Slot Machines and Payback Percentages

Slot machines are easy to play, but you shouldn't do so blindly - read our slot machines primer.

Although they are the most popular form of gambling in the world, most people ignore the inner workings of the slot machines in favor of simply enjoying them. Experts agree however, that your pocketbook will benefit if you learn at least a little about payback percentages and slot machines.

It is important to understand the concept of payout percentages when playing the slots. In one way, it's very easy to visualize the payout percentage of a machine as being the compliment of the house edge. Slot machines with a posted 95% payback could be called machines with a 5% house edge. A 90% slot machine has a 10% house edge.

There is a difference though between how a slot machines payout percentage applies to your play, and how the house edge applies to a table game's play. Imagine you are playing a $1 slot machine, starting with $100. Playing this money through you might end up with 120 credits on the machine. For this segment of your play the payback percentage is 120/100, or 120%. If lets say you now play that $120 through the machine, and you only end up with $78 after 120 tries. The machine, since you started playing initially has taken in ($100 + $120) and given up ($120 + $78) for a payback percentage of 198/220 or 90%. You continue to play and put your remaining $78 dollars through; this time you have $70 remaining. The machine still calculates (120 + 78 + 70) / (100 + 120 + 78) = 268/298 = 90%.

The above example is not very unrealistic, just because, in real life, slot machines exhibit a more volatile payout percentage than this. The unfortunate thing about slots is that you can continue to play according to the above example and experience a low payout percentage. Over time, this will slowly eat away at your bankroll. However, hitting a pocket of money from a single spin part way through your play can bring the payback percentage for your session back up to well above 100%, and this is generally the point that you stop spinning. The more tries you take, the better your chances of hitting a bell ringer and winning much more than you started with. To maximize your advantage over the house, try and stop playing after a bell ringer and keep the payout percentage over 100%.

The volatility of the payout percentage is what makes slot machines popular, because they ensure that some lucky players can score big. But remember, increasing volatility reduces the effective payback percentage over typical playing periods, so you can't always expect to win. Some sessions will run through your bankroll without the bells. Most slot players won't stop with a moderate win. Instead, they will keep going, hoping for a nice big hit. If this is your playing style, maximize your chances by getting the most play from your bankroll. Weigh the value you place on the possibility of hitting a larger jackpot by playing with maximum coins against how long you want to stretch your entertainment dollars.