Slot Machine Payback Percentages: The Devil is in the Moment

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Published: Jul 8, 2014
DOI: https://doi.org/10.5750/jgbe.v8i2.830
Keywords:
slot machine payback gambling statistics

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Robert Scott Farrow
UMBC
Jackson Costa
UMBC

Abstract

The average payback percentage from slot machines is important to gamblers, casinos and governments.  While apparently simple to define several complications can exist, among them which measure to average and potentially misleading formulas to calculate the average.  Daily slot machine data from the state of Maryland for 19 months are analyzed for the expected value of the average payback ratio per machine and per dollar gambled.  On a per dollar gambled basis, the payback percentage meets legislative requirements that the gaming floor payback be at least 90 percent. On a per machine basis, that requirement is not met which can imply a significant shift of money from gamblers to casino operators and the state. Other payback measures are hypothesized to also be less than the per-dollar gambled measure but data are lacking.

Article Details

Issue
Vol. 8 No. 2 (2014)
Section
Articles
Author Biography

Robert Scott Farrow, UMBC

Scott Farrow is the former Chief Economist of the Governmental Accountability Office in the United States.  He is currently Professor of Economics at UMBC.

References

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