How Slot Machines REALLY Work

I was inspired to write a post about how slot machines really work after talking with a friend of mine who had some weird ideas and misconceptions. I think he’s not alone in this. In fact, I’d suggest that the casinos and the slot machine designers prefer that their customers not understand how slot machines work very well.

The first thing to understand about slot machines is that they can’t be beaten—not legally, and not by normal methods—at least not in the long run.

In fact, slots games have a higher house edge than almost any other game in the casino. Not that you’d know, because the games don’t make their payback percentages easy to calculate or obvious in any way.

There are probably more myths and misconceptions behind the working of slot machines than there are about any other game in the casino.

And that’s saying a lot.

Here’s how slot machines really work:

Slot machines were originally mechanical and powered by springs. The spinning reels were actually large hoops of metal with symbols printed on them. Most of these early machines were limited (by the size of the metal hoops—the reels) to 20 or so stops—stopping points on each reel. Some of these had symbols on them, while others were blank.

The earliest slot machines had a single payline. That’s an imaginary horizontal line through the middle of the window. If matching symbols lined up on all 3 lines there, you got a payoff.

Generally, the probability on those machines was pretty easy to figure out. The probability of a single event is calculated by divided the number of ways something can happen by the number of possible outcomes.

If you have a slot machine reel with 20 stops on it, and each of the stops has the same probability, then you have a 1/20 probability of getting that symbol on a random spin of that reel.

If you want to calculate the probability of multiple events happening at the same time, you multiply those probabilities. Let’s say that the big jackpot on a theoretical mechanical slot machine is the cherry symbol, which has a 1/20 probability of showing up.

Since there are 3 reels, you’d multiply the probability for getting a cherry on each of those 3 reels:

• 1/20 X 1/20 X 1/20 = 1/8000

Now assume that there are 10 symbols on the machine, and 10 blank stops. You have 10 possible winning combinations of 3 symbols. The probability for each of them is 1/8000, so the probability that one of them will come up is 10/8000, or 1/800. (Most slot machines also have prizes for matching 2 symbols on a payline, but I’m just demonstrating how the math works here.)

The designer then have a pay table for each combination of symbols. The payoffs are applied at less than the probability of winning.

The pay table lists the symbol combinations that pay off. Some of the combinations pay off with large amounts, but most of them are pretty low. In fact, slot machines like to have a high hit ratio to make you feel like you’re winning, even though you’re really gradually losing your money at a steady pace.

If the payouts for all the combinations add up to 7200 coins, the game would have an obvious mathematical edge. 7200/8000 = 90%, which means that the house pays out—on average, over the long run—90% of the money gambled. They keep 10%.

• That 10% is the house edge.
• That 90% is the payback percentage.

Most table games have a house edge of between 1% and 10%, assuming you don’t make sucker bets. The action at most table games is much slower than the action on a slot machine, too.

What does this mean to you as a player?

A smart casino gambler thinks about games in terms of their entertainment value. Think of slot machines as being like a movie. Think of blackjack, craps, and roulette as being different movies.

Which games are more entertaining?

And which games are more entertaining based on their dollar amounts?

How much money will you lose per hour (on average) on these kinds of games?

It’s actually easy to calculate. You multiply the number of spins you’re making per hour by the amount you’re wagering on each spin. Multiply that by the house edge, and you have your mathematically expected loss per hour.

Most slots players make 600 spins per hour. (It’s a fast game.) Let’s assume you’re playing for $3/spin. That means you’re putting $1800 per hour into action.

If you’re playing the above example game, you’re losing $180/hour on average over time.

That might or might not sound like a lot to you, but let’s compare it to roulette.

At an average roulette table, you might make 50 wagers per hour. That’s considerably less than 600 wagers per hour, by the way.

But at most roulette tables, you must wager a minimum of $5. (At a lot of tables, the minimum is higher than that, but we’ll assume you’ve found a good low roller casino at which to play.)

50 wagers per hour multiplied by $5 per wager is just $250/hour in action.

The house edge at roulette is 5.26% on most tables, at least in the United States. This makes your hourly expected loss at roulette 5.26% of $250, or $13.15.

You can plug in whatever numbers you like into those equations, but it should be clear that the high house edge and high speed of play on a slot machine makes it an expensive long-term proposition.

Modern slot machines have eliminated the spinning reels for video screens. Some modern slot machines look like they have physical reels, but that’s just for show. They might as well be video screens, too.

The outcomes on modern slot machines are determined by computer programs called random number generators (RNG, for short). A random number generator is a small computer with a single purpose. It cycles through thousands of numbers every second.

When you pull the lever or hit the spin button on a modern slot machine, the RNG stops on whatever number it was “thinking of” that millisecond.

This enables slot machine designers to do all kinds of new things with these games.

For one thing, you can have more reels with more stops on them than you were able to have with mechanical slot machines. The physical size of the reels was a limitation. You can now easily have a slot machine with 5 reels and 50 or 60 stops on each of them.

These modern machines are also programmable with different probabilities for each symbol. Some symbols might only come up 1/100 of the time, while others might be programmed to come up 1/20 of the time.

The PARS sheet of a slot machine is what determines these probabilities. Each of these have been examined in detail and set to a specific payback percentage.

Some people think that a slot machine starts paying out less after a big jackpot has been hit. The idea is that the machine needs to even out its payoffs so that it maintains its payback percentage. This isn’t necessary, and it isn’t how the slot machine works.

