Introduction to Who Controls Slot Machine Odds
Who controls slot machine odds is a popular question with slot players. One audience member asked, “When a new themed penny slot debuts, what is the typical hold percentage? Does it vary by machine, casino, or both?”
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A Bit of Background on Legal Requirements
To answer this question, let us delve into history to explain how odds were previously set in physical reel slot machines using a random number generator (RNG). How the odds are set on slot machines by most is incorrect. But it’s not hard to see past so many persistent myths.
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New gaming technologies emerged in 2008 with slot machines but also casino operating systems. These new innovations gave casinos better operating efficiency and lower operating costs. With more people visiting casinos, and with shrinking casino profit margins, casino operators couldn’t afford to ignore the savings opportunities of new technologies.
The second driver for this change to who controls slot machines odds was ongoing developments in gaming regulations. In the U.S., gaming jurisdictions are the states, territories, or federal district. In essence, casino operators must follow the gaming regulations in the jurisdiction.
In part, these gaming jurisdictions may have placed an upper and lower limit on the payback settings for slot machines, a theoretical payout return. Thirty-one of the fifty-six U.S. gaming jurisdictions have one or two such limitations:
- Sixteen have a minimum limit only: AZ, AR, FL, KS, ME, MA, MO, MT, NV, NJ, NM, NY, OH, PR, SD, and WA.
- Fourteen have both a minimum and maximum limit: DE, IL, IA (tribal casinos), LA, MD, MI, MN, MS, NC, ND, PA, VA, WV, and WI.
- One has only a maximum limit: OR.
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Casino operators must remain in compliance with these legal gaming requirements. Otherwise, they’d face hefty fees or potentially lose their gaming license. Tribal casinos must also comply with their gaming requirements, usually not based on state law.
Instead, federally recognized tribes negotiate a gaming compact with their state, which must ultimately be approved by the U.S. Department of the Interior. This requirement is due to a federal requirement signed into law in 1988 by President Ronald Reagan. It’s the Indian Gaming Regulatory Act, a federal law.
So, within this overall context, who controls slot machine odds? At a high level, gaming regulators determine any legal limits, not the actual return setting according to a perpetual myth, for payouts of slot machines via state law or negotiated compacts. And these gaming regs are usually not changed for a decade, if that often.
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Gaming regs can also require casino operators to provide actual payout returns to show their gaming authority they’re compliant. Twenty U.S. gaming jurisdictions require this monthly reporting: CO, CT, DE, FL, IL, IN, IA, KY, LA, ME, MA, MS, MO, NV, NJ, NY, OH, OR, PA, and RI. Seven gaming jurisdictions further break down their slot machine returns by machine denominations: CO, CT, IN, IA, LA, MS, and NV.
Report styles are dependent on the gaming jurisdiction of the casino. Some report by state region, others by casinos, and yet others by county or area of county. What is done is a matter of state law.
At its highest level, state-by-state gaming regulators control slot machines through theoretical payout limits. But sometimes, these state-specific gaming regulators do not set limits. For instance, Alabama, Connecticut, California and twenty-one other U.S. gaming jurisdictions have no legal limits.
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But when this happens, it hardly matters. Why? Because state limits are so low, casinos can’t afford to set their returns that low without severely damaging their casino reputation.
Casinos want to remain open and not lose their customers, so they must be careful not to set the payout returns on their slot machines too low. To do so is just good business. For instance, Nevada’s minimum theoretical payout limit is 75%, but their average monthly return has been around 93% for decades.
Setting Odds in Slot Machines
A fully mechanical approach had worked well since the 1890 invention of slot machines, but the ongoing development of slot machines began causing difficulties. As credits and pay lines increased, mechanisms for determining odds reached physical limits. Yet slot enthusiasts loved having many credits to bet and playing more than one pay line, so a technical innovation was required.
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Increased credits and pay lines also led to much higher jackpots. Slot machine designers need more options for different odds of winning due to many more possible outcomes, which mechanical devices could not handle. So, these mechanical devices began to fall behind and became less and less random.
The random number generator (RNG) was developed for slot machines by Bally Technologies in 1984, U.S. Patent 4,448,419. Within a decade, most slot machines had an RNG which allowed for easily adjustable odds of winning. Beforehand, adjusting a fully mechanical mechanism was problematic.
