Slot Payouts

Published: 25/02/2012

A slot “payout” is the amount of money the player receives in return for wagering. Most often, it is seen expressed as a ratio or a percentage, comparing amounts won to amounts put at risk. It is calculated quite simply by dividing total winnings paid by the total cash wagered. In other words, if a player begins a session of play with £100 and ends up with £97, the payout is 97:100 or 97%.

The percentages are by no means random. Quite the opposite, they are fixed by law in most jurisdictions. Payouts may not fall below a given minimum as established by the local regulatory authority.

Ratios are pre-set as part of each slot’s programming at the factory. There is no other way of ensuring that the rate of payouts to cash wagered falls within the mandated legal range. In some areas, the minimum payout for slots may be as low as 75%. Although there is no maximum limit, realistically it must be somewhat below 100% in order the slot operator to make a profit.

Most casinos find it is to their advantage to have slots programmed with payouts ratios well above the legal minimum. It’s a matter of market economics at work. When the payout ratio is near 100%, the casino’s margin is small but players are willing to bet and risk much more money. When the payout percentage is low, the casino can make more profit per wager, but the volume of play declines rapidly as players discover they are not winning.

The challenge for every casino is to set slot payouts at an appropriate level in order to maximize profit. The point of equilibrium may be quite elastic, but as a rule the best range is between 80% and 95%. So-called “tight” slots will fall at the low end and “loose” ones at the high end. Most casinos will feature a variety of loose and tight slots in order to have an overall payout ratio of 90% or higher.

Customarily, casino slot bosses would position looser slots in areas that experienced high traffic, with the goal of drawing attention to payouts. Passersby would supposedly see how “easy” it was to win and then sit down and play themselves.

More recently, however, players have caught on to this ploy, so the managers have begun using more random placement. It is no longer quite so easy to tell where the loose and tight slots are located, but there are still ways of finding the machines that pay out the most.

In locations where there may be just one casino, or where there are very few slot machines, payout ratios are usually rather low. This is especially true in special economic zones or on Native American reservations, where gambling is otherwise prohibited in the surrounding region. By contrast, along the Las Vegas Strip, where many casinos compete for business, payout percentages tend to be much higher. Competition is certainly a determining factor for payout ratios.

A very different way to identify a machine with a higher payout ratio is to examine its credit denomination(s). Higher payouts are typically offered by slots with higher minimum and maximum bets. According to one study, 5p machines at a particular casino averaged returns of 92.4%, while the 25p versions gave a 93.9% ratio. The rate of return for that casino’s £1 slots was 95.8%, and the few machines requiring a £5 minimum were the “loosest” of all, paying out 98.4% on average.

Being aware of such factors can assist a player in deciding what machine to play as well as how much to wager. Consider, for example, a player whose rate of play is six spins per minute with three credits bet. That’s equivalent to betting 1,080 credits per hour. If the payout percentage on a selected machine is 95%, the player can expect losses equal to 1,080 x 0.05 = 54 credits per hour. On a 5p machine, that’s £2.70. On a 25p machine, it’s £13.50. And on the £1 machine, it comes to £54. The player’s bankroll will largely determine the denomination that is worth the risk.

Published on: 25/02/2012

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