• What Percentage Of A Casino Revenue Are Slot Machines
• What Percentage Of Casino Revenue Comes From Slots
• What Percentage Do Casinos Pay Out

On any given day, a casino gambler will walk away a winner 30% of the time. This statistic is from.

Slot machine replacement sales are in the doldrums in the United States, and have been for a while. Slot manufacturers believe it’s time for a sit-down with casino operators about solutions, and they’ve let it be known publicly that loosening up on hold percentages would, in their view, be a good place to start.

The Monthly Revenue Report is a summary of revenue information for nonrestricted gaming activity. Each report reflects 1-month, 3-month, and 12-month data. Prior to 2004, only fiscal and calendar year-end reports are available. Every slot machine has a predetermined payout percentage. When you hear things like 'our slots pay back 98.3%' this means that over the long-term for every dollar inserted in the machine, it will return 98.3 cents.

What Percentage Of A Casino Revenue Are Slot Machines

The broad silence that has followed suggests the casinos might beg to differ.

Says Mark Birtha, general manager of Hard Rock Rocksino in northeastern Ohio, “There’s the manufacturers’ side and the operators’ side, and there are things that are important to them that are very different.”

This gulf, if it can be called such, must be widening in the midst of these leaner times for the industry overall, for the Association of Gaming Equipment Manufacturers to bring out a report last month that combines historical revenue and slot hold trends in 16 states with a lively series of quotes from experts within and outside the industry, who describe an arc of rebellion on the part of consumers against today’s tighter machines, which they say have become more expensive and less fun to play.

The report was released to publicize the survey that arrived at those trends, which the association commissioned in 2014 from Applied Analysis, an economic research and consulting firm based in Las Vegas. What Applied Analysis had found was pretty much what you’d expect—that slot handle and slot win, respectively the aggregate in dollar terms of what players wagered in those 16 states and what they lost to the house, tended to mirror the fortunes of the wider economy:

“During periods of notable economic expansions (mid-2000s), the gaming sector reported similar trends (in handle and win).”

They track this back to the early ’90s, when the industry’s dramatic jurisdictional expansion would have factored into handle in a big way, although the report makes no mention of this.

“On the other hand,” it continues, “the point at which the economic climate shifted from expansion to contraction, the slot industry followed suit. More specifically, total slot handle and win contracted for the first time in 2008 (the first full year of the Great Recession). This appears to be the inflection point for slot operators overall.”

It doesn’t stop there. “It is important to understand how slot win has trended relative to personal incomes,” it goes on. “Throughout the majority of the 1990s, slot revenue expanded at a faster pace than overall personal incomes, suggesting a higher share of consumers’ wallets were being dedicated to gaming activities.

“These trends moderated somewhat through the 2001-to-2007 time frame as gaming revenue growth more closely approximated gains in personal income. From 2008 forward, there has been a clear and consistent trend that consumers are simply spending less of their earnings on slot activities.”

Operators and suppliers know full well that there are a lot of reasons for this, holds generally having ratcheted up to compensate for falling revenues and increasing competition being but one of them.

And AGEM acknowledges as much. But for the association’s purposes, the survey did examine trends in RTP in the selected states, focusing on the years from 2004 to 2014, when 10 of the 16 states reported increases in hold percentage and seven reported declines in win. From this, the association calculated a “blended” increase in hold of 14.5 percent over the decade against a corresponding increase in slot revenue of only 1.1 percent.

Applied Analysis’ conclusion was this:

“While statistical correlations on a state-by-state basis vary due to any number of factors, the broader, aggregate trends would suggest a rising hold percentage has not translated into incremental gaming revenue for operators during the post-recession era. In fact, they very well may be contributing to its decline.”

Of course, you’d be hard-pressed to find a granny on any slot floor in America who wouldn’t agree, and, not surprisingly, the follow-up report AGEM released in August duly made headlines nationwide.

But to be fair to both sides of the divide (and the manufacturers are, after all, the ones who brought to market the technologies that made rising holds possible), the survey is hardly conclusive.

“We make no representations as to the adequacy of these procedures for all your purposes,” Applied Analysis added as a cautionary note when it submitted its findings to AGEM back in February. Or as one casino executive put it, “The report was somewhat illuminating but by the same token somewhat one-sided.”

Actually, a closer read of it shows that gains in average annual hold slowed in the years after the recession hit. In 2013, they even declined. Percentage-wise, the largest average increases occurred from 2001 to 2007, a period that coincided with the advent of the cashless technologies that made viable the low-denomination, multi-line Australian-style games that experts agree are the greatest single contributor to today’s higher holds.

