Measuring returns

Mar 6, 2007 1:01 AM

Every now and then a debate develops over playing machines that have an EV — expected value — of less than 1.00. Which, by the way, includes every machine in the casino!

That is to say, every machine has a long-term expectancy of paying back less than 100 percent of the amount played to the customer.

Surely, that can’t come as a shock to any player. After all, how could a casino remain profitable if the machines were programmed to pay back more to the players than they took in?

Some gaming jurisdictions require machines to return a certain percentage to the customers, say, 75 percent to 80 percent.

But competition is so intense, casinos in major markets such as Atlantic City and Las Vegas typically have machines that return more than 90 percent of the amount played to the patrons.

The debate arises because many players don’t understand how the machines’ payback percentages affect the day-to-day operation of the machines.

Here’s an extreme though typical argument that is often used to criticize or discredit those of us who enjoy playing video keno or video poker machines.

"No one can win playing any negative expectation game. Secret strategies, advanced pays, mumbo jumbo. You need to find ways to turn 99.5% into 101% with bonuses, cash back, comps, etc. Changing play strategies will only turn a 99.5% into a 99.2%."

It’s unimportant who is being quoted, though he is known to be a serious sports bettor in Las Vegas. (Keep in mind sports betting has a "negative expectation" because of the 10% vigorish charged by the sports books!)

The mistake this person makes is that the return percentage is a life-of-the-machine statistic. It can’t be relied upon to predict short-term play.

This is something we as players understand. If a keno machine has a 93% return rate, we know that if we shove $1,000 through the machine, there’s no way we would have $930 at the end of the session.

The machine’s fluctuation is too volatile. We could have 40% of our bankroll left. We could have nothing left. Or we could have increased it 10,000 fold.

It’s practically impossible to predict how a machine will behave. All we can do is play, alter our strategy here and there and take what the machine gives back to us.

To rely on a payback percentage is absurd. Thus it is absurd to say "you can’t win" when playing these machines.

We as players know you can win. The trick is tailoring your strategy and style of play into a consistent methodology that will produce winners. And that’s what we endeavor to do every time we sit down at the machines.