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High Paying Slot Machines

When discussing the odds of most casino games, writers use the term “house edge” or “house advantage”. Slot machines use a slightly different metric called the “payback percentage” or the “payout percentage”. It’s the same idea, but it’s that idea looked at from a different perspective.

In blackjack, a player who’s using a basic strategy might be playing against a house edge of 0.5%. That means, over an infinite number of bets, the casino will win an average of 50 cents out of ever hundred dollars the player wagers.

In slot machines, a player might be playing a slot machine with a payout percentage of 99.5%. That means the same thing as the house edge in the first example, and over an infinite number of bets, the mathematical expectation is the same—the casino will win an average of 50 cents out of every hundred dollars the player wagers.

The payback percentage is simply the house edge subtracted from 100%. You could use payback percentage to describe other games besides slots and video poker, but they're not usually referred to in the same terms.

Of course, good luck finding a slot machine with a payout percentage that high. They don’t exist. That’s because blackjack played skillfully is one of the best bets in the casino. Slot machines are fun and exciting, but mathematically speaking, they can drain your wallet faster than one of my ex-wives.

The Theoretical Hold

Another phrase used to describe the payback percentage is “theoretical hold”, which refers to the mathematical expected amount that the casino will keep over the long run from each bet. This number is determined by the random number generator (RNG), which is a computer program inside each slot machine that determines the outcome of each spin.

It’s important to remember that the random number generator is truly random, but the payouts for the various combinations are set up so that the casino will be assured a profit in the long run.

For example, a very simple slot machine might have 12 stops, each with an equal chance of hitting on any given spin. The odds of getting all three reels to land on a given stop are 1/12 X 1/12 X 1/12, or 1/1728. If the game is programmed to pay out any such combination at a rate of 50 to 1, then it’s easy to see why the casino would make a long term profit.

Of course, slot machines have various settings. Some stops might come up once out of every 12 spins, while others might only come up once out of every 64 spins. One set of symbols might result in a payout of 50 to 1 while another might result in a payout of 2000 to 1. Calculating the math for the various combination isn’t difficult, and slot machine manufacturers and casinos modify factors like hit frequency (how often a game pays out anything at all) in order to maximize how addictive a slot machine game is psychologically.

Another factor to consider is that two identical slot machines, sitting side by side in the same casino, might have completely different settings. One of the games might have a payout percentage of 93%, while the one next to it might be set to pay out at 83%, You’ll have no way of knowing, because you would only be able to guess if you had a tremendous amount of data on each machine. Even then, variance could affect your calculations. The information wouldn’t even be that helpful, because, as my friend the professional poker player likes to point out, if you play a game with a negative expectation, you’ll eventually go broke, no matter whether the negative expectation is 1% or 25%. The only difference is how long it will take.

Regulations

In the United States, slot machine payouts are usually regulated by the gambling authority of the state in which they’re located. For example, all slot machines in Nevada are required by law to have a minimum payout percentage of 75%. (You’ll find those machines at the airport). Most casinos offer higher payout percentages in order to remain competitive. On the other hand, Atlantic City slot machines are legally required to have  a minimum payout percentage of 83%.

Location, Location, Location

I’m not going to repeat the oft-touted myth that slot machines near the aisle offer better payout percentages than the ones inside the slot banks. That’s just hokum. But when it comes to payout percentages, location does matter, and here’s how:

Las Vegas usually has the best payout percentages of anywhere in the country. The reason is simple. Casinos there have more competition than anywhere else, so they have the loosest slots in an attempt to get more players excited about playing in their properties. Even within Vegas, the casinos in Downtown often offer slightly better odds than the casinos on the Strip.

Airports, bars, gas stations, grocery stores, and restaurants offer the worst payout percentages. These types of businesses aren’t looking for regulars like the major casino properties, so they focus on getting as much money they can out of the people that just wander in and play on impulse.

Some casinos will advertise specific payback percentages, but take that information with a grain of salt. For example, you might find a casino that advertises “certified payouts of up to 99.5%”. The key words in that sentence are “up to”. Such a casino might have a single game with a payout set at that rate, but good luck finding it.

If you’re looking for accurate information about casino payouts on their gambling machines, Casino Player magazine and Strictly Slots magazine offer trustworthy information on those percentages. These are still just approximations, but they’re better than nothing. They also segment out these payout percentages based on denominations, which is helpful if you’re a legitimate low roller or high roller.

The Short Run versus the Long Run

One final factor to remember is the difference between the short run and the long run. The former is longer than you think, and so is the latter. In any single gambling session, you might be a winner or a loser. You might play a game that’s programmed with a 96% payout percentage and still lose as if you were playing a game that’s programmed with an 85% payout percentage. Or you might win a lot of money in defiance of the odds.

It’s only when the number start becoming truly massive that the statistics start to near the theoretical percentages. This works fine for the casinos, which have hundreds or even thousands of machines being played 24 hours a day at 500 spins a hour, but for the individual player, it’s a blessing or a curse. It’s a blessing if and when you win, and a curse if you don’t.

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