As an aside, the topic of randomness is quite interesting. True randomness is very difficult to achieve, if not literally impossible. So, when randomness is needed in either a mechanical or electronic device, various methods are used which are “random enough.”
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If you’re not a computer engineer or programmer, most don’t know (or have been sadly misled)how the random number generator feature works in a slot machine. Like the engine starter in an automobile, that starter has one job but does not operate alone. To start an ICE car, you also need an entire system including an engine, fuel, injectors, ignition key, onboard computer, and so much more.
Similarly, a slot machine’s RNG has one small job as part of an overall system. It accepts inputs like probability distributions (sorry for mentioning calculus, dear audience). And the RNG isn’t legally protected, as is the game theme programming.
If you want to learn more about RNGs in slot machines, take a university course in statistics. Tell the professor you’re there to learn to win at slot machines. That should liven up the class.
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Otherwise, I suggest you review Bally’s first RNG patent. Being an inventor myself in physics, I’ll share that submitting a patent requires citing any relevant, prior patents. And the bottom of that first-ever RNG patent is listed all 630 (and counting!) RNG patents that have since come out.
Bally’s invention of the RNG solved for slot machine manufacturers the limitation of mechanical devices for determining randomness in slot machines. But it created an initially minor problem. With adjustable odds of winning via electronic RNGs, casinos needed a large workforce to regularly adjust individual slot machine RNG settings to meet their financial goals and any state gaming reg requirements.
And so, that is what casinos did. They trained and maintained a workforce of slot mechanics to adjust the odds of winning on their slot machines to meet state law and their desired performance metrics. However, that workforce’s cost increased tremendously depending on how often those odds of winning were adjusted.
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Before casino central computer servers, switching settings on all slot machines took between seven days and two weeks. Since central servers swept through all casinos in 2012, casino operators severely reduced this costly workforce thanks to these new casino operating systems. And these systems also help casinos manage significant promotional events with fewer overall issues, but that’s just the first side benefit of many.
The main attraction of central servers for casinos is that it allows for fast and remote adjustment of the odds of winning on slot machines depending on the day and even the time of day. And since retraining slot mechanics to push buttons in a casino’s backroom is problematic, everything is instead programmed. Now, these adjustments are scheduled days in advance.
To get closer to the answer to our question of who controls slot machine odds, we’ll next discuss the legal limits of payout returns and who sets them. Why? Because setting odds changes with slot machine types.
Methods of Setting Odds by Network Type
The methods for setting slot machine odds of winning determine who sets them. These six variations include:
- Standalone Slot Machines
- Local Network Progressives
- Wide Area Progressives
- Off-site Control
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Standalone slot machines have within their cabinets the ability to set odds of winning. Due to infrastructure limitations, riverboat casinos still have slot mechanics opening slot machines and directly changing settings. Central computer servers remotely adjust the odds of winning on a schedule everywhere else.
Either way, slot machine manufacturers offer a range of six or so payout settings limited by state gaming regulations, if any. With those return settings, manufacturers also offer around sixty random probability curves. That’s just how computer engineering works.
You can easily see this if your state allows private ownership of slot machines. That slots work this way isn’t an innovation. They’ve always been this way, so you can reduce costs by purchasing a 25-year-old slot machine.
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But slots players accessing the internal controls to change the winning odds is quite problematic. The slot machine door is locked and alarmed – any tampering without official access. Plus, the casino surveillance system sees all.
Next are two types of progressive slot machines based on network size. Who owns that network progressive defines who controls a progressive jackpot’s odds of winning. Not line hits, but the identical progressive jackpot amounts seen on multiple slot machines.
Briefly, the size of a progressive jackpot depends on how many slot machines are in its network. For instance, a group of identical progressive jackpots in a circular carousel will have more enormous jackpots than a standalone progressive machine. But both types have far smaller jackpots than a group of progressive jackpot machines networked across multiple casinos or state-wide.
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Casinos control the odds of winning progressive jackpots within a single casino property. Networks across multiple properties with a single owner are similar. We see this at the numerous Oneida Casinos in Wisconsin.
But the odds for progressive jackpots spread across different casino operators are controlled by a neutral third party: This business partner is the slot machine manufacturer. They offer this necessary service for a fee.
