by the prize amount, you come up with the “return” for that combination.

Add all those returns together, and you get the total return for the machine.

That return is always less than 100%.

Here’s an example:

You might have a 55% probability of getting no win at all. This would apply to all non-winning combinations, so the return for any of the non-winning combinations would be 55% X 0, or 0.

You might have a 20% probability of getting a single cherry symbol that doesn’t match anything else on the machine, and that might pay off at even money (1 for 1). The return for a cherry-blank-blank combination would be 20% X 1, or 20%.

You then might have another 20% probability of getting a 2 for 1 payoff for any combination that includes a bar symbol and no other matches. The return for a bar-blank-blank combination would be 20% X 2, or 40%.

If you had no other combinations, the overall return on this game would be 40% + 20% + 0%, or 60%.

This means that on average, over a staggeringly large number of spins, you’d wind up getting back 60% of the money you bet.

At $3 per spin over 1000 spins, you’d have bet a total of $3000.

The odds say that you would have gotten $1800 in winnings, for a loss of $1200.

Of course, a real slot machine pay table would have more than three possible prizes, and at least one of those prizes would be large. The average slot machine has a 1000 for 1 jackpot for its top prize.

How Do Bonus Games and Other Slot Machine Features Work?

Modern slot machines have a staggering array of special features, too. One of the most prominent of these features are the slot machine bonus games.

Here’s how that works:

Some combinations of symbols result in a mini-game that you get to play. It’s called a bonus game. It might be as simple as getting 10 free spins, each of which is guaranteed a winner. It might be more involved, like getting to play a Space Invaders type game where each alien you shoot has a prize amount associated with it.

Scatter symbols are also popular. A scatter symbol is a symbol that triggers some kind of payout regardless of where it appears on the screen.

For symbols to win on a slot machine, they need to match along one of the paylines. The traditional payline is the one that runs horizontally across the center, but most modern games have multiple paylines now.

The 8-liners in Texas are a good example. A screen has three rows of symbols, for a 3X3 grid. It’s called an 8-liner because there are eight paylines.

You have three horizontal paylines, three vertical paylines, and two diagonal paylines.

You must activate each payline with a bet, and it’s possible to win multiple prizes on multiple paylines.

Think of paylines as being similar to the various patterns that bingo variants have.

Scatter symbols trigger wins regardless of where it is on the screen.

Wild symbols are also popular. These are symbols which can fill in for another symbol that you would need to trigger a win on that payline.

If you play poker, you’re probably already familiar with the concept of wild cards. Just apply that concept to slot machines, and you understand how it works.

These are just a handful of the special features that are now available on modern slot machine games.

How Do You Win at Slots?

I wish I had a foolproof winning strategy for slot machines that I could share with you.

But I don’t.

No one else does, either, regardless of what they claim.

Slot machines are entirely random. You put your money in, and you take your chances. The only way to win on a slot machine is to get lucky.

You’ll find plenty of looney strategies that are supposed to improve your probability of winning. They’re all equally worthless.

One example is to find slot machine games on the edges of the banks near the walkways. The idea is that the casino managers want to attract players to the slot machines, and they do this by putting the looser games near the walkways.

Of course, this isn’t true in modern casinos. Even if it were true, it wouldn’t mean you were going to beat the casino. Such games would still have a mathematical edge for the house that you couldn’t overcome in the long run.

Another popular strategy I see touted is to look for hot or cold machines. A hot machine is one that has paid out several times in a row. The idea is that the game has gotten hot and is going to keep paying out.

A cold machine, on the other hand, is one that hasn’t paid out in a while.

Some superstitious slots players think that a cold machine is “due” to pay out soon. Both of these are examples of the gambler’s fallacy in action. Each spin of the reels on a slot machine game is an independent event. The probabilities on each spin are the same.

If you have a 1 in 1500 probability of winning the top prize on a slot machine, that probability is the same regardless of whether the jackpot got hit on the previous spin.

It seems intuitive to think that if you just hit the jackpot, the probability of hitting it again on the next spin would be lower.

But that’s not the case.