Heading to the casinos in Macau? Modern slot machines offer more for your money, but the house still always wins
Traditional slot machines used to pay out on 3 per cent of spins, but those manufactured today return at a rate of 45 per cent, according to an article by Andrew Thompson on American technology news website The Verge.
That's not down to the generosity of manufacturers but can be explained by psychology, and goes back to an experiment by Burrhus Skinner, who discovered that a pigeon was more likely to press a lever that gave it a pellet of food on random presses than when every try gave out the prize.
As Thomson writes: "Too little reward and the animal becomes frustrated and stops trying; too much and it won't push the lever as often."
Here are some other winning titbits from Thompson's piece about the history and economics of slot machines:
The first slot machine came at the turn of the 20th century. The Liberty Bell Machine, invented in 1898, had three reels with 10 symbols and paid out in coins, making it the first true incarnation of the modern slot machine. This combination gave punters a one-in-1,000 chance of hitting the jackpot. It is a far cry from the random number generators of today's equipment.
Slot machines have become dominant in casinos. Despite the classic image of cards, croupiers and chips, table games now take up just 20 per cent of space in the standard modern casino. The rest of the floor is dedicated to slot machines, which account for 70 to 80 per cent of most outlets' revenue - an increase from 50 per cent in the 1970s.
Slot machines compete for customers with distinct themes and designs. The Wheel of Fortune is enduringly popular, apparently, while other television-inspired designs mentioned in the piece include Friends and Entourage. There are 2,500 different machines on the floor of the MGM Grand, with hundreds of different themes.
One company, IGT, makes 93 per cent of the world's video poker machines and is the largest manufacturer of video slots in the world. Video poker has been described as the "crack cocaine of gambling". In explaining the key principle behind the machines, IGT's founder, William "Si" Redd, said: "If you were to take US$100 and play slots, you'd get about an hour of play, but video poker was designed to give you two hours of play for that same US$100." In other words, the time in which a player's money is consumed is lengthened. There are no one-off big wins or big losses; instead the game is a flow, volatility is low and the sense of risk is drip-fed.
Curved screens help grab attention. A curved screen on a slot machine can increase game play by somewhere between 30 and 80 per cent. The only reason: "It looks cool; it's incredibly clear."
Small-but-long-term gamblers can be as profitable as high rollers. Over a lifetime of spending, regular customers who keep coming back to slot machines to gamble a little each week can be worth as much as those who are big spenders on Macau or Las Vegas tables.