I was reading another website recently and a post discussed public payback reporting where $25 machines in a part of Nevada (Wendover) showed over 100 percent payback for a window of time in 2018. I’m not linking to the resource or naming the site because it goes off the reservation on the whys and hows.
But it’s an interesting question: Can a slot machine, or group of slot machines, pay more than 100 percent?
STATUS: It’s possible in the short term, but not in the long term.
In today’s post I’ll discuss the concept generally, and then talk through the specific scenario referenced above and what likely happened.
Slot Machine Design Prevents it Long Term
As discussed on the site previously, slot machines are designed with payback to reach some handful of pre-designed payback options that a casino selects from. Over millions of spins, the game will slowly converge on that.
That doesn’t mean a game will consistently pay out at that level. You could get a handpay, or have a ton of dead spins in a row. There’s short term volatility that can overperform or underperform the expected long term payout. And casinos are absolutely expecting this and fine with this.
If a game is paying over or under the expected amount for too long, it’ll be noticed by a casino. If it’s happening in multiple places with the same game, it’ll be noticed by the slot manufacturer before long as well.
Games have been and can get pulled if unintended outcomes are happening on the live floor, even after a game has been tested and reviewed. Bugs and glitches can happen on games designed by humans, after all.
But casinos can usually tell pretty quickly the difference between a short term variance issue and an actual game problem. The fact that games live in multiple places mean that if only one casino is seeing variance, it may just be an exception short term cycle that will eventually resolve itself.
What Happened in Wendover?
So now we come to the Wendover situation. Effectively, for two months in 2018, it was reported that the $25 denomination slot machines in Wendover paid out 100 percent. The fact that it happened two months in a row is mildly surprising, but not necessarily unexpected. Let’s look at the circumstances as to why it would not be surprising:
- $25 denomination machines are usually set to a higher payout. The higher you go in denomination, the higher the payback generally will be. This is near the top end of the denomination spectrum, so a long term payout of 94-96 percent wouldn’t be surprising.
- When payback is closer to 100 percent, it doesn’t take as much variance to sneak over the 100 percent line. This is just some basic math, but if you’re a penny slot machine with 85-88 percent payback settings, it’s going to take more effort to see an over 100 percent scenario. It certainly happens enough as people have winning sessions, but it’s simply more difficult as you have a larger house edge to overcome.
- $25 denomination machines are usually in small supply. We know that short term variance can drive swings – but if you don’t have a lot of machines available at a denomination, a swing one way or the other can have a larger impact than, say, one of a thousand penny machines. More spins, more machines, will yield a smoother variance curve. $25 machines will have among the most volatile numbers just based on the number of machines.
- Less players play $25 machines. Further constricting the spin count that leads into the reporting will be the fact that $25 machines are more likely to sit idle than penny machines, so the number of total spins factored into the reporting will be lower. This further allows short term volatility to take hold in the reporting.
- Wendover isn’t a huge market. There are five casinos in Wendover. Three are owned by one company and the other two by a number. The company that owns the three reports a total of 2,600 slot machines – not a huge amount, and only a very small subset would fall into that $25 bucket. So there’s less data going into that reporting.
A single sizable handpay with the conditions above is very possible to skew the entire month’s reporting numbers. We know casinos track this stuff carefully – if they aren’t reacting to this reporting, you know it’s just short term variance.
It should be noted that another month not far off from those winning months had an under 92 percent payback – below the expected average. So players weren’t seeing the same sort of wins in that given month vs. the over 100 percent months. Again, just the short term variance expected on a given set of machines with not enough play to truly smooth the numbers out.
You as a player shouldn’t react to this as an opportunity when you see those over 100 percent scenarios, as that site I won’t link tried to suggest – we know past performance – both hot and cold streaks – have no impact on future results.
What ultimately happened in all likelihood is that there were a couple of sizable wins that skewed the data those months.
