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Introduction to Controls Slot Machine Odds

Who controls slot machine odds is a popular question from slots enthusiasts. It’s quite an interesting question, which I thought my audience would appreciate an answer to.

My most recent encounter with this general question was during the Q&A segment of another gambling podcast, episode #634 from Five Hundy By Midnight. They had a question from David which was, “When a new themed penny slot debuts, what is the typical hold percentage? Does it vary by machine, casino, or both?”

Tim and Michelle, co-hosts of the long-lasting Five Hundy By Midnight, a gambling podcast that’s all about Las Vegas, answered the question well, if somewhat briefly.

I’m sure my own audience would like the answer too, so I’m providing a few more details as well as a more general answer with a bit of the why of it all.

This segment has the following sections:

Introduction
A Bit of Background on Legal Requirements
A Bit of History on Physically Setting Odds
Slot Machine Types Based on How Odds are Set
Identifying Who Controls Slot Machine Odds
Does It Really Matter Who Controls Slot Machine Odds? Yes!!
Summary

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A Bit of Background on Legal Requirements

To answer this question, I’ll need to delve into a bit of recent history to explain how odds are set in older-style standalone slot machines using a random number generator (RNG). This way is how many people incorrectly believe the odds are currently set on ALL slot machines.

However, starting around 2008, a lot changed with setting slot machine odds. These changes are due to the emergence of new gaming technologies, not only in slot machines but also with the development of casino operating software. Both provide casinos with an increased operating efficiency and therefore low operating costs.

With so many more people visiting casinos in the last decade, and with their profit margins getting smaller every year, casino operators find they cannot afford to ignore the savings opportunities of new technologies.

The second driver for this change to how slot machines are controlled is due to ongoing developments in statutory regulations for gaming jurisdictions. In the U.S., these gaming jurisdictions are the states, territories, or federal district that legally allow gaming.

In essence, casino operators have to follow the gaming regulations for the jurisdiction wherein they are located. In part, these gaming jurisdictions often include laws which place an upper and lower limit on the pay back return for slot machines.

To not lose their gaming license, or to otherwise get in trouble with gaming control authorities, casino operators must remain in compliance with these legal gaming requirements.

Note that commercial casinos have to be comply to gaming regulations as set by the U.S. state, territory, or federal district they are located in. Native American tribal casinos also have to comply with their own set of gaming requirements, which are usually not based on state law.

Rather, these are defined by negotiation between a federally-recognized tribe and the state within which they are located by carefully crafting a state-tribal compact ultimately approved by the U.S. Department of the Interior.

So, within this overall context, who controls slot machine odds? At a high level, gaming regulators determine the legal limits, if any, for payout returns on slot machines. This is accomplished via state law or negotiated compacts, and usually not changed for a decade, if that often.

Casinos operators are, often but not always, required to provide weekly or monthly reports on actual payout returns to show their gaming authority they are compliant. Sometimes, depending on each gaming jurisdiction, these statistical reports are then provided to the public by the state gaming commission.

Going further, these regular reports can break down these actual payout returns by casino, table games, slot machines, gaming machines, by the denomination of slot machines within a specific casino, or even if the machine has a progressive jackpot. What is done is very specific to the gaming jurisdiction where the casino is located.

Given all these variability of what is or is not done within a U.S. gaming jurisdiction, I’ve created an online series of posts for my audience of slots enthusiasts. It’s meant to help them navigate this dynamic environment of state-specific gaming regulations.

For more information on your specific state, territory, or federal district of interest, see Slot Machine Casino Gambling, State-By-State: A Weekly Blog.

So, at its high level, slot machines are controlled by gaming regulators by the placement of legal requirements for payout return percentages. Sometimes, however, these state-specific gaming regulators do not set limits on payout returns. Put another way, they have deliberately chosen to not set legal limits.

When this happens, somewhat obviously, casino operators do not have a legal requirement for setting payout returns. However, to remain open and not close due to lack of customers, they still have to be careful to not set their payout returns too low.

It’s worth noting that most gaming regulations set a low limit on payout returns to which casino operators deliberately stay well above. To do so is just good business.

A Bit of History on Physically Setting Odds

The random number generator (RNG) was developed for slot machines by Bally Technologies in 1984. About a decade later, most slot machines had this RNG, which allowed for easily adjustable odds of winning.

Beforehand, the odds of winning were set in an entirely mechanical manner. This worked well for decades, until the technical development of slot machines began to cause difficulties. Basically, as credits to bet and number of pay lines increased, the physical mechanisms for determining odds began to reach certain physical limits.

