The slot industry has benefited
from many technologies
through the years.
Many of these technologies
have had a direct impact on
how we calculate a slot
machine’s net win. Some of
the advancements that have
altered the way we calculate
a machine’s win include the advent of the “credit
meter”, the use of bill acceptors, ticketing, and
fund transfers. Each of these technologies has forever
altered the way we look at a slot’s net win.
For many years a casino’s slot machines win was relatively
simple to calculate. As the patrons inserted
coins, they either fell into the “hopper” where they
could be dispensed into a tray if the customer had a
winning combination, or if the hopper was full they
were diverted or “dropped” into bucket at the base of
the machine. These buckets were periodically collected
and counted by weighing the coins. This process eventually
became known as “the drop”, named after the
dropping of the coins into the collection bucket. The
total of the dollar value of coins dropped into these
buckets was the “gross” win of the slot machine.
Subtracted from the “drop total” would be the jackpots
that were paid in cash, and amount of coins needed to
“fill” hoppers that would periodically be emptied.
So the “net” win of a slot machine was simply:
Coin Drop– (Hand paid Jackpots + Hopper Fills)
I think many of us remember these simpler times
with nostalgic fondness.
As the casino industry matured, and technology
advanced, many innovations were deployed; the first
of these was the advent of the credit meter. This
introduced a new type of expense: the “Cancel Credit
Hand Pay”. This expense would be incurred if there
were a game unable to pay the customer their
remaining credits, and the patron was then paid the
balance in cash. Then the net win became:
Coin Drop – (Hand paid Jackpots + Cancel
Credit Hand Pays)
The next technology to be deployed was the
bill acceptor; this added a soft count component
to our net win equation. Now we have:
(Coin Drop + Bill Drop) – (Hand Paid Jackpots
+ Cancel Credit Hand Pays + Hopper Fill)
Then came ticketing, and the win equation
became even more complex. At this point we no
longer have coin drop and hopper fills, but instead have ticket-in and ticket-out. But the basic underlying principle remained the same;
take how much the customers put into the slot
machine (total customer Buy-in) and subtract
how much the casino paid them back. So after
ticketing the Net Win equation became:
(Bill Drop + Ticket In) – (Hand Paid Jackpots +
Cancel Credit Hand Pays + Ticket Out + Disputes)
A few years later, casinos introduced eFunds.
This new technology demanded that we once
again examine how slot machine win is determined.
Fortunately, the same principle still
applies; net win can be determined by how much
the slot takes in (“income”) and subtract how
much the casino pays out (“expenses”):
(Bill Drop +Ticket In +eFunds In) – (Hand Paid
JP + Cancel Credit Hand Pays + Ticket Out +
eFunds Out)
As new technologies arrive, there will no doubt
be new consideration as to how net win is determined.
However, the fundamental concept of
examining net win as “Income” less “Expense”,
or total customer buy-in – total physical paid
outs, will still apply.
Another consequence of advances in casino technology
was the advent of online slot accounting
systems. Gone now are the days where coin-in
and coin-out meters had to be manually read and
recorded. With these systems it became practical
to record a slot’s total wagers (coin-in) and total
payouts (coin-out) and give analysts another way
of determining slot win. Simply: Coin-in – Coinout.
The total amount wagered regardless of the
source of the buy-in (bills, coin, tickets or
eFunds) less the total amount the machine paid
out to the customer regardless how it was paid
(coin, tickets, hand paid jackpots or eFunds).
We should note the “Coin Out” can be looked
at in two ways. Some define coin out as all winning
combinations that are paid to the credit
meter and therefore exclude hand paid jackpots.
Others consider coin out as all player wins, which
would then include hand paid jackpots. So,
depending how Coin Out is defined, we can have
two ways of calculating machine win:
Coin-In – “total” Coin-Out
Or
Coin-In – Coin-Out – Hand paid jackpots
This win calculation is often referred to as
“Machine Win” or “Statistical Win” or
sometimes as “Actual Win”. Ideally the
“Machine Win” and “Net Win” results
should be identical.
The Machine Win calculation has the advantage
of simplicity. Just two components: Coin-in
and Coin-out (and perhaps hand paid jackpots).
However, the accuracy of these numbers is
totally reliant on the slot system and games
meters. Slot game meters and the slot accounting
systems are subject to a variety of environmental
challenges; game meters rollover,
games meters are often “RAM cleared” back to
zero, and new games may come online with
residual meter values still active. Further, slot
systems may go offline, networks may scramble
data, and of course, historical data can be lost.
It takes the constant vigilance of a dedicated
slot auditor to monitor and correct the coin-in
and coin-out data as needed.
The Net Win calculation, while more complex,
has the advantage that the components
that make up the calculation can be independently
verified through multiple sources. Bills
and Tickets can be physically counted, hand
paid jackpots and Cancel credit hand pays can
be physically tallied from paperwork, game
ticket meters can be compared to system ticket
database, etc. Where the Net Win data can be
verified, the Machine Win calculation is solely
dependent on the slot accounting system.
Analysts can choose which of these calculations
suit their specific needs. However, ideally
the net win and machine win calculations
should yield nearly similar results.
Another component that may be included in
these win calculations is “Customer Disputes”
or what many historically call “Short Pays”,
referring back to the days where slots paid out
physical coins and occasionally these slots
would jam up and “short” the customer a few
coins. Some casinos will include this as an
expense that can lower the net win of the slot.
Others consider the payment of these customer
complaints as a customer good will “marketing”
expense and don’t include these payments
in the win equation. It may be difficult to In this case it is likely that there was no system
“ticket out” expense. So to keep the Net Win calculation
accurate, we would need to include this
dispute as a “legitimate” net win expense.
Slot auditors will often compare “Net Win” and
“Machine Win”. Ideally these two calculations will
yield identical results. The variances between these
two calculations can often be traced backed to how
a customer dispute was handled.
Ultimately, whether a customer dispute
should be included in the Net Win or
Machine Win equations depends on the
nature of game malfunction. This may be difficult
to determine while we are dealing with
an angry customer. Fortunately, customer disputes
are a relatively rare occurrence, and
therefore usually have no material impact on a
game’s overall performance. But customer disputes
will likely give our slot auditors an
annoying little variance to puzzle over.
Free Play is another technology that impacts
how we look at a game’s win. When we look at
the total slot win from a strictly accounting perspective,
there is no logical reason to include
downloaded free play in our win equation. From
a net win formula perspective, free play is considered
a part of the total buy-in of a customer and
therefore increases the win. However, it makes
no sense to give away a $100,000 in free play, and
then claim our win increased by $100,000. So,
from an accounting perspective we should
exclude free play from our win equations.
However, if we want to look at a game’s true
performance, or if we want to compare Net
Win to Machine Win, we have to include free
play as part of the total customer buy-in, otherwise
we will see variances between Net Win
and Machine Win and the game’s other performance
metrics, such as hold percentage,
will be inaccurately calculated.
As the casino industry has matured, new technologies
have been deployed to both improve the
customer’s gambling experience, and to optimize
the slot department’s overall performance. These
new technologies have required a “re-tooling” of
how we calculate a game’s win.
Josh Cantrell is Founder of and Senior Slot
Systems Consultant for Sierra Gaming
Consultants (www.sierragamingconsultants.
com). He specializes in slot operations,
slot accounting / analysis, and slot system
support. He has over 25 years of experience
working in casino markets around the world
including those in Canada, Mexico, Macau,
South Africa, and throughout South
America.