The random number generator runs independent trials on every spin. The computer has no way of knowing whether you hit a win on your previous spin.

The math behind the payouts is what determines the payback percentage. The casino relies on The Law of Large Numbers to actualize their mathematical edge.

The Law of Large Numbers suggests that as the number of trials increases, the more likely it is that your actual results will resemble your mathematically predicted results.

Think about it from the casino’s perspective, too:

The casino is operating in the long run on a daily basis with these slot machines.

But a casino player is operating in the short term every time he plays.

When dealing with any kind of random game, anything can happen in the short term. This is called “variance.”

This short-term variance is what the casinos count on for keeping you interested in playing. You’re going to occasionally have a winning session. You’ll often leave the casino with some winnings in your pocket.

The casino is okay with that, because the casino managers understand that in the long run, they’re going to win more money than they pay out to the slot players in winnings.

This is true even if a player has a quick win and walks away forever.

There seems to be a lot of confusion about how the slots club works, too. A lot of people seem to think that if you play with your slots club card inserted, you’ll hurt your chances of winning. They think that the slots club reduces the payback percentage for the machine.

This is categorically untrue.

The players’ club card merely tracks how much money you put through the machine. The computer that reads this information is entirely unconnected from the random number generator.

Casinos have no incentive to make you lose more often when you play with the players’ club card inserted. In fact, the opposite is the truth. They WANT you to insert that card and get those rewards. The math behind this is pretty simple, too.

Most slots clubs offer rebates in the form of comps equal to about 0.3% of what you wager in the machines. This effectively reduces the house edge for the game by 0.3%, but when you’re dealing with a game that might have a house edge of between 10% and 25%, 0.3% doesn’t make much of a difference.

In an earlier example, I described a slot machine player who was losing $180 per hour. That player was putting $1800/hour into action. Assuming he’s getting 0.3% back in the form of rebates, he’s getting back $5.40 per hour.

If you’re the casino, and you’re winning $180/hour from a player, giving them $5.40 in free food, beverage, and lodging suddenly makes a lot of sense.

Also, when a player signs up for the slots club, he gets on the casino’s mailing list. Some people think they’re immune to direct mail advertisements, but some of them are just deluding themselves.

But if even 1% of the people who get a direct mailing and respond to it by visiting the casino, the casino makes a lot of money.

Let’s take an average player from Dallas, Texas who likes to visit the Winstar Casino twice a year. This player loses an average of $540 per trip. That’s a customer worth $1080 per year.

But let’s say that the casino sends him a coupon for 2 free buffets if he comes to visit between certain dates. That’s probably $40 in a giveaway, but if he visits the casino one extra time, he’s no longer a $1080 a year customer, he’s now a $1620 a year customer. Even if you subtract the $40 for the buffets, the player is now worth $1580 a year instead of $1620.

Multiply that by thousands of potential customers.

It isn’t hard to see why casinos are willing to give away money and food to encourage gamblers to come visit them more often.

That random number generator we discussed earlier enabled the casino to do lots of new things with their games that weren’t possible with mechanical slot machines.

Let’s talk about progressive jackpots first. A progressive jackpot is a top prize that grows constantly while the machine is being played. The casino pays for this with a small percentage of each wager; it effectively lowers the payback percentage for that game by diverting some of that money into that larger prize.

Some progressive slot machines are standalone games, but others are networked with other slot machines in the same casinos.

But the biggest jackpots can be found at the wide-area network progressives. These jackpots grow fast because there are hundreds, maybe even thousands of machines, networked into that single jackpot. MegaBucks is probably the best-known example of a wide-area progressive jackpot game.

The jackpot on the MegaBucks games starts at $10 million and grows from there.

Bonus games are usually just miniature video games that are randomly awarded as you play a slot machine game. They often involve guessing which symbol on the screen has the biggest pile of money behind it. As I explained earlier, sometimes these have a skill element, but usually, they don’t.

The bonus game’s frequency is determined by the same PARs sheet as the rest of the game. It’s part of the slot machine game’s payback percentage.

Slot machine games with progressive jackpots and/or bonus games usually have lower payback percentages than games which don’t have these features, by the way. Both of these features cost money and have a low hit frequency.

A wild symbol acts like a wild symbol in a game of poker. It can stand in for any symbol you might need to create a winning combination. The machine automatically gives you the biggest possible winning combination, too, so you don’t have to decide how the wild symbol gets treated.

Of course, modern slot machines have lots of paylines, too. The single payline is easy enough to understand. It’s just a horizontal line through the middle of the reels.

But if you’ve ever seen a slot machine, you’ll know that there’s a possible payline above and below that first payline, because you can usually see the symbols above and below the payline.

Video slot machines often show 2 rows of symbols above and 2 rows of symbols below the main payline, too.

This enables the slot machine to offer 3, 5, 10, 15, or 25 different paylines.

All of these new features result in effectively lower paybacks for the player. One slot machine trick that really does work to improve your odds at slot machines is to find the simplest, most plain-Jane slot machine in the casino, with the lowest flat-top jackpot. (A flat-top machine is one which has a fixed amount as its top prize.

You can find all kinds of nonsense on the internet about how slot machines work, but this post has explained how they REALLY work. Armed with this information, you can make better choices about which games to play and how.

Slot machines are honestly one of the worst bets in the casino. That’s probably why most modern casinos make 70%, 80%, or more of their profits from their gaming machines. The combination of a high (and invisible) house edge with a fast rate of play results in a game that can drain your wallet faster than you ever could have imagined.