How I would populate a slot floor

Sep 18, 2006 5:05 AM

Last week I covered some of the reasons why a player should seek out full-pay machines. The question for this week is what type of machines should a casino want to fill its floor with and why?

Obviously, if a casino has no competition then it will put out the lowest paying machines that will still bring in enough players. So, we’ll focus on the situation where there is a competitive marketplace and there are presumably numerous casinos, each with its own plan for what machines to put out on the floor.

Because I’m an author and analyst about casino games, I’m often asked if I’m allowed into the casinos. My candid answer is that of course I’m allowed in. I may know how to play almost every casino game perfectly, but so long as the payback is below 100%, I’m still going to lose in the long run.

The only games that offer over 100% payback are a few varieties of video poker. With card counting, you might come close in blackjack, but thanks to the perpetual shufflers that are becoming more prevalent, card counting is nearly extinct.

Games with a payback over 100% scare the daylights out of the casino. Mathematically, it means that the player will win in the long run. What sometimes gets forgotten is that players win in the long run ONLY if they use the proper strategy, and very few players do that.

However, all it takes is one, or a few, players to attack a positive expectation situation for the casino to feel the pain. So, should casinos eliminate all video poker machines paying over 100%? Is there really that much difference between a machine paying 99.9% and one paying 100.1%?

As I already stated, any difference that might exist and make a difference to the casino will only be true IF the player is playing the machine perfectly. If his strategy causes him to lose 5% of overall payback, the casino really won’t care much if he is playing at 94.9% or 95.1%.

At 100.1% the player is going to win money in the long run and at 99.9% he is going to lose money in the long run. But, the casino has a lot of bills to pay and a mere 0.1% profit will make this tough. So, I guess the casino should really eliminate all machines paying NEAR 100%?

Not so fast. A very, very small percentage of players truly achieve the payback that a game can deliver theoretically. An even smaller number of these players are professionals, who actively look to play enough hours to make a living.

In order to make this living, they must find games with a payback over 100% and playing at a denomination to make enough money. If a video poker professional were to stumble across a nickel machine paying 101%, how much money would they make playing 40 hours a week? Playing 1000 hands per hour at max-coin, they would make $100 per week in the long run. That’s $5,200 per year, which is hardly earning a living!

A quarter full-pay machine would net them five times this or $26,000 per year. While this makes for a nice profit, it may be difficult to pay all of one’s bills from this ”˜salary’.

It is only at the $1 and above level that the professional can make his living. Below this amount, you will find some expert players, but most of these will still only be recreational players, playing only for entertainment (but still hoping to win).

So, if you’re a casino manager, what should you put out onto the floor to keep the place packed and to generate a sizeable profit for the casino?

If I were placing machines, I would think about each denomination and who tends to play these machines. Penny machines are played strictly by the recreational player, many of who are probably beginners. I’d consider these to be loss leaders. Their goal is to get people hooked on playing video poker. While it’s tough to make a profit on a penny machine paying too high, I’d look at these as a form of marketing. Machines paying in the high 98% to low 99% will make sure that the player doesn’t lose to fast, has a chance to win and may just move up in denomination.

The nickel and quarter players tend to be the more serious expert players, but as stated earlier, they are not the professionals. These are the machines most heavily played and I would put out a wide range of paytables, from the mid 97% range all the way up to just over 100%.

The reason for the high end is so that I could advertise machines paying over 100%. In reality, a handful of players will play at a skill level capable of achieving this. But, as recreational players, they won’t play long enough to harm profits.

The majority of the machines would be at around 99%. This is enough to make a tidy profit for the casino even if the player is playing expertly. For the average player who will probably play these machines at 96% or less, the casino can count on more significant profits.

The dollar machines (and up) would all be at about 99% to 99.4%. Even an expert player will lose $50 an hour playing these. By capping the top end of the payback, the professional who is looking to turn a profit will have nowhere to turn. An expert player who wants to play at this level will at least have a reasonable chance to win, but will lose in the long run.

Of course, I would only set up my casino floor in this manner if I thought someone just like me would set up the casino across the street in a similar manner. By advertising top paying machines, I would get most of the business.

There is only one flaw in this thinking. So long as players will play ANYTHING the casino will put on the floor, why should the casino put out a higher paying machine? If all of my 98% machines are full, why would I want to put out a 99% machine instead?

In the end, it comes down to the same simple fact. If you want better paying video poker machines in the casinos, you have to demand them by refusing to play the short-pay ones. It worked in Atlantic City and it can work in other places too.