Most video poker players are acutely aware of their machine’s payback percentage. In fact, some won’t even sit at a machine unless they believe the machine will return at least 98 percent of the coins fed into it.
Slot players are less aware of payback percentages, but if they thought they were playing a machine with only 92 percent return, and a machine set to pay back 97 percent were across the aisle, they would undoubtedly chase the percentages.
Payback percentages, however, like everything else that is cryptic or confusing, are "highly overrated" if not totally meaningless to actual players, according to experts on the subject.
"Most slot customers don’t notice a difference," said Harvey Perkins, vice president of operations at the Sands in Atlantic City, in an interview with the Press of Atlantic City. "You would have to play a slot machine through its whole cycle, through millions of (handle pulls), then play exactly the same slot machine at another club, through another millions of decisions, to see a pricing difference."
Perkins added that, in Atlantic City, all the casinos have slot paybacks within a couple percentage points of each other, so gamblers aren’t likely to use those numbers as a criterion for selecting a casino.
"Customers are sensitive to the total value they receive from the casino, including the payout on the games, the cash back (from slot club promotions) and other promotions the property has to offer," added Resorts President Audrey Oswell.
Robin Farley of UBS Warburg said machine payback percentage or claims of loosest slots are of less importance in tourist markets, compared to locals-oriented casinos.
"The payout rate matters more in regional or local markets," Farley said. "The Strip is more tourist driven and people are not as sensitive to looking for the best slot deal. That’s not why they’re going to Las Vegas."
Very simply, slot payback percentage is the total number of coins dumped out divided by the total number of coins played into it. For example, a machine that returns 94 percent of the amount played into it has a theoretical payback of 94 percent.
Conversely, the hold percentage of the machine is the number of coins retained divided by the total amount of coins bet. Thus, in the above example, the machine would have a hold of 6 percent.
Slot hold is similar to the hold in table games, except that table game percentages are equal to the win divided by the handle. In Las Vegas, table hold percentages range from about 12 percent for blackjack and 13 percent for craps to 17 percent for baccarat and 24 percent for roulette.
A slot technician with a major slot maker explained that the payback percentage is only one measure of a slot machine, and other factors need to be known to accurately gauge how the machine will perform. They include the hit frequency, its volatility index and its confidence values.
"You could have three slot machines with identical payback percentages, but one machine could pay out 60 times more often than another and only twice as frequently as the third," the technician said, asking that his name be withheld. "And on one machine, the top jackpot could hit three times in one month, while the top award on another machine with the same payback may hit once in three years."
There’s also a factor called the volatility index of a slot machine which affects its ability or "confidence value" to perform within the rated payback percentage, the technician said.
"The point is, the payback percentage can fluctuate," he said. "For instance, a machine with a 94.832 percent payback has a 90 percent confidence level that the actual payback will be between 94.25 and 95.42 percent after 10 million pulls. However, after only 1,000 pulls the payback percent can be as low as 36.53 or as high as 153.14. Likewise, after 100,000 pulls the return can fluctuate between 89 percent and 100.66 percent.
GT video keno columnist L.J. Zahm, author of Cluster Keno, stressed that there are more important issues than the machine’s payback percentage.
"Virtually all of the keno machines I play, as well as the actual keno games, have payback percentages in the 92 percent range," said Zahm. "For instance, the 7-spot keno returns 92.44 percent, while the 8-spot returns 92.31 percent, the 9-spot, 92 percent and the 10-spot, 92.55 percent.
"But these statistics aren’t important to what I’m doing," Zahm continued. "What I base my play on are these stats: The odds of hitting 7-out-of-7 spots is actually less than the odds of hitting a royal flush, but the payoff (7000-1) is substantially higher than the royal’s award (800-1). Here’s another: for every royal flush you hit on a poker machine (with a payoff of $1,000 for five quarters bet), the video keno machine will hit at least six 7-out-of-8 jackpots (with a payoff of $1,652 for four quarters bet!).
"So you see, payback percentage isn’t the key number. What’s key are the odds of what you’re trying to win, and therefore your ability to win. This is what matters."