There is nothing more typical and defining of a casino than the slot machine. Relative to the long history of gambling, slot machines are a new creation, a modern vehicle for people to risk money in the hopes of winning much more.

Where did the idea for the slot machine come from, and how did the quintessential gambling device come to be the most common thing in today’s casinos? Though slots number somewhere in the hundreds of thousands in Las Vegas and in the millions across the United States, slot machines were once an unlikely candidate for that kind of omnipresence. 

Where it all started

Charles Fey, a Bavarian-born mechanic and machinist, is generally credited with inventing the first slot machine at the end of the 19th century in San Francisco.

He solved a problem in the slot machine’s precursor by simplifying the design and creating a structure for automatic payouts. In the 1890s, just a few years prior to Fey’s Liberty Bell, a popular gaming machine existed with cards where players would insert a nickel (comparable to $1 today) and try to make a good poker hand from the drum of cards.  

These machines were novelties in some bars, but they weren’t intended as full-fledged gambling devices. Since there was no mechanism for automatic payouts, each establishment would have its own prizes and prize structure. Often, 50 cards, instead of the full 52, were loaded into the machine to create an inherent house advantage, usually to make getting a royal flush less probable.

Footprint

A recent report from the UNLV Center for Gaming Research details the prevalence of slot machines from 1963 to 2016.

In 1963, there were just over 22,000 licensed slot machines in Nevada. Peaking at the turn of the 21st century, Nevada had over 217,000 slot machines. To put these numbers in perspective, there were about 15 times as many slot machines as all games and tables (blackjack, roulette, craps, poker, gin, etc.) combined in 1963.  

By 2001, this ratio had grown by multiple of almost 33. In the modern era, slots can be found on bar-tops and in grocery stores across Nevada. In brick-and-mortar gambling establishments, slot machines are by far the dominant gaming device. Now, how will this change in the future with the use of mobile technology?

Revenue

One would correctly infer that if the ratio of slot machines in casinos over time has changed, so has their impact on a gaming establishment’s revenue model.  

In 2016, nearly two-thirds of Nevada gaming revenue came from slot machines, a monthly average of around $600 million of the total $950 million statewide. As recent as 1984, slot revenue represented 53 percent of total gaming revenue in Nevada. In the earlier days of Las Vegas in the 1950s and ‘60s, slot revenue represented an even smaller portion of total gaming revenue.

Prevalence and different types of casinos

In some, if not most, jurisdictions, slot revenue contributes the majority share of gaming revenue.  

There are many racinos across the US — gaming establishments that are traditionally race tracks but have more recently added slot machines and sometimes live poker. Jurisdictional regulations prohibit blackjack, roulette, craps, or other house-banked table games.  

Furthermore, one could claim that as horse and greyhound racing loses its popularity, slot revenue becomes even more valuable. As these venues attract unfamiliar gamblers with offers of dining and live events, such as concerts and shows, chances are greater that a guest inserts a bill into a slot machine as opposed to sitting down at a live poker table or making a race wager. Sticking currency into a machine and hitting a button is a lot less complicated and threatening to a novice than the process of making a race wager.

The UNLV Center for Gaming Research studies the popular racinos in Florida. At Pompano Park, located in Pompano Beach, the racino saw revenue (excluding over $2 million in promo credits) of over $147 million in the month of November alone.

Net revenue, the dollar amount retained by slot machines after jackpot payouts, for November was $10.9 million. The hold percentage for the month was 7.4 percent, nine-tenths of one percent higher than the state average. With a modest gaming floor (slots downstairs, live poker and race windows upstairs), the slot machine revenue surpasses the revenue of race wagering and live poker combined.

Slot payback

Payback refers to the average percentage return gamblers can expect to see on their slot play.

In Nevada, the law requires slot payback percentage to be 75 percent or higher. Because of the competition in much of Nevada, slot payback percentages are rarely below 90 percent.

In Arizona, where tribal gaming establishments are the only places to find legal slots, casinos are required to maintain a minimum return of 80 percent.

The Seminole tribe dominates gaming in Florida, and similar to in Arizona, the tribe does not release payback information on any of their gaming machines. Applied to the dozens of non-tribal establishments, Florida regulations require all gaming machines to payback a minimum of 85 percent. Most of these racinos, like Pompano Park, Gulfstream, Casino Miami, or Mardi Gras all return 90 percent or more on average throughout their respective properties.

Payback gems can be found in small places. Towns like Wendover or Sparks, Nevada have machines that typically payback 95 to 96 percent. Mississippi is a great destination for high percentage payback as well.

Evolution of slots

For many casual gamblers, the evolution of slot machines might feel anti-climactic, but the contrast of the slot machine of 1917 and 2017 is as great as that of the automobile.  

