Some slot machines feature large, wide area progressive (WAP) jackpots that can reach into the millions of dollars. Some allow payouts to be chosen in a lump sum or in annual payments over a period of time. With a large delta between those two, how does that work when it comes to slot machine’s overall payouts, known formally as return to player (RTP)?
When a wide area progressive can pay out a cash amount that is sometimes around half of the winning amount, is that calculated into the RTP?
Harriszee
The structure of these prizes mirror those found in many lotteries, which makes sense when you think about the fact that many of these companies also had lottery divisions at some points. Both IGT and Light & Wonder both previously had lottery products that are now spun off as separate companies, to cite a couple of examples.
So, when you look at Mega Millions or Powerball and see a lump sum payout vs. the big jackpot prize that’s paid over some number of years, the general idea is still the same.
The amount that’s contributed to the prize pool is based in the case of slots on the size of your wager (since nowadays WAP slots offer a variety of bet sizes that contribute to, and make you eligible for, the top progressive). The lump sum value is calculated by that contribution, and the bigger prize paid over x number of years is the lump sum with an investment of it factored in to yield those larger payouts over a longer period of time.
The higher advertised number’s ratio compared to the lump sum can change over time, as investments have the ability to yield higher or lower performance. In times where earnings can be more robust, you’ll see a larger distance between the lump sum and the top prize shown – this too is similar to what you’ll see on Mega Millions or Powerball. At times where the investments can’t yield as much extra money, the delta between the top prize and the lump sum will be smaller.
So technically the RTP is based on the lump sum as the amount set aside to award the prize. If you choose the annual payments, there’s an extra layer doing work to give you more overall cash, because it’s been invested to grow the money (which can help account for inflation).
Not all wide area progressives are the same – some may not give a lump sum option, for instance. It depends on who’s offering it and how the prize structure is set up. Similarly, there was a point in the history of various lottery games where lump sums weren’t always offered either.
How the prize is paid out will often be marked in the machine or noted on the paytable, so if you’re curious what options you might have, that’s a great starting point.
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