Don't fall victim to payback rates

Mar 18, 2008 6:00 PM

Cluster Keno by L. J. Zahm | Slot, video poker and video keno payback percentages seem to always be the topic of debate among machine players. But, like everything else that is cryptic or confusing, the value placed on payback is "highly overrated" if not totally meaningless to actual players, according to experts on the subject.

Very simply, slot payback percentage is the total number of coins dumped out of the machine 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.

A slot technician with a major slot manufacturer 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.

"Obviously, to compare machines by their theoretical, long-term payback percentages is both risky and inaccurate," he continued. "Payback percentage is at best a volatile guide, and not something that should be taken as an absolute."

Ian Williams, a former slot technician and author of a book on slot machines, said the slot payback percentage is "strictly theoretical" and derived from mathematical models based on over 10 million spins or handle pulls.

"Go to any machine in the casino and you’ll find that the current or actual payback percentage could vary from -200 percent to +200 percent," Williams said. "It is only theory and the actual payback percentage changes every time a game is played.

"My advice is don’t even bother trying to figure it out," Williams said. "It won’t do you any good."

As a video keno player, 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.

The odds of hitting 7 out of 7 spots is actually less than the odds of hitting a royal flush, but the payoff (7,000-1) is substantially higher then 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, from my perspective, payback percentage isn’t the key number. What’s key are the odds and your ability to win. This is what matters.