The dreaded slot machines

A long time ago, I did some work for OLG and got to take a look at how they make their money. The way all casinos make their money is SLOT MACHINES. The table games do not make a lot of money, but they do bring in patrons and their partners.

Table games require personnel... one for each table (four for craps), pit bosses, floor supervisors, and security. Even on a full night, there's one staff member for every three - four players on the casino floor, and that costs money. Whereas for a slot machine, there might be only one person to 200- 300 gamblers.

OLG gives 5% of its SLOT revenues (direct revenue, which is the profit on the machine itself) to the community. Here is the statement for Brantford. Over eight years, the city has received 29.5 million dollars. There are 514 slot machines. Let's do the math: 29.5 million / 5% = 589 million dollars in slot revenue revenue. Divide by 8 years and that is 73.6 million / year. Divide that by 514 slot machine and you'll see that EACH slot machine contributes $143,300 per year or $392/day to the Province of Ontario's coffers... and these slot machines are not busy 24 hours a day. It's scary. A slot machine in Thunder Bay brings in roughly $250/day while the Soo brings in $222/day.

That's because slot machine are designed to keep between 5 and 15 cents of each dollar you bet. The advantage on these goes up as the denomination goes down. Let's assume for a minute that you are playing a standard quarter slot with a house advantage of 5%. To win the jackpot, you must play with maximum coins, meaning that you are betting 75 cents per pull. So, on average you are giving up 3.75 cents per bet. You are slow, so you press that button 6 times on average a minute, so, playing that machine, you are going to give up on average of 21.5 cents a minute, or $12.60/hour.

Now, let's say you are playing a $15 blackjack game, betting $15/hand. The house advantage on this game is 0.4%, meaning that on a given hand, you are going to lose six cents. If you play 100 hands per hour (the dealer is fast), over that hour, you are going to lose, on average $6.00.

The worst part of the slots is the nickel and penny machines. Players think that they are not spending as much, but they aren't betting $.01/pull. They are playing max lines and max bet, sometimes pulling $.75/pull. Yet the casinos are taking 10 to 15% in the house advantage, or 7.5 cents per pull. So, even though they are playing the lowest demonination machine, they are giving up more money than the person playing the quarter slot (twice as much). That's why when you walk into a casino, you see these machines. They make more money per machine than the quarter machines.

So if you must play slots, what should you do?

• Play video poker (and learn to play it first). Video Poker's house advantages are less than 5% and they offer big jackpots as well. Legally, the video poker machines must play a fair deck of cards (no manipulations, deals are random) and therefore, you can calculate the house advantage by looking at the pay table. For example, if you play Pick-em poker at Casino Niagara, there are eight $.50 machines where the house advantage is less than 0.05% (when playing $2.50/bet), which makes it BY far the best game to play in the entire casino, including table games. Most other video poker games offer house advantages between 2 and 5%.
• Set a limit of losing $20 - $40 dollars and play higher denomination machines. Nickels and pennies will suck the life out of you because the house advantages are high and the payoffs are low. Play the quarter, fifty cent and dollar machines where the payoffs are higher. You'll last just as long and you have a better chance of losing less and winning a significant amount of money.
  
• Lock in your winnings. If you hit a decent win, print that ticket, cash it in and put it away.
  
• Pull the lever instead of hitting the button. You'll get some exercise and slow the number of hands played, increasing your life span.
• Play at machines without a progressive jackpot. You're less likely to win the "big" jackpot but you'll be more likely to win a few hundred dollars if that is the maximum jackpot. Of course, ignore this if you want to win a life-changing amount of money. Just stick to your limit.
• Use your player's cards. Player's cards in Ontario generally pay about 1 point (10 cents) for every $20 bet. That doesn't seem like it's very much but it results in reducing the house edge by 0.5%. You can use that player's card to get cash back or as a discount in meals. Player's cards do not affect the game you are playing... they are free, and if you gamble enough, there are decent benefits.
  

Best of luck in and out of the casinos...