While the payouts are massive in slots, lotteries the gamble is too great
January 10, 2017 3:00 AM
by Elliot Frome
I received an email this past week in response to last week’s column. The writer explained how while he enjoys video poker; he finds he enjoys slot machines and video keno because of the opportunity for big wins. I can’t really argue this point. No one has yet created a multi-million dollar prize for a video poker game (at least not a 25 cent or even $1 one). Video keno doesn’t go quite that high either, but does offer some big prizes if you get very lucky.
But at what cost? I’ve written many times over the years how caution can go out to the wind when the top prize is high enough. The classic case of this is Powerball and the multi-state lotteries. Players go absolutely nuts for the top prize, which can go into hundreds of millions of dollars even though the payback of the overall game is a mere 60-70% with a significant portion of that in that top prize. This means, if you aren’t the big prize winner, you’re playing a game that might not pay more than 30%.
The good news is neither video keno nor slots are as bad as the lotteries. The bad news is they don’t offer prizes in the hundreds of millions of dollars range. There are a few slot machines that can make you a millionaire, but even these are a rare breed.
So, what does it mean to play a regular slot machine with a top prize in the hundred thousand dollar range? Well, to begin with, the average payback for slots in Las Vegas is about 93%. How much of this 93% goes into the top prize?
Well, this is problem number one. I have no way of knowing. You have no way of knowing. No one but that manufacturer knows (and maybe the casino). The calculation is simple. The frequency of the winning hand times the payout of that hand. But the casinos don’t tell you the frequency of the winning hand and there is no way to calculate it by looking at the machine. That leaves us to essentially guess at how much of the payback is in that top prize.
In video poker, we know the Royal accounts for about 2% of our payback. So, a 99% machine becomes a 97% machine until you hit the Royal. With our slot machine, in order to fund a much bigger jackpot, there are two possibilities – the frequency of the winning combination must be more rare than a Royal or the contribution to the payback must be more than our 2% (or a combination of the two). So, it is very likely the contribution for the jackpot on our slot machine could be 5% or 6%, which brings our payback without the jackpot down to 87-88%.
I have no doubt the frequency is also a lot more rare. How many slot players do you know who have ever hit a serious jackpot on a slot? How many video poker players do you know who have ever hit a Royal? Any video poker player who knows what they are doing and have been playing for even a couple of years has likely hit a Royal. The same cannot be said for a slot machine player. I’m not talking about a $1,000 payout on the slot. I mean one that is at least $20K or more.
So, do you have a “shot” at winning a bigger prize playing a slot machine? Yes, you do. I can’t argue this point. But, in order to get this chance, you have to play a game at about 87% instead of 97% until you hit that big prize. The odds of hitting that prize at slots is far lower than hitting the big (but smaller prize) on video poker. To me, my choice is pretty straight forward. I’m not sure my bankroll will last long enough to get to the big prize on slots. Let’s take a little bit of a look at the impact on your bankroll of these two games.
Playing a quarter video poker machine at max-coin and at 600 hands per hour means you’ll play $750 per hour. At 3% house advantage, you’ll lose about $22.50 per hour. At that rate of play you should hit a Royal in about 70 hours. This equates to a loss of about $1,500 until you “recover” your $1,000 with a Royal.
If you were to play a quarter slot that required five coins as max-play (many require more nowadays), and you were to play 600 spins per hour at 87%, you would wager the same $750 per hour, but would expect to lose – are you sitting down for this one – $97.50 per hour. If the jackpot were “only” 70 hours away, it would take a bankroll of nearly $7,000 to get to it. But, there is a strong likelihood the jackpot is 500 hours or more away for a bankroll requirement of nearly $50,000 to win that $20,000 jackpot.
I admit I had to pull some of these numbers out of the air. This is simply the way slots work. But the concepts are sound. What you are really hoping for is you will hit that jackpot well before average in order for you to not only make the proposition profitable, but to give you any chance to actually get to that point.
Buy his book now!