I Don't Understand How Casino Slot Machines Pay Back Say 96% - Please Explain?

Question

I've heard about slots paying back 96%. Does that mean that

for every $100 put in the machine it returns $96 in winnings, on average? That doesn't seem realistic since most people lose their shirts playing slots. Not just 4%.

Answer 1

It is true that most people lose, but some people win jackpots for greater in proportion to their bet. The jackpots come from all the losers' bets. Four or five percent is sufficient to earn a profit, since such a large amount of money passes through each machine. The payoff has to be as high as it is or people would get discouraged and not play.

Answer 2

Imagine you start with $100 and bet $1 per spin. Every now and then you will win a few dollars and you can reinvest those winnings as the game proceeds.

Most machines can run at about 600 spins per hour, so a four hour session will see you invest 600 spins x 4 hours x $1 per spin = $2400.

You will lose about 4% of $2400 = $96

A couple more spins and your $100 starting bank is gone.

Answer 3

Everyday people bet millions or perhaps billions of dollars in the slot machines.  Would you like 4% of that action?

Answer 4

To answer you question, you are correct. For every $100 played, over the life of the machine, the average player should make back $96.

The reason most people lose money is because they do not have a large enough bankroll, and do not play enough spins. Here's what I mean:

Say the jackpot on a machine comes up once every 100,000 spins. This is very reasonable, and actually probably pretty generous compared to most actual machines. For a player to reasonable expect the machine to pay out it's expected long term return, they must play the machine enough that the 1 in 100,000 chance they have becomes insignificant. In other words, they must play so many spins that it would be almost statistically impossible for them to NOT have hit the jackpot many, many times. For a 1 in 100,000 shot, that number is going to be at least one billion spins.

But just having the time to sit there and play one billion spins is not enough. They must have the bankroll to wade through the typical up and down swings of the machine. Even on a penny machine, those swings could go many thousands of dollars, and require a bankroll of no less than $25,000.

Since most people don't have that huge bankroll, it's not only possible they will hit a downswing, but it's actually more likely than not that they will hit a losing streak long enough that it will eat up their entire bankroll. That's why some 70-80% of people who sit at a slot machine lose every penny they start with. It's inevitable that they will lose.

Answer 5

It's 96% over the life of the slot machine, which can be several years. And it refers to the total amount paid out, not how much each person will get.

Some machines are set to make many small payments, some are set to make fewer, but bigger, payments.

To use bigger numbers, for every $1000 put in, the machine will pay out $960. It might pay that out in 3840 quarters, or in one payout of $960, or anything in between.

Obviously, the machine won't pay out the $960 every time somebody pushes the button, so a lot of people will have to make a contribution without winning a lot of money.

If the machine pays out one quarter at a time, people tend to replay that quarter. Slot players tend to look for a bigger one-time payout.

Slot machines are also a very fast way to "invest" your money. You can easily go through several 20s within just a few minutes.

Answer 6

That's exactly what it means.

But, if you put in $100, you won't play enough times to hit every single combination.

So after $100 of play, you might have $50, $90, $110, or $100,000.  On average, you'll have $96.

But, if you've made 100 pulls and you now have $96, are you going to stop?  Probably not.  So now the casino gets 4% of the $96.  Etc.

Let's play a game.  Flip a coin.  Every time it comes up heads, I pay you $0.96, but every time it comes up tails you pay me $1,00.

Answer 7

Thats exactly what it means, but the 96% is an average over a very long period of time.