Slot enthusiasts loved having a choice of how many credits to bet, as well as playing a slot machine with more than one pay line. Increased credits and pay lines also led to much higher jackpots.

All of these developments led to odds of winning being needed for many more possible outcomes, which mechanical devices for determining the odds of winning began to not be able to handle. In fact, these mechanical devices began to fall behind and actually became less and less random in nature.

As an aside, the topic of randomness is actually quite interesting. True randomness is very difficult, if not literally impossible, to generate. Often, when randomness is needed in either an mechanical or electronic device, various methods are used which are “random enough.”

Technically speaking, there is no such thing as an existing perfectly random number generator. At best, there are only pseudo random number generators, one variant of which was patented by Bally Technologies in 1984.

Moving away from our brief sortie into the philosophy of randomness, the invention of the RNG solved for slot machine manufacturers this limitation of mechanical devices for determining randomness in slot machines. But, it created another problem: With adjustable odds of winning via electronic RNGs, casinos would need to have a large workforce to do that adjusting.

And so, that is what casinos did. They built and trained a workforce of slot mechanics to adjust the odds of winning on their new slot machines to meet their desired performance metrics.

However, the size of that workforce would increase tremendously depending on how often those odds of winning were adjusted. For older style slot machines, this is at least 7 days and may be as much as 2 weeks, as I’ve expressed in Professor Slots Episode #21: Winning at Slots on Older Casinos-Kentucky Slots 2018.

Most recently, since 2012 or so, relatively newer casinos have been able to reduce this costly workforce thanks to new casino operating systems. These systems not only help casinos manage large promotional events with less overall issues, but also allow them to remotely adjust the odds of winning on slot machines connected to the casino’s central computer system.

Of course, this connection to the casino’s central computer system is currently limited to a wired connection due to potential security concerns as well as WIFI bandwidth limits. As a result, using a central computer in this manner is only possible if all the slot machines are physically “wired up.”

Doing so requires sufficient building infrastructure, such as clearance beneath floors and behind walls, to allow for these many, many cable connections. This is only practically possible in all new casinos being built as well as older casinos being heavily renovated. That is to say, renovated to have far more than simply new carpeting and wallpaper.

With wired connections from slot machines to a central computer, the reduced cost of a smaller workforce of slot mechanics, much faster adjustment of casino performance metrics to daily or even hourly updates, and more satisfied customers due to efficiently run events, the question remains. Who controls slot machine odds?

To get closer to the answer to this question, we’ll next have to discuss how the legal limits of payout returns are set on actual slot machines. Why? Because slot machines can be categorized by how their odds are set. And, how those odds are physically set will tell us who really controls them.

Slot Machine Types Based on How Odds are Set

Slot machines can be divided up into methods by which their odds of winning are set. These slot machine types include:

Standalone
Casino-Specific Progressives
Multi-Casino Progressives
State-Wide Progressives
Remotely Controlled Onsite by Casino
Remotely Controlled Offsite by Gaming Regulators

Standalone slot machines are those which are most often found in older casinos, but are technically slot machines including within their cabinets the ability to set and provide odds of winning with a random number generator. A workforce of slot mechanics adjust the odds of winning periodically as directed by the casino operator.

In general, there is a limited number of settings available for these older slot machines. YouTube videos are available from individuals who have personally purchased an older style, standalone slot machine showing exactly how these odds are set.

For those videos I have viewed, there were six possible settings which could be entered after opening up the slot machine door. These settings were based on codes from a booklet provided by the slot machine manufacturer.

Keep in mind that videos such as these are the general source of knowledge most people have about the internal workings of slot machines. Employees of slot machine manufacturers and casinos with access to these payout settings simply aren’t sharing this information due to non-disclosure agreements and other legal restrictions.

Besides which, accessing the control for changing the odds of a slot machine is quite problematic. The slot machine is alarmed, so any tampering without official access (employee card key, entry code, physical key) are required to even open a slot machine door. Not to mention, the casino surveillance system sees all.

Discussing the three types of Progressive Slot Machines mentioned will be the dedicated topic for another time. I’d discuss how the ownership of these Progressive slot machines matters with regards to how the odds of winning are set. Briefly, the amount of the Progressive jackpot is primarily based on how many slot machines are included.

For instance, these can be a carousel of slot machines in a certain area of a casino, it can be a larger number of slot machines located throughout a casino, or a large group of Progressive slot machines located at multiple casinos.

These large group could actually be of two types: multiple properties of the same casino operator, or multiple casino operators, within a single gaming jurisdiction, i.e., state.

