How Do Casinos Make Money On Slot Machines?

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April 16, 2021

 

How Do Casinos Make Money

Casinos are large establishments that look to make money from their activities. Slot machines are the most demanded games in both online, and land-based establishments and players are really impressed by their features. Gambling providers are aware of this practice, so they tend to introduce as many features as possible and make games more attractive to bettors. It leads to more regular revenues for operators, especially from slot machines which are must-choose options for most gamblers. To learn more about pokies and how much money a casino makes, be sure to read this article.

How Slot Machines Work

Slot machines are easy to understand games, which supply players with a smooth gambling experience. As a matter of fact, players should choose the currency, determine the bet amount and press the spin button to start. There are different models of machines, from those with physical reels to machines with replicated reels on the screen. However, all these games work in the same way and depend on the chance.

The element of chance is something that determines your result with slots. If you already know how to bet your cash and press the button, you will already have good probabilities to win the game as players who have already spent years playing the same options. Everything depends on luck, and you never know how a slot machine pays out.

To learn more about how do slots work, you can check the following steps:

How Slot Machines Work

 How Do Casinos Make Money on Slots?

Online slots real money are very interesting for players at online casinos. Customers enjoy them for many reasons, and one of them is stability. According to the words of Bomb Ambrose, who worked at Tropicana Atlantic City Casino in 1980, slots are all about math.

If the casino wants to check the certain machine’s performance, it will look at the drop or money deposited by the player at the machines. Additionally, operators will also check the handle or the total amount of bet placed by the player. Is this possible that a player bet more cash than he placed? For example, if a player places $150 and takes a jackpot of $75 and continues with the game until the money’s gone, an average player would make a handle of $150 and drops of $100.

As soon as the casino pays out the jackpot, the only thing that remains in the hands of the operator is revenue.

The real question is, how do casinos decide who is the winner of slots. Based on Ambrose’s words, a random number generator works like an algorithm that also decides whether the spin is winning or losing. Each game comes with an RTP rate and paytable, which will further explain how much money games return to players and when.

Another important question is ‘Do Casinos Ever Lose Money?’ and how can you learn more about their profits. For these purposes, you can check the parameters such as Software, Typical holds, the Best approach to a great experience, and Rewards.

⚙️ Software

Each slot comes along with a cycle, which is programmed to handle x amount in wagers and payout x amount in money. This cycle is called a hold which represents a percentage of bet which the gambling provider will take. Additionally, the duration of each cycle is also random.

💰 Typical Holds

Now, it’s time to talk about hold and its duration. It depends on the casino in question and typically amounts to 8–11%. Moreover, its amount for video poker and keno stands between 2.5–4%. In addition to it, we can speak about progressive games (including the wheel of fortune and megabucks), which have small odds (20% or higher). These machines are owned by a third-party enterprise and connected. The third-party provides the casino with a part of the hold, but they keep the profit and cover the jackpot. If you have an opportunity to win a progressive jackpot, you will have to wait about 8 hours for a third-party provider to verify your winnings.

🎬 Hypothetical Scenario

If we make a hypothetical scenario, we can explain the situation in the following words. For example, a player has placed a $1 bet, and there are several possible outcomes:

  • A player will lose
  • Get 1:1 or the entire amount back
  • Get 5:1 (5x of the wager)
  • Get 50:1 (you receive $50 on every $1)
  • Get Jackpot

Each of the aforementioned outcomes will also have a certain probability of:

  • 30% of a losing spin
  • 30% odds of 1:1
  • 30% odds of 2:1
  • 20% probability of 5:1
  • 1% probability of a jackpot

Moreover, when the machine closes a cycle, the provider will make revenue in the amount of the hold:

  • it is known as a theoretical win
  • theoretical win = bets amount * hold

🎯 Best Approach to a Great Experience

Knowing all the previous facts, we should also consider the best approach to the great experience and the following rules:

  1. Play with the money you are ready to lose.
  2. Expect to stay without the same amount.
  3. Hope that everything will last long enough to entertain you.
  4. When you are bored, leave the venue/online site.
  5. When you lose your cash, be sure to leave.
  6. If you take a jackpot, claim it, and leave the venue/site.
  7. Gambling hosts will probably award you a comp to spend in a restaurant or hotel and keep you interested in additional rounds.
  8. The provider will also send a letter while inviting you for some free slot action in the upcoming days. All these are tricks from the operators to make casino money and additional revenues.

🎁 Rewards

We should also speak about possible rewards at gambling venues. Casinos will usually use about 10–20% of the theoretical win for marketing purposes. We can take the following example:

  • 5% points – used for cash, free slots, benefits, etc. These points work as a liability and should be honoured. Bettors who don’t visit the venue for 1–2 years will lose points as well as the total comps balance.
  • 5% comps – bettors should ask for them either club or host; otherwise, it would be considered as expired. They don’t represent a casino liability. Not possible to redeem them for online casino money or free games.
  • 10% direct mail – free games, gratis rooms, extra meals, promos (for instance, scratch-off tickets or additional events). In this case, bettors are advised to check the dates as the provider will not grant the expired coupons. Moreover, the entire process is audited, and customers usually honoured (high-end players).

