EVOLUTION OF CALCULATING SLOT WIN

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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.

 

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