“The floors have been converted,” says Claudia Winkler, an industry veteran specializing in gaming and hospitality systems and IT. “Where you used to have a lot of choice of denom, you walk onto the floor now and they’re all penny games. Pennies have raised the overall floor hold substantially.”

This was also when leased games came to the fore. “Where there is more of a (revenue) participation element in the form of licensed games,” Birtha says, “you’re paying fees to the license-holder and fees to the manufacturer, so these games tend to come out with higher hold percentages.”

Industry consultant Frank Neborsky, who was vice president of slot operations at Mohegan Sun during the salad days of the mid-’90s, says, “When you talk about the player experience, that takes in a lot of things besides hold percentage. One thing I find interesting about the report is it didn’t mention anything about the potential factors influencing that. How did expenses change, marketing costs, promotions, the other perks that operators were giving to patrons for their loyalty? In other words, what was the true value of what that hold may or may not be affecting?”

Operators will tell you that certainly it hasn’t been the gambling alone. Time and age are steadily eroding the core base of machine players. The players rising to take their place generally don’t find slots all that compelling. They’re having to compete against the backdrop of a society that provides consumers with more alternatives for their discretionary spending than at any period in history.

“Guests are more focused on their entertainment dollar,” says Birtha. “If it was purely about winning at the game, there wouldn’t be anything but video poker out there. But clearly, that isn’t what happened.”

Nowhere is this more evident than on the Las Vegas Strip, which has evolved to a point where gaming constitutes well under 40 percent of total revenues, and slot inventories are down 15 percent from their peak, even as visitation hits all-time highs. Since 2006, handle has fallen at a rate of 3 percent per year. It’s down 22 percent from where it stood at its highest.

In an August client note, investment brokerage Union Gaming Research said, “Gaming equipment manufacturers and industry pundits suggest that Las Vegas operators have driven down slot demand by focusing on non-gaming customers, and that this trend has begun to spread to more U.S. regional markets. Our frequent conversations with regional property managers often suggest that cap-ex allocations and wish-list items are for new F&B outlets, meeting and retail spaces and more hotel rooms. Very few, if any, operators discuss the need for more gaming machines.”

Neborsky says, “What we consider a slot machine now, though it’s been advanced through technology, through better visuals, the emotional connection, it is still the same. You put money in, spin the reels, you win or lose. In essence the game is the same.”

And it has to change, he says: “If you look at the demographic that now plays slots, when they were in their 20s they weren’t necessarily inundated with technology. And you look at people in their 20s and 30s now, the things they do for recreation, if they aren’t gambling it’s because they’re on video games.

“On Candy Crush, Farmville, those games, they’re spending money, but not to win money, and they don’t play slots. The games have to evolve into a technology that isn’t necessarily a skill machine but something that is as much skill-based as randomly based.”

This is the conversation casinos want to have, according to Birtha. “It’s the million-dollar question. What do millennials look like and what do they want? How do we create slot experiences that meet the needs and wants of this younger generation? And how that value proposition translates to revenue.”

AGEM’s thinking in commissioning the report is guided by the same desire, said Tom Jingoli, senior vice president of Konami Gaming and chairman of the association. “This is meant as a talking piece and not a broad brush stroke for the gaming industry.”

Birtha, for one, welcomes the opportunity. “Both sides of the slot equation are looking for the same outcome. Value is the key for everybody. Our objectives are the same—a better product on our floors that our guests enjoy. It needs to be a conversation about what players want and how we support that. We’ll benefit from all of this equally.”

Some people might want to know how to find the payout percentage on a slot machine. Sadly, it’s not something that’s printed on most games — at least not here in the United States.

This post is for them.

Understanding this topic involves some rudimentary understanding of probability as it relates to casino gambling. You’ll need to understand three separate concepts thoroughly:

1. Payback percentage
2. House edge
3. Return to player

This post explains each of those in enough detail that even a beginner should understand what they mean.

Some Basic Facts Related to Probability, the House Edge, Payback Percentage, and Return to Player

Probability is the branch of mathematics that deals with how likely an event is to happen. If you want to measure how likely you are to win a jackpot on a slot machine, probability is the way to figure that out.

But the word also refers directly to that likelihood.

In other words, if I say the probability of getting heads when I flip a coin is 50%, I’m not talking about that branch of mathematics. I’m talking about the actual statistical likelihood of that event.

You should understand a few things about probability in general.

Probability is always a number between 0 and 1. An event with a probability of 0 will never happen, and an event with a probability of 1 will always happen. The closer to 1 the probability is, the more likely the event is to happen.

Probability can be expressed multiple ways. It can be expressed as a fraction, a decimal, a percentage, or as odds. The probability of getting heads on a coin flip can be expressed as 1/2, 0.5, 50%, or 1 to 1.

