Some casino players (or watchers, we tend to think) obsess about casinos and their belief of the control they supposedly have over slots. Here’s one recent example:
How does a casino make a business plan when they have no control of the slots?? Exactly.
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Not exactly at all, actually.
Let’s say you own a business and put a vending machine in there. As a business you can’t force people to buy anything, but you can figure out over time what your customers would want to buy.
That’s similar to the slot machine selection – casinos can’t make players gamble, but if they put the right machine, the right number of machines, the right bet ranges, they can figure out some sort of selection of machines that entices players to come play.
But let’s keep going. What a vending machine person can also do is set the price. If a bag of chips costs them 50 cents, they can sell it for 60 cents, 75 cents, a dollar, or whatnot. What they set it at can over the long term impact their ability to sell more or less, and their profit on each. Taken to the extreme, a 20 oz bottle of soda costs more than $6 at some casinos in Las Vegas nowadays – would you buy one?
At this level too, casinos have the ability to set the house edge by deciding, from a list of options slot makers give casinos, what return to player, or RTP, they wish to offer. A lower RTP means a large amount over time is kept for the house.
But as we’ve talked to the more data-driven organizations, the maximum profit margin on a slot machine isn’t necessarily setting it to the lowest value. Players may find that level too punishing and move on more quickly, meaning the machine doesn’t make as much money as a slot where players are having more fun, play longer, and offer more bets against a lower house advantage.
There’s a sweet spot, and the more savvy casinos lean into that to maximize the utilization and profit of their slots to get the most out of the games on their floor.
Notice not once did we mention in here casinos controlling the outcome of the slots. Casinos can’t force us to gamble. But they also don’t need to manipulate the machines because the profit’s baked in based on the choices they have – what machines draw in players, and the house edge they deliver over time. That’s the extent of the control casinos need for their business plan to be successful (other than getting players in the door).
Slots are incredibly profitable for the casino – the average machine can yield hundreds of dollars of revenue for the casino, across hundreds or thousands of them on a casino floor. Controlling the slots is not necessary – we’re not going to give them enough of a lift to justify such granular management of our play, and the slots are sufficiently volatile that there will be big winners and big losers every day, and it all averages out in the end.
Remember winners are part of the business plan too: Without winners sharing their successes and having their giant checks posted, it takes away one of the enticements of gambling – the chance for a big win. It’s easier to set them up, let them do their job, and get out of the way.
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