Large Slot Machine

Large Slot Machine – Enlarge / Think you can tell if one slot machine has a bigger house edge than another? Think again.

It’s a great mantra that when it comes to casinos, the house always wins, at least in the long run. That’s because casinos maintain a small house “edge”—not enough to scare away gamblers, but enough to ensure that the house comes out ahead. Some gamblers think they can get around this by jumping from slot machine to slot machine, for example, hoping to hit one at the right time to win a big payout.

Large Slot Machine

There is a corresponding long-held belief among casino operators that experienced players can actually sense changes in how much and how often a particular machine pays out—that is, they can detect subtle differences in the margin of house between machines. But the math says otherwise, according to a recent paper in

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Slot machines are the source of most of the casino’s revenue. It’s all about manipulating the payback percentage: the percentage of “coin in” that a player gets back when they’re done with the game. “When slot machines are manufactured, the manufacturer licenses multiple pay tables (usually around five),” said co-author Anthony Lucas, a professor at the University of Nevada, Las Vegas. “After the casino operator decides to buy the game, they must decide which of the five licensed pars (aka pay tables) to install. This is where our work becomes useful, as most operators do not know which par will optimize profits.”

Lucas worked at Lake Tahoe as an operations and financial analyst in gaming out of college for about 34 years, so he has a long-standing interest in the kinds of challenges the industry faces. He has been conducting research at UNLV for the past 20 years. “Most of the research questions I’ve pursued come from problems we face in industry,” he says. “We didn’t have time to solve them, because the decision horizon is very short in business, and you don’t have the opportunity to do long-term thinking in academia.”

The house edge for slot machines is usually between 5% and 10%, with most machines delivering a payback percentage in the 90% to 97% range. (If it’s 90%, the casino’s gain—and the player’s loss—is 10% of the coin, for example.) But how can casino operators determine the best house edge for their bottom line within the range that? “It’s really a pricing issue, because it’s a unique product,” Lucas said. “In real slots, the price is not marked anywhere.”

The common wisdom among casino operators is that even without a clear markup price, the law of demand kicks in. They think that regular players can easily sense when a game they are playing has a higher “price”—that is, also has a large house edge—and thus, if the house edge is too large that that is, players will take their business to another casino with a more generous approach.

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“This is basically how you respond to a price shock,” Lucas said. If Whole Foods doubles the price of your favorite brand of almond milk, for example, you can switch to a cheaper brand. That’s the law of demand, which is that if you raise the price of a product, you should expect demand to decrease. The big question for slot machines is: “how much will that demand drop?”

“We may see a drop in coin in, but if it’s less than the coin in product in a higher par game, time par, then we don’t care,” Lucas said.

Together with Katherine Spilde of San Diego State University, Lucas tested this long-held belief by observing the behavior of slot machine players in local casinos in the suburbs of Sydney, Australia, where all the gaming is done. electronically. Many previous studies have relied on simulations or brought subjects into the lab to play slots. Lucas thinks field studies are a better indicator, citing two main advantages. “Number one, you attenuate games differently, because you have the capacity for truly losing your own money,” he said. “Furthermore, when people go to a casino and gamble, they don’t play the games like they do in a lab. The advantage of a field study is that you observe the behavior as it occurs in the setting being tested. you understand. .”

For example, virtual players in a simulation will not react the way a human would react when, say, they lose six or seven times in a row. And a typical lab setup would ask subjects to play a game for 500 spins with a constant bet. In a real scenario, that doesn’t happen. Players will not play a slot machine for exactly 500 spins, never changing their bet. They tend to mix up bets and switch machines if they don’t get the result they want.

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This creates a significant difference in outcome distribution, according to Lucas. “You’re jumping games, so that makes the identification of the true population parameter, which is par, even more difficult,” he said. “You have an inconsistent sample size. You have an inconsistent rate.” For example, if a study includes a 3% game and a 9% game, there is a wide range of outcome variability in both, with considerable overlap between them. “As an engineer would say, the signal to noise ratio is not good,” Lucas said. “You get that little weak signal that breaks out in the sea of ​​difference.” That’s before considering such cognitive biases as the gambler’s fallacy and the hot hand fallacy.

For their own study, Lucas and Spilde tracked the daily performance of two identical slot machines (pairs of either “Tokyo Rose” or “Dragon’s Fortune X”) in identical positions on the floor of casino for nine months. Each machine in a pairing is set to a different par (the percentage of total coin-in the machines keep over time), from 7.98% to 14.93%. They measure the daily coin-in as well as its theoretical win (“T-win”), which is determined by multiplying the coin-in and par to get the machine’s expected value. According to Lucas, such a comparison will show whether players are actually moving from higher par to lower games over time.

Unfortunately, the math doesn’t support conventional wisdom. Differences between high and low par games were stable for the entire nine months, with high-par games posting greater profits. But that conventional wisdom is so strong and entrenched that Lucas finds it hard to get operators to listen when his research challenges their favored operating paradigms.

“We get a lot of flak from the industry because nobody wants to have a mental model challenged,” he said. “I understand. But the pie is getting bigger, and everyone’s getting a smaller piece, so they have to get a little more technical. Eventually, I think the power of research will overtake the resistance because there’s so much pressure on them to optimize profits.”

Set Icons For Game Interface. Casino Icons For Slot Machines. Stock Vector

Lucas recently completed a similar study in Mexico involving two slot machines placed right next to each other. “One is a 15% game and the other is a 4% game, eleven percentage points apart—almost a 300% increase in price,” he said. But he found that there was the same amount of play, and the same amount of wins, in both games over a 180-day period. Players do not switch to the machine with the smaller house edge. “This area does not have a single hotel, so all the players are frequent players, arguing that the population will have the best chance of determining the price,” he said.

The message to casino operators is clear: they should stop worrying so much about whether they will lose customers by opting for higher-par machines, which in the long run are better for a casino’s bottom line. casino. “Many believe that lower pars will attract more revenue by appealing to the customer’s appreciation of the value of playing (ie, lower ‘prices’), but our work suggests otherwise, ” Lucas said. “Our results are likely due to the players’ inability to see par, of course. However, knowing that higher pars perform better is most useful in the game of profit optimization.”

Jennifer Ouellette Jennifer Ouellette is a senior writer at Ars Technica with a particular focus on where science meets culture, covering everything from physics and related interdisciplinary topics to her favorite movies and series on TV. Jennifer lives in Los Angeles.

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