An event’s probability is the number of ways it can happen divided by the total number of possible outcomes. When you’re discussing a coin toss, you have two possible outcomes. Only one of those is heads. That makes the probability 1/2.

The probability that an event will occur added to the probability that an event won’t occur always equals 1. Therefore, if you know the probability that something will happen, you also automatically know the probability that it won’t happen, and vice versa.

The house edge is a statistical measure of how much the house expects to win (on average, over the long run) from every bet you make on a game. The house edge is a theoretical number that accounts for the probability of winning versus the probability of losing AND the payout if you win.

All casino games carry a house edge. In the short run, it doesn’t matter much, but in the long run, it’s the most important thing.

If I say a game has a house edge of 4%, this means that over time, you should average a loss of $4 for every $100 you bet on the game. This is a long run statistical average, though. In the short run, you’re unlikely to see results that mirror the house edge.

The return to player and the payback percentage are the same thing. Some writers use one to refer to the statistical expectation and the other to refer to the actual results, but most writers use these terms interchangeably.

The payback percentage added to the house edge always equals 100%. The payback percentage is the amount of each bet that you get back, and the house edge is the amount of each bet that the casino wins. Again, these numbers are on average over the long run.

A game with a 4% house edge has a 96% payback percentage.

In the United States, slot machine payback percentages are impossible to calculate and not posted on gambling machines. To calculate the house edge or the payback percentage for a casino game, you need two pieces of data:

1. The probability of winning
2. The amount of money you’ll win (the payoff)

Slot machines include their payouts on their pay tables, but they don’t include the probability of achieving any of the winning outcomes.

In some countries, the payback percentage is posted on the machines, but not in the United States.

To make things even worse for a slot machine player, the random number generator program can be set differently even if the slot machine is identical to the one next to it. You could be playing The Big Lebowski slots at Choctaw Casino in Durant, Oklahoma, and your buddy could be playing the identical machine right next to you.

The payback percentage on his machine might be 94%, and the payback percentage on your machine might only be 88%.

The difference comes from how the probabilities are weighted for each symbol. On one game, the bars might show up 1/4 of the time, but on the next, they might only come up 1/8 of the time.

This has an obvious effect on the payback percentage.

The payback percentage would be easy to calculate if you knew the probabilities. The payback percentage is just the total expected value of all the possible outcomes on the machine.

Let’s assume you have 1000 possible reel combinations. Let’s also assume that if you got each of those in order, from 1 to 1000, you’d win 900 coins.

The payback percentage for that game would be 90%.

You’d put 1000 coins in, and you’d have 900 coins left after a statistically perfect sampling of 1000 spins.

If you knew the payback percentage and house edge for a slot machine game, you could predict your theoretical cost of playing that game per hour in the long run. You’d only need to multiply the numbers of bets you made per hour by the size of those bets. Then you’d multiply that by the house edge to get your predicted loss.

Most slots players make 600 spins per hour. Let’s assume you’re playing on a dollar machine and betting three coins on every spin, or $3 per spin. You’re putting $1,800 per hour into action.

If the slot machine had a 90% payback percentage, you’d lose $180 per hour on that machine. You’d have $1,800 at the start of the hour and $1,620 at the end of the hour — assuming you saw statistically predicted results.

What Percentage Of Casino Revenue Comes From Slots

In the real world, though, where you’d be seeing short-term results, you’d see some hours where you won and some hours where you lost. If you played long enough, the Law of Large Numbers would ensure that you’d eventually see the statistically predicted results.

But in the long run, the math will ensure that the casino will win a net profit.

How You Could Calculate a Payback Percentage Based on Actual Results

Of course, you have some data that you can directly observe when you’re playing slot machines.

But tracking this data and calculating the payback percentage on a specific session can add to your enjoyment of any slot machine game. It can make you more mindful because you’ll be paying more attention to what’s happening.

Here’s how to do it.

Start by tracking how many spins you’re making per hour. This is easy to do, but it takes more effort than you might think. It might help to get one of those clicky things people use to count stuff with. You will probably also need a stopwatch of some kind. I just use the timer function on my phone.

Make a note (mental is fine) of how much you’re betting per spin. It helps to bet the same amount.

Also note how much money you started with so that you can calculate how much you’ve won or lost. The slot machine will convert your money into credits. The easiest thing to do is to keep up with how many credits you had at the beginning of the session and again at the end of the session.

Now, let’s do the math using a hypothetical 45-minute session.

I made 300 spins in 45 minutes. I was betting $3 per spin, and I started with $600.

After my playing session, I had $500 left. At times I was up, and at times I was down.