Already discussed are slot machines remotely controlled onsite at a casino through the use of a central computer operating system. Only new or heavily renovated casinos have the facility infrastructure to handle the sheer number of cables necessary.

If they are controlled onsite, these slot machines have their odds of winning adjusted daily or hourly by remote access. How often these adjustments are made is, rather unfortunately at this time, a matter of debate.

I’m currently trying to track down state legal requirements of which I’d heard rumors. The rumor I heard was that a slot machine must be idle for at least 15 minutes without a players card being inserted before the casino is allowed, if desired, to remotely adjust its odds of winning. Further, the rumor stated that this practice was typical and originally based on Nevada gaming regulations.

However, this rumor doesn’t pass the so-called smell test. At this time, I’ve currently reviewed state gaming regulations for over 38 U.S. states, territories, or a federal district. I’ve yet to find any substantiation for this rumor. Alternatively, it may well be an accepted business practice built-in to the advanced casino operating systems.

Why do I feel strongly that slots players are protected from having their odds of winnings reduced while playing? It’s simple – the state control board controls the odds of winning on slot machines, and everything I’ve seen, read, and studied tells me they work for you.

I just can’t imagine state gaming commissions would allow something this untoward, this nefarious even, to occur. They have careful casino operating system approval processes in place to prevent it, they watch casino operations like hawks (often from within the casino), and any casino that decides not to be fully compliant is in for a world of hurt if/when caught.

Finally, there are slot machines having their odds controlled off-site by state gaming regulators. These are most or all video lottery terminals style slot machines.

Video lottery terminals are, as their name implies, instant lottery machines. That means they are controlled by the state lottery, which is set up to remotely handle many, many such terminals at any given moment.

Identifying Who Controls Slot Machine Odds

Who controls slot machine odds at a casino you are considering whether or not to visit? Who controls slot machine odds on the slot machine you’re sitting at?

As I’ve discussed before, both on my webpage Assessing Casinos as well as Professor Slots podcast episode #3: Assessing Casinos, Alaska Slots 2017, deciding which local casino you want to spend your time at is an important decision for determining your baseline success at slots.

So, you’ll likely want to know who controls slot machine odds when you’re choosing between, for instance, an older, pre-2012 casino with standalone slot machines or a racino with many new video slot machines.

The top level choice is really about your own gambling goals, as also discussed on my webpage Identifying Gambling Goals or, alternatively, within Professor Slots podcast episode #5: Identifying Gambling Goals, Arizona Slots 2017.

But, whether your gambling goal is entertainment, earning maximum comps, or take-home money, having better odds of winning on a slot machine will help accomplish that goal. So, ignoring other important considerations such as drive time, the spread of the buffet, players club, and etc., the type of slot machine is definitely a consideration.

Casinos with standalone slot machines where the actual machine in front of you has its own dedicated random number generator is relatively easily determined. Ask someone, how old is the casino?

Or, if you don’t want to ask someone or look it up online, just take a look at the slot machine in front of you. Specifically, look at the player card interface area. What does its display look like? Is it a touchscreen display?

Or an LED display like those seen outside of a bank showing the time and temperature for a passerby to see? If it’s a touchscreen, the slot machine is most likely not standalone. If it’s an LED, it most likely is a standalone slot machine.

Determining whether or not a Progressive slot machine is connected to a single carousel, across several carousels within a casino, across several casinos owned by a single casino operator, or across several casino operator properties will be, as previously mentioned, the topic of an upcoming post.

Next up are non-video slot machines with touchscreens at the players card interface. These are all slot machines centrally controlled by a computer onsite at the casino. You can confirm this by learning the date of the casino’s original opening or when it was last heavily renovated.

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Keep in mind that a very few casinos have both, assuming they have expanded their original structure not by renovating it, but by building a new casino facility right next to it.

This is the case with Foxwoods Resort, which is itself an older style casino. However, they recently build Fox Tower right next to it, which is a newer style casino.

Finally, there are video slot machines. It can be difficult, if not impossible, to tell the difference between a video slot machine and a video lottery terminal. A video slot machine is controlled onsite by the central computer at the casino. A video lottery terminal is controlled offsite by the state lottery.

The only sure way to tell the difference between these two slot machine types is to take a look at what the state gaming commission says they are at that casino.

For instance, in Ohio, there are currently 4 commercial casino resorts and 7 pari-mutual racinos. The 4 casinos have traditional reel and video slot machines all controlled by a central computer located onsite.

