A shuffle through the gaming mailbag:
Q. Why don’t the slot machine companies put higher paybacks on their machines? Wouldn’t that give them a competitive edge? If Bally’s had 97 percent machines and IGT’s were 90 percent, it seems like everybody would flock to play the Bally’s games.
A. It’s not the slot manufacturers who decide what payback percentages are on casino floors. Casino operators do that, and they’re not in the business of boosting play for any one manufacturer. They’re in the business of making money.
Game manufacturers make slots available to casinos in a variety of payback percentages. The same game might be available in versions that pay 87, 89, 91 percent and so on.
The slot director at each casino is the main decision-maker on which games the casino will offer and which payback percentages will be installed. The game manufacturers ship and install the games to casino specifications.
Decisions are influenced by profit potential and competitive situations. If there are enough customers to fill games that return 90 percent, there is little incentive for a slot director to offer higher payback percentages.
If the casino gets the same play on games that it keeps 90 cents per dollar wagered, as on games that return 97 cents per dollar wagered, then the decision is easy. The profitability factor will keep the lower-paying games on the floor.
Not every game a slot director chooses has the same return. The old standby still applies: Games at higher coin denominations tend to have higher payback percentages than those at lower payback percentages.
In the end, the games and payback percentage chosen will be those the slot director thinks will bring the desired play and profit.
Q. I’ve noticed that when you explain the house edge at roulette, you do the math or give examples for even-money bets like red/black or for single-number bets. Then you assert the calculated house edge of 5.26 percent is the same for other bets.
Can you walk me through another one, just to show good faith? How about a four-number corner, or a six-number double street. Show me how those are 5.26 percent, too.
A. The 5.26 percent edge applies to all bets except one on a double-zero wheel, the exception being 7.89 percent on the five number bet, 0-00-1-2-3.
Let’s look at a four-number corner bet first. Let’s say you bet $5 on a corner for each of 38 spins in a sequence where each number comes up once.
You risk a total of $190 — $5 times 38 numbers. On 34 of the numbers, you lose your money. On the four winners, you’re paid at 8-1 odds. On each winner, you’re paid $40 and you keep your $5 bet. Multiply that $45 total by four winners, and at the end of the trial, you have $180.
That means the house has kept $10 of your original $190. If you divide that $10 by your $100 investment, you get .0526. Multiply that by 100 to convert to percent, and the house edge is 5.26 percent.
If you bet $5 on a double street instead, you still risk $190. On each of the six winners, you’re paid 5-1, so for each winner you’re paid $25 and you keep the $5 wager. At $30 per winner and six winners, at the end of the trial you have $180 — the same as you have after the corner-bet trial.
From there, the arithmetic is exactly the same. The house has $10 in profit. Divide that by $190 in wagers, then multiply by 100 to convert to percent, and the house has its 5.26 percent edge.