But my net loss was $100. (My starting bankroll was $600, and I finished with $500.)

Over 300 spins, that means I lost an average per spin of 33 cents. $100 in losses divided by 300 spins is 33.33 cents per spin.

How much was I betting per spin?

Since I was playing a $1 machine, and my max bet was three coins, I was risking $3 per spin.

33 cents is 11% of $3, which means my actual loss was 11%. The machine paid back 89% for the session.

Does this mean that the payback percentage for the machine is 89%?

Probably not.

In the scheme of things, 450 spins is a small sample size. To have any confidence in your statistics, you really need to have at least 5,000 spins under your belt.

Even then, depending on how volatile the game is, your actual results might be wildly different from the mathematically expected payback percentage.

Here’s another example that will prove that point.

My friend Leo went to the Winstar last weekend and played the $5 slots. He started with $3,000, and when he left, he had $4,800, which means he had an $1,800 profit for the day.

He played for seven hours.

I’ve watched Leo play. He’s slow, but not much slower than average. He makes about 500 spins per hour.

This means that he made about 3,500 spins.

$1,800 in winnings divided by 3,500 spins is an average win of 51 cents per spin.

Since he was betting $5 per spin, his return was 10.3%.

His actual return for the trip on that slot machine was 110.3%.

I have friends who design slot machines for a living — more than one, in fact. They’ll be happy to tell anyone who asks that the algorithm is never set up to have a payback percentage of more than 100%.

What About the Casinos That Advertise a Specific Payback Percentage?

What Percentage Do Casinos Pay Out

Some casinos advertise a specific payback percentage. This is almost always stated as an “up to” number.

So you might see an ad for a casino that says, “Payback percentages up to 98%!”

They’re almost certainly telling the truth, too. They probably have one slot machine in their casino that has a payback percentage of 98%. Of course, it isn’t labeled, so you don’t know which one it is.

And in the short run, which is what you’re going to be playing in as an individual gambler, there’s not much difference between a 98% payback percentage and a 92% payback percentage. You could walk away a winner or a loser at either setting.

Also, keep in mind that the games aren’t designed to tighten up after a win and loosen up after a lot of losing spins. That’s not how it works at all.

The machines are designed to allow you to win a certain specific percentage of the time because of the probability. Then there’s an average amount that you’ll win based on the payout for the specific combination of symbols that you hit.

But every spin of the reels on a slot machine is an independent event. You can hit a jackpot on a spin, and your probability of hitting the jackpot on the next spin hasn’t changed at all.

What About the Denominations and Location Reports I See Advertised on the Internet?

You’ll find websites like Strictly Slots and American Casino Guide which post payback percentages for specific denominations and specific casinos. These are AVERAGES.

These averages have little bearing on the machine that you’re sitting in front of.

For example,
you might be looking at a casino that reports an average payback percentage of 94% on its dollar slot machines. That casino might have half their machines paying off at 90% and the other half paying off at 98%.

And you won’t be able to differentiate between the two because the hit ratio might be the same from one of those machines to another.

What Do Hit Ratio and Volatility Have to Do With It?

The hit ratio is the percentage of time that you can expect to hit a winning combination on a slot machine. Something like 30% isn’t unusual, but it can vary 10% or more in either direction. The casinos want you to a hit a winning combination often enough that you won’t lose interest in playing the game.

But hit ratio is only part of the equation. The average size of the prize amounts is also important. Volatility takes this into account. A game that hits less often but has higher average prize amounts might have the same payback percentage as a game that hits more often but with lower payouts.

Either way, in the short run, it will be all but impossible to discover this number, too.

If you wanted to, you could track how many spins resulted in wins for you and calculate the percentage, but you’re facing the same obstacle you are with the overall payback percentage of the machine.

You just don’t know what it’s programmed to accomplish in the long run.

Online Slot Machines

Some online casinos post the payback percentages for their slot machine games. I think this information is of limited use, but I also think it’s fairer to the gambler than not providing them with that information.

After all, table games are transparent. You can calculate the house edge for any casino table game there is because they all use random number generators with known quantities — cards, dice, and wheels.

There’s been a push to label food, both at the grocery store and at restaurants, with nutritional information that includes caloric amounts.

Requiring casinos to provide similar information about their gambling machines only makes sense.

We’ll see if it ever happens, though.

Conclusion

You can’t find the payout percentage on a slot machine — at least not in the United States.
I’ve heard that you can get this information on slot machines in Europe, but I’ve never seen an actual photograph of this kind of labeling.
You can, though, have some fun calculating actual payback percentages in the short run. This at least gives you something to keep track of while you’re playing slots, which is honestly one of the more mindless activities in the casino.