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Best of John Robison

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Does long-term payback on a slot machine include casino expenses?

24 May 2010

I have a couple of questions. When the experts talk about long-term payback from a machine, does the payback percentage reflect all the expenses a casino will incur in running their operation? When I visited a website that dealt with state taxes on casinos, some of the tax rates are as high as 30-40%. Are these taxes on profits only, which casinos have very few these days, or are those taxes on every dollar bet. So a machine that you state would have an expected payback of 95+%, is that after all casino expenses and taxes?

I go to a casino once a month for an overnight stay. If I arrive on a Friday afternoon in Atlantic City, the casinos these days are very empty. Yet, I look around and know that the utilities must still be paid, loans must be paid, personnel need a paycheck, etc., you get my point. Are the reduced number of us who still gamble, getting reduced payouts, because the casinos were not built by losing money? It seems to me that the all the fancy amenities that some demanded in the past, must now be paid by those of us who are really interested in just the entertainment of gambling alone.

Thanks,
Jim

Dear Jim,

Long-term payback on a slot machine comes from a relatively simple calculation that says how much of the money players bet on a machine will be returned to them. A casino's expenses have nothing to do with the calculation.

Each state is a little different, but most taxes are based on a casino's win, not profits or amounts bet.

While it's true that casinos have to pay their operating costs somehow, it's not likely that casinos have tightened machines to make up for lower demand (fewer visitors). Changing a machine's long-term payback is expensive, time-consuming and paperwork-intensive. In addition, a casino runs the risk of driving away players if its slots are tighter than its competitors' slots.

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
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