How Slot Machine is Programmed

The gaming industry is a major business in the US, adding an estimated $240 billion to the economy every year while producing tax revenues of $38 billion and creating 17 million jobs.

What people do not know is that all this economic activity is made up of slot machines, video poker machines, and other computer gaming devices. For example, these devices have contributed up to 89 per cent of annual revenue from gaming at casinos in Iowa and South Dakota. On the other hand, there is also slot machine online gambling malaysia.

In particular, spinning-reel slots are profit juggernauts for many casinos, outperforming table games like blackjack, video poker machines and other styles of gambling. What makes slot machines such reliable money makers? In part, it has to do with the willingness of casinos to mask their true price even from the savviest of gamblers.


The price of a slot

An essential economic theory holds that demand for something continues to decrease as the price of something goes up. However this depends on price transparency, which occurs for most of the transactions we make every day. That is, we know the price of most products and services, other than visits to the doctor’s office and possibly the auto mechanic, before we decide to pay for them.

Slots can be even worse than the doctor’s office, in that most of us will never know our wagers’ true price. What this means breaks down the equation of supply and demand.  Casino operators usually consider price in terms of what’s called the common or expected advantage of the house on every player’s bet. In essence, it is the long-term advantage built into the game. His or her minimal contact with the game can result in a “price” that looks a lot different for an individual player.

Consider , for example, a game with a house advantage of 10 per cent — which is fairly typical. That means the game must return 10 percent of all wagers it accepts to the casino which owns it over the long run. So if it accepts $1 million in wagers over 2 million spins, it’d be expected to pay $900,000, which might end in $100,000 in casino gains. Thus, from the management ‘s viewpoint, the “mark” that it pays is the 10 per cent that it expects gamblers to earn over time.


However, individual players are likely to describe price as the cost of the spin. For instance, if a player bets $1, spins the reels, and receives no payout, that’s the price — not 10 cents.


What is right, then? In a way, both. Although the game has definitely earned $1 from the user, management understands that 90 cents of this will ultimately be allocated to other players. However, a player will never know this, considering that he would only play for an hour or two, during which he will hope that a big payout compensates for his many losses and then some. And at this pace of play, it could take years for the long-term benefit of the casino to become apparent to play a single slot machine.


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