Don’t be fooled, slots pay back nearly 92%
Experts: In long term, machines return most cash to players
By William Sokolic
For The Norwich Bulletin
Posted Jul 10, 2009 @ 11:26 PM
Gamblers who walk away losers time after time at Mohegan Sun and Foxwoods might scratch their heads and complain the casinos pay out very little from the slot machines.
In gaming parlance, casinos are tight with their money. But are they?
Truth is, Mohegan Sun paid back 91.79 percent of the money deposited in May, while Foxwoods returned 91.64 percent to players, according to data from Connecticut’s Division of Special Revenue. Translated, that means, on average, Mohegan Sun paid out $91.79 for every $100 wagered; Foxwoods paid back $91.64 for every $100 bet. The balance was what the casinos kept.
The key phrase is “on average.” A machine’s payback is a long-term percentage that takes into account all possible winning and losing combinations, said expert Henry Tamburin, who runs smartgaming.com, a gambling strategy Web site.
He also has written several books on casino gambling and has taught seminars and courses.
The average includes folks who lose $100 or $500, but also takes into account those who win $5,000 or $500,000. If 10 gamblers each lose $100, and one gambler wins $917.90 on a $100 investment, the payout percentage is 91.79 percent, even though 10 of 11 gamblers lost.
The May payout percentage at Mohegan Sun was the highest payout since August. The May 2008 payback was 91.28 percent. At Foxwoods, the payout percentage in May was the highest since last December and higher than last May, when it was 91.19.
Still, tracking annual payback percentages at five-year increments reveals that both casinos have held on to more of the money over time.
In fiscal year 2008-09, the payback percentages were 91.62 at Foxwoods and 91.51 at Mohegan Sun. In 2003-04, they were 91.83 at Foxwoods and 91.86 at Mohegan Sun, and in 1998-99, they were 91.98 at Foxwoods and 91.95 at Mohegan Sun.
The percentages are set by the casinos through computer programming. The computer determines which symbols line up on the reels by generating a random sequence of numbers in accordance to the percentage payout decided by the casino.
“We have a company-wide hold percentage we shoot for on the entire floor,” said Ray Pineault, senior vice president of casino operations at Mohegan Sun. “We leave it to the slot department as to the mix of games and competitive data set to stay within that range.”
Casinos know that even though a machine might be programmed to return 95 percent to players, in the short term there is a variance, Tamburin said.
After 100,000 spins of a slot machine, for example, there is a 90 percent probability that the payback percentage on that game could range from 91 to 98 percent. But as the machine gets more spins, the variance decreases and gets closer to the 95 percent payback percentage factored into the computer.
The payout percentages tend to vary with the denomination. As a general rule, the higher the denomination of machine, the greater the return percentage. Thus, a $1 machine will return more to players than a nickel or penny does, Pineault said.
If a gambler plays $100 in a dollar machine the money would disappear a lot quicker than the same amount in a penny machine if the payback percents were the same. Mohegan Sun has two $100 machines. The payback percent often exceeds 95 percent, and may go as high as 98 percent, Pineault said.
Mohegan Sun president and CEO Mitchell Etess credits the rising popularity of low denomination games, such as nickel, penny and half penny, for the lower payouts and higher hold percentage from the casinos. The general rule is the lower the denomination, the more the casino keeps.
Casinos will still win more on a dollar basis even if the return is less percentage wise, so they can afford to make them looser, said analyst Roger Gros, editor of Casino Connection and co-publisher of Global Gaming Business magazines.
“If you gamble more money, you should get more money back,” said Gros, who said reporting payback percentages and not just what casinos kept emanated from a magazine he worked for in the late 1980s. “It used to be that with a nickel machine, you were lucky if the payback was 87 percent. But these days nickel and penny games are not really about nickels and pennies. There are so many alliterations of bets it’s not a hard and fast rule.”
Mohegan Sun compares its payout percentages not only against Foxwoods, but Atlantic City, Rhode Island and New York. The Atlantic City Hilton, for example, paid back 91.6 percent in May, less than Mohegan Sun and Foxwoods.
What players need to realize is that slot machines do not return all the money that is wagered in them. In the long run, they’ll lose, Tamburin said. Any other way and casinos wouldn’t be in business.
“The best advice I give slot players is to try to convince them to play video poker. Often the worst-paying video poker machine in a casino returns more than the best paying slot machine,” he said.
EDITORIAL FOOTNOTE: At the end of the day, if you gamble long enough, over a period of time the casinos will win. The best game according to the article was video poker. The whole thing is about averages and chance. could it be the computers are allowing a higher pay back to get customers in to the casinos? What do you think?