However, Ohio’s seven racinos have a mix of traditional reel and video lottery terminals slot machines. The traditional reel slot machines are controlled onsite with a central computer while all of the video lottery terminals, which externally look exactly like video slot machines, are controlled offsite by the state lottery’s central computer systems.

How To Pick A Winning Slot Machine

Does It Really Matter Who Controls Slot Machine Odds? Yes!!

With this improved understanding of how casinos work, let’s consider these two facts. First, that there are types of slot machines, specifically those that are standalone or remotely controlled by casino operator or state. Second, that there are the several ways slot machines can have their odds of winning set on an ongoing basis, depending on their specific type.

So yes, actually, it does matter who controls slot machine odds. Why? Because this is where patterns of winning are found. When slot machines are set up to be as random as possible, and that assigned level of randomness is unchanged over days and weeks, then long-term statistical principles rule.

Meaning, on average over the long haul, people will always loss money playing slots. Put another way, profits are only possible in the short term.. This specifically applies to all slot machines controlled by the state, such as video lottery terminals.

However, when the odds are changed hourly or set over 100% for promotional purposes, then there are better times to play a slot machine – and all that slot enthusiasts need do is figure out when that better time is in order to win more and, potentially, make some level of profit. That’s what I did: I made a profit at slots by looking for and finding winning patterns, when I won 90 taxable jackpots in 9 months.

Only casino operators change their odds hourly or deliberately adjust them for promotional purposes. The state has no need or desire to do so, getting their money no matter what, while the casino is a business, with stockholders and a board of directors, obligated to try to succeed financially.

The casino puts in the time and energy to hit their financial performance metrics. The casinos hire the best general manager who themselves hire the best possible team.

Put another way, the casino has a business need to adjust the odds of winning on their slot machines to eke out a living while the state only needs to be patient. Businesses are not patient – they try things in their ongoing quest for success.

And, really, that struggle is what has changed since around 2012 with the technology behind the winning odds of slot machines. Casinos are always trying new things. And, when they have control over setting the odds on slot machines, they adjust them to try to succeed.

Before 2012, this amounted to increasing the odds of winning to be over 100% on a single slot machine near a busy area in their casino, as a promotional tool with its own limited budget.

With the new casino operating technologies, casinos have been given a finer control over setting those odds. This has allowed them to try new things, which they very much like to do. These new things are to adjust the odds on slot machines more often than ever before.

In financial terms, they’re trying to tune their financial performance metrics on a daily or even hourly basis, something that was never before possible.

I’ve never worked for a casino, so have never been pitched a new casino operating system by a slot machine manufacturer’s sales team. But, it’s obvious that this “tuning” is part of the pitch being made to casino operators. Without having seen it, how can I believe this? Simple. I’ve won a lot at slots through pattern recognition.

What’s happened is that, and it matters not at all how it came about, casinos have obviously bought into the idea of finely tuning their financial performance metrics.

In the case of slot machines, which is the only game as casino offers that I’m interested in, they’ve broken the long-term constant randomness of the odds of winning on a slot machine. Therefore, as all statisticians know, patterns emerge.

So, again, yes it does matter who controls slot machine odds, because those controlled by the casino have had their randomness broken. It matters because slots enthusiasts can look for emerging patterns on these casino-controlled machines, then use them to win more.

In the future, I’ll talk more about the winning patterns I’ve found using this understanding. In the meantime, I hope I’ve made it clear how and why they exist.

Summary of Can You Guess Who Controls Slot Machine Odds?

In summary, who controls slot machine odds is answered by understanding they are controlled by the machine, the casino staff, both, possibly the state if the machine is a video lottery terminal, and by slot machine manufacturers themselves in the case of most Progressive slot machines.

This control over the odds of winning was historically a mechanical device supplanted by an electronic random number generator invented in 1984, afterwards allowing slots machines to be developed having more credits, denominations, and pay lines as well as higher jackpots.

There’s currently older-style casinos with standalone slot machines and newer-style casinos built to have the facility infrastructure necessary for physically wiring up their slot machines to be remotely controlled by a computer server.

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I’ve discussed how to tell the difference, as well as explained how slot machines can be remotely controlled by the casino or, in the case of video lottery terminals, by computers established for this purpose by the state lottery agency.

Finally, I’ve discussed if any of this matters to slots enthusiasts looking for an advantage. It does matter. In essence, any slot machines with odds of winning directly controlled by a casino have patterns of winning because casinos keep adjusting those odds to meet their financial performance metrics.

These patterns make it possible for savvy slots enthusiasts to improve their own gambling performance.

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By Jon H. Friedl, Jr. Ph.D., President
Jon Friedl, LLC

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