If you are not sure about the definition of a high-end player, it represents someone who constantly has a high theoretical win. This parameter is shown in different ways depending on the casino, and some providers (smaller) will hook up bettors in case of an approximate theoretical win of $100.

Keep in mind that theoretical win is averaged. For example, if you have a win of $300 one day and only $2 for the next three visits to casinos, your theoretical win would be $76.

How Much Does the Average Person Lose at the Casino?

Playing at a gambling establishment is connected with losses. Everyone who plays favourite games should risk something to win. The best strategy for betting is to optimise losses and set a gambling-related budget. Once you have determined how much money you are ready to lose, it would be easier to stop betting when reaching a certain point.

Some bettors tend to wager larger amounts in order to recover the losses, which is completely wrong. This practice usually ends with high losses, leaving players without anything. The purpose of betting is to have fun and entertainment and not to remain without all your budget.

Another important point refers to winnings. Once you have made some cash at the casino, collect money and stop betting. It will increase your chances in the long run, keeping you away from financial catastrophe. Online betting should be enjoyable, and that’s the only point of spending some cash.

Why Do I Never Win on Slots?

Can you make money playing slot machines? Earning money on slot machines is possible; however, earning on a regular basis is hard to accomplish. From time to time, bettors can make some decent sums with these games, but there is no strict rule on how to win online casino real money with pokies. These games are based on chance and results determined by RNG (random number generator). It means that results are based on luck without any influence from third parties. The outcome of each spin is unpredictable, which adds to the excitement even more.

The main reason for such a result is the casino order. Not every casino has the same pay schedule, and there is no single RTP rate for one game. However, there is a certain rule which could be followed – slots with bigger coin denominations will usually pay more. On the other hand, penny machines will offer only between 88-91% RTP. At the same time, a quarter game can deliver anything between 93-95% return.

Are Slot Machines Rigged?

If you wonder ‘Do Slot Machines Cheat?’, be sure to check the following information. Slot machines are created to have a mathematical edge over the bettors. Casinos don’t have to cheat players in order to make a profit from games. Moreover, slots that are available in the most regulated regions pass detailed audit checks for fairness. As part of the check, one of the important things to examine is whether the game has a jackpot which is impossible to get. This is one of the main worries of players when they want to be sure about a fair gaming experience.

According to the data, slot machines don’t make it impossible to win jackpots, but no one could be sure about probability. The result of each round is determined by RNG (random number generator) or a specific computer program. The whole story about RNG and its functionality is only known to designers and managers of online casinos. It means that you can play two same machines next to each other and have different winning odds. This is a completely legal and frequent practice. Many customers would mention that the same practice is misleading or dishonest, but online gambling providers don’t care. The same situation happens in both land-based and online venues. However, some online slots might cheat players, which is not the case with reputable providers and platforms.

How Money Is Cycled on a Slot Machine?

Slot machines are also interested in cycles. However, each spin within the game is independent without the influence of past events. Modern machines include a random number generator (RNG) that controls the return percentage. As soon as the casino orders a certain machine, the producer will possess a list of percentage rates for each slot, and the operator must choose one from them. All these machines are inspected and authorised by a gaming commission allowing casinos to select them without any concern. A casino is always free to alter the payback rate but must turn to the manufacturer to get RNG programmed with the other percentage. It is one of the reasons why casinos don’t change payback percentages that often.

Bettors would usually refer to pokies as hot or cold (whether they pay a lot of small amounts). However, all these “cycles” are based on luck, and events from the past don’t have any impact on the future. The same works for the jackpot, and you never know when it will appear.

Considering all this information, we can conclude that money is not cycled in machines but rather randomly paid to those who have enough luck. The only exception is slots with must-hit jackpots where the prize must be hit when reaching a certain amount.

How Does a Slot Machine Pay Out?

Slot machines are created to pay out anything from 0% to 99% of the wagered money. In other words, we can speak about the “theoretical payout percentage” or return to player rate. The theoretical payout percent is different depending on jurisdiction and is usually determined by regulation. For instance, the min payout rate in Nevada stands at 75%, and in New Jersey 83%.

Slots work according to certain patterns. It means that the amount and frequency of payment is defined to keep a certain percentage to operators (the house) while returning the rest to players.

Let’s imagine that a certain machine costs one dollar per spin and provides an RTP rate of 96%. It means that over a period of million spins, the machine will return approximately $960,000 to its players, who have made $1,000,000 during the same period. According to this example, the slot machine pays out 96% and keeps $40,000.

Are Slot Machines Owned and Leased?

Many slot machines are held by casinos, which also pay the compensation for winning with them. Additionally, some operators lease the machines or engage in participation machines when the casino pays a smaller jackpot while the larger amounts are paid by slot enterprises.

We can mention some participation machines, such as Wheel of Fortune, which is also connected to additional casinos with the same title. As part of the deal, a particular percentage of each bet will be shared between casinos, the game producer, and the jackpot pool. Moreover, each game will use the RNG, which will define the odds of claiming the jackpot. Regarding the parameters, they are determined by regulators and later used by casinos which decide on odds.

How Much Do Casinos Make?

Online gambling providers are business operators who want to make money from their activity.

The University of Nevada published a study on 23 Strip casinos regarding their daily revenues in 2013. The study was based on the data from operators who have produced at least $72 million per year. The average amount of earnings for each of 23 casinos was more than $230 million per year.