The Mathematics of Slots

The Mathematics of Slots

August 20, 2018 0 By Smith Devis

 

The casinos set slot machines to make money for themselves, and taking into consideration the initial cost of the machine, the various taxes for its use, its upkeep and maintenance, plus the servicing of its customers, the average nickel machine should return something like $2,000-$2,500 a year in net profits for the casino.

I had the opportunity during one of my studies of casinos to follow the full cycle of slots operations, from the mechanics shop where the payoffs were set to the final printouts on the computer, showing the profit margin for each and every machine in the casino.

With 470 machines, most of them nickel ones, the club was taking in a net profit of over a million dollars a year. This study was made about eight years ago, and since that time this casino has upgraded its machines so that most of them are now 25¢ and $1 ones, and I’m sure its profits are much higher today.

These slots profits are always sure things, because they’re mechanically set. At a craps table, a hot roll by one player can literally wipe out a month’s income, and a bunch of card counters can wreck a blackjack pit’s profits, but the one-armed bandits shrug off the human element and automatically churn out the profits.

The casino works out its profits on a purely mathematical basis. Since most machines are equipped with three reels and each reel holds twenty symbols, the total number of combinations possible are 20 3 , or 20 x 20 x 20. This adds up to 8,000.

With this 8,000 figure in mind, the casino operators decide how many coins they’ll return for the 8,000 spins. If they allowed 8,000 coins to drop, then there would be no profit at all, since 8,000 coins would have to be used to complete the cycle.

If 7,500 coins dropped, the profit margin would be 1/16 or 6.25 percent. This is a very low percentage for any casino slot, and there is hardly a slot machine that retains $o few coins Such a machine would be known as an extremely loose one, and a player fortunate to find it would get a good run for his or her money.