Gamblers can wager in many multiples and denominations across a factor of 100, or even more, paylines. The nickel slot machine in 1917 took only five cents per spin. Today’s nickel slots might cost a player $40 per spin to have the potential to earn the maximum payout.  

Single machines have the capability to accept a wide range of coin denominations and wager sizes. High-limit rooms in casinos around the world have slot machines where gamblers can risk $500 or more on a single spin. One can even visit a $5,000 per credit slot at the Aria and Wynn in Las Vegas.

Alas, only as a nostalgic gimmick are real coins accepted and disbursed from a slot machine. Nearly every slot machine manufactured after 1993 uses ticket in ticket out (TITO). The small ceiling, smoky depths of antiquated Downtown Las Vegas casinos are where classic slot aficionados can find a few slots with hoppers full of coins.

How to win at slots

Is there a legal, scientific way to gain an edge playing slots? Though the preconceived notion is “no,” that programming makes the games random and unbeatable, this is not the complete story.

Slot machines with a progressive payout structure — jackpots that increase with coin-in — are either programmed to have to hit at a certain value or they increase in value indefinitely until someone hits the respective jackpot.

What does progressive play mean for slot players? As progressive values increase, house advantage moves in favor of the player. A progressive machine with a base payback of 94 percent may become a 98 percent machine if the progressive is high enough. In a few rare and special cases, progressives can get high enough to turn a slot machine into a neutral expectation (100 percent payback) game – or even a positive proposition for players.

Having an edge

Though slots are not typically thought of as a form of gambling where a player can have an advantage, slot clubs or players cards, essentially casino loyalty programs, are the key to player advantages through promotions, cash back, comps, and other perks.

Think about finding a special machine with progressives high enough where the casino does not have an advantage. Or if they do, it is only a few one-hundredths of a percent.  

Factor in the equity of winning a brand new luxury car in a drawing, earning comps for free meals and hotel rooms, cruises, and other luxuries with real cash value. Some loyalty programs may even convert points earned from slot play into real cash at an advantageous rate. Add in all of these conditions, and a once-negative expectation experience can become a lucrative one.  

Generally, slot club or loyalty programs at casinos are tiered, meaning that once the progressive jackpot is hit, making the machine no longer advantageous to play, a player will retain his/her loyalty status for an extended period of time. In a corporate gaming world where single companies own several properties around the country and even around the globe, having the higher tier status continues to pay dividends.

Slot edges have changed over time with computers. An example from a few decades back is card pulling. A player could wait until the reels lined up in a way that opens up a bonus round of sorts — digital extras that award free games, free spins, or other chances to win without having to pay for additional movement of the machine and then pull their players card from the machine.

These cards keep track of coin-in and wins and losses and are viewed by casino management and marketing to determine the value of a patron to the casino. A player’s goal is to appear to be a bigger loser in hopes of preferential treatment from casinos.

Technology at the time would often register that the player spent the money to spin the machine, but once the card was pulled, the player account would not be updated to include the result from the activity of the bonus round. Slot manufacturers have long since eliminated this opportunity for player advantage, but that doesn’t mean that older versions of slot machines can’t be found in use today.

The future

Slot machines will continue to be a cornerstone of casino gaming. The brick-and-mortar casino landscape is constantly developing to attract millennial gamblers, who appear disinterested in traditional gambling compared to their parents and grandparents.  

Slot manufacturers are perpetually reviewing new ideas for added features, bonus rounds, free spins, and interactive media in order to make slot machine gaming more appealing.

Mobile

The physical space slot machines occupy can sometimes be unattractive to casino patrons. For some, bells, whistles, noise, smoke, and commotion are all elemental to the gaming experience, but how much better could the casino do if the floor was condensed into a single digital network accessed by laptop, tablet, or smartphone?

The cost of all of the square footage, hardware, and labor could be revisited, and casino patrons would have a searchable directory and the capability to load any slot with any denomination from an iPad.

The precursor to this next generation of gaming exists today in Las Vegas, Reno, Atlantic City, and is rapidly growing in popular jurisdictions like Florida. Slot players in Las Vegas can play rea- money slot tournaments daily from their mobile device simply by connecting to the property’s wifi. In jurisdictions where regulatory bodies have not yet fully approved this next generation of gaming activity, players are still able to earn valuable loyalty points, free rooms, meals, and show tickets from essentially anywhere.

Online slots experience

Since slot machines are a less social form of casino gambling than poker or table games, they translate very well to the online experience.

In digital form, casinos can afford to offer more bonuses and better payback to players. Online, there is no concern about a game being unavailable because someone else is playing it, nor is there an awkward wait for a slot attendant to come by and handle every small jackpot.  

High rollers and penny slot players alike will appreciate the online slot experience. Regulatory movement may be slow, but the future of slot gaming is brighter than ever.