Casino odds aren’t as flexible as you think

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slot-machineGamblers, as anyone who has spent time in a casino knows, are superstitious. They may know that slot machine payouts are governed by the chilly indifference of a computer chip, and that a random-number generator determines when jackpots are paid. But that knowledge seldom is internalized.

Many players seem to believe certain machines are “looser” than others, some Cripple Creek casinos have better payouts, and following particular rituals will improve their odds.

“I always play here, and I always play on this machine, and I always come up early on Saturday,” one dedicated player at Wildwood Casino said recently. Her rationale: Casinos alter the payout ratios early Saturday to accommodate the weekend crowd, so early morning players are more likely to hit a jackpot.

Alas, casinos do no such thing. The computer chips embedded in slot machines that determine payout ratios can’t be tampered with. And while most players have their favorite machines, their choices are influenced by past experience.

“The regulars all have their favorite machines,” said Ken, a “slot tech” at Bronco Billy’s, “but once they have a losing streak, they find another favorite, and keep moving until they win, and then the whole cycle starts over.”

By law, slot machines in Colorado casinos must pay out between 80 and 100 percent. In practice, most machines are set to pay out 92 percent or more. Does this mean that if you play $100 on a device programmed to pay out 95 percent, you should get back at least $95 every time you play? Nope.

In an online brochure for slot players, the Division of Gaming sets the record straight, saying, “The computer chip in the slot machine that determines the payout is programmed with a theoretical payout percentage. If a chip is set at 97 percent, theoretically it should pay back 97 percent over the lifetime of the machine, which is normally seven years. You would have to play the machine for an entire seven years to get a ‘guaranteed’ 97 percent return over time.

“In the short term, the odds of winning a certain prize, including the top jackpot award, are the same every time you play the machine. If you win a jackpot, your odds of winning it again on the next handle pull are identical to when you won it the first time.”

Optimistic gamblers (is there any other kind?) believe that even if they can’t beat the odds, they can take advantage of small payout differences between casinos. Individual casinos do not release such information to the public. It is provided to the Division of Gaming, which then aggregates it by location.

Aside from casinos located on Native American tribal lands in southwestern Colorado, casino gambling in Colorado is restricted to the mountain towns of Black Hawk, Central City and Cripple Creek. Of the three, Cripple Creek appears to offer slightly better odds, or at least a chance to lose more slowly.

Statistical indices reveal both average revenue per machine and average “hold” per device. Average daily adjusted gross proceeds (AGP) are defined as “the total amount of all wagers made by players less all payments to players.” The average hold is the percentage of revenue retained by a device over a given period.

Using the popular 25-cent slots and video-poker devices as the benchmark, here are figures for the first seven months of fiscal 2012-2013 (July 2012-January 2013):

 

All machines AGP Hold pct.
Black Hawk $160.81 7.26
Central City 81.80 7.09
Cripple Creek 83.43 6.46
25-cent slots/poker AGP Hold pct.
Black Hawk $116.72 6.19
Central City 45.33 6.04
Cripple Creek 61.91 4.68

Locals can take comfort in those statistics, which appear to give long-term Cripple Creek players a marginal advantage. Yet these numbers don’t take into account other benefits that casinos offer such as reward cards, special promotions and discounted food and drink.

If casino players are superstitious and prone to magical thinking, casino owners and managers have few illusions about their customers. A recent analysis in Casino Inside Magazine divided casino visitors into four categories: the non-player, the fun player, the time-on-device player and the gambler.

TOD players were described as often retired, on fixed budgets, visiting mainly in daytime hours, and seeing the casino as “a social escape, as a place to spend time.” Gamblers, by contrast, think they can outsmart the casino, accept and neglect the risks of the game, seek the intense emotion and are attracted by “volatile elements.” Cripple Creek operators try to attract high-rolling gamblers as well as elderly TOD players who ride the Ramblin’ Express buses from Colorado Springs.

Are they successful? Comparing overall AGP figures, which show Black Hawk casinos taking in twice as much revenue per device as those in Cripple Creek, the risk-taking gamblers are heading north. The market in Cripple Creek hasn’t grown in recent years, and its casinos focus on the Colorado Springs/Pueblo markets.

Marc Murphy, who with Mike Chaput founded Bronco Billy’s in 1991, might have been talking about a restaurant or a dry cleaning business when asked about the keys to his success.

“We’re a service industry,” he said. “We’re all offering basically the same machines with the same odds — the same product, so it all comes down to service. We can’t guarantee you a win, but we can guarantee that our staff will be friendly, competent, and make sure that you enjoy your visit.”