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Ask the Slot Expert: How Does the Casino Pay for Prizes?

21 March 2012

By John Robison

John, here's a question I would like answered.

More and more casinos are giving away gifts, cars, cash, and drawings, etc. Where does the money come from? Is it from their net profit (i.e., the 10% on slots) or gross money taken in? If it's gross then a player doesn't really get the 90% on paybacks.

Keep up the good work.

Hope you can understand the question.

KY slot player

Dear KY:

Thanks for the kind words.

I think I understand your question. Let's distinguish between prizes that are awarded when a combination lands on a payline and prizes that are awarded from drawings or players club points.

If a prize appears on the paytable of a slot machine, then its value is part of the long-term payback for the machine. Instead of a $40,000 car, the prize could be $40,000 in cash and the machine would have the same long-term payback. You can consider these prizes to be paid from the casino's bankroll.

Prizes that are awarded from drawings or players card promotions are usually charged against a marketing budget.

Prizes that are awarded to a random player currently playing a machine can go either way. When Mandalay Bay first opened, the machines were a little tighter than the strip norm, but the casino made up for the tightness with random bonuses. Making up the numbers, the machines may have paid back 90% on their own, but an additional 2% was given in random bonuses, so the overall payback percentage was 92%. Alternatively, the prizes can be charged against a marketing budget.

However the prizes are awarded, they have no effect on slot payback percentages. A 90% long-term payback machine is a 90% long-term payback machine regardless of whatever prizes the casino is giving away.

Best of luck in and out of the casinos,
John


Send your slot and video poker questions to John Robison, Slot Expert™, at slotexpert@comcast.net. Because of the volume of mail I receive, I regret that I can't reply to every question.

John Robison
John Robison is an expert on slot machines and how to play them. John is a slot and video poker columnist and has written for many of gaming’s leading publications. He holds a master's degree in computer science from the prestigious Stevens Institute of Technology.

You may hear John give his slot and video poker tips live on The Good Times Show, hosted by Rudi Schiffer and Mike Schiffer, which is broadcast from Memphis on KXIQ 1180AM Friday afternoon from from 2PM to 5PM Central Time. John is on the show from 4:30 to 5. You can listen to archives of the show on the web anytime.

Books by John Robison:

The Slot Expert's Guide to Playing Slots