Finally, slot machines can have their odds controlled off-site. These are most video lottery terminals-style slot machines, like those found in Rhode Island, Washington, and bars and taverns in Illinois. Other states like New York and Ohio share responsibility for setting the odds of winning in close coordination with their racetrack casinos.
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Video lottery terminals are part of an instant lottery system where many transactions occur at any given moment. They are like the VLTs you find when purchasing a paper ticket in a gas station or convenience store, but entirely electronic. The casino version of VLTs looks identical to ordinary slot machines but is partially or fully controlled by the state lottery, depending on the state.
Who Controls YOUR Slot Machine’s Odds
Who controls slot machine odds at a casino you are considering visiting? My best advice is to learn your casino well. To understand how to take advantage of your casino, do that but also know your state gaming regulations.
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Deciding which local casino to spend your time in is important for determining your success at slots. Unless you’re at a riverboat casino that doesn’t have a floor under which to run cables back to a central server because it’s not a floor but rather a hull with water on the other side, then somewhere, your casino has a central computer server controlling its odds. Another exception is “gasinos” and convenience store slot machines, as central servers are prohibitively expensive.
Knowing who controls slot machine odds when you’re choosing between a riverboat casino in Missouri or the tribal lottery system in the state of Washington is a necessity. Why? Because slot machines are not table games where the game rules determine the house edge alongside your probability of winning when using optimal play techniques.
Knowing who controls slot machine odds is based on a casino’s decisions, gaming regulations, and who owns the machine. Casinos with standalone slot machines are relatively easily understood. Otherwise:
- Line hits are controlled by the casino or the state lottery if a VLT.
- The casino controls progressives on standalone machine or a local network.
- A single casino owner controls wide-area progressives or, if owned by multiple casino owners, the slot machine manufacturer.
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It can be challenging to distinguish between a video slot machine controlled by the casino and a video lottery terminal controlled off-site by the state lottery. The only sure way to see the difference is to review what your state gaming commission says they are at that casino.
Does Who Controls What Matter? Yes!!
Consider these two facts with this improved understanding of who controls slot machine odds. First, each slot machine has a network type, either standalone or remotely controlled by the casino operator, state, or both working together. Second, each entity has its way of controlling the odds of winning continuously.
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So yes, it does matter who controls slot machine odds. Why? Because with this knowledge results in finding advantages, you can use to win at slots.
When a slot machine’s return is less than 100%, and that assigned return is unchanged over days and weeks, then long-term statistical principles rule. On average, over time, people will lose money playing slots. But winning is possible long-term if you choose slot machines with a return greater than 100%.
Returns greater than 100% exist daily, hourly, or as little as fifteen minutes as set by a casino’s central computer server. This advantage includes managing your slots play around nights of significant promotional events. All that slot enthusiasts need do is figure out when that better time to win is and then successfully get out of the casino with their winnings.
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That’s what I did: I made a profit at slots by looking for and finding winning advantages when I won ninety W-2G hand pay jackpots in nine months. And it’s what I show now in my demonstration videos on YouTube.
Only casino operators change their odds hourly or deliberately adjust them for promotional purposes. The state has no need or desire to do so, but the casinos are businesses with stockholders and a board of directors who are obligated to succeed financially. And slot machine return settings are where casinos put their time and energy into achieving their financial performance metrics.
The casinos hire the best general manager who themselves hire the best possible support team. Put another way, the casino needs their business to adjust the odds of winning on their slot machines to earn a living, while the state only needs to be patient and wait for the revenue to roll in. Yet, businesses are not patient: They try new things in their quest for success.
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That titanic struggle is what changed around 2012 with central computer server technology. Casinos are always trying innovations. And casinos couldn’t get servers fast enough. Every casino that could have a central server had one within eighteen months.
But that wasn’t the end of innovations to leverage who controls slot machine odds. Now, casinos are learning to use their central servers well to optimize financial outcomes daily or hourly. With remote control over setting the odds of winning on each slot machine set to a schedule applied weeks in advance, they adjust slots odds of winning so that they succeed.
Casinos have a plan. Do you have a plan to take advantage of them? I have several plans and you can, too.
Summary of Who Controls Slot Machine Odds
Who controls slot machines ultimately tells us how to take advantage of casinos to win at slots. It does for savvy slot enthusiasts who understand their casinos and state gaming regs well.
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