Pa. slot payout rate increases for a change
Slot machine players might have a hard time seeing it, but the slot payout rate in Pennsylvania casinos has risen for the first time since the year after the state legalized gambling.
The statewide payout rate for the fiscal year ending June 30 was 89.94 percent, up from 89.9 percent in 2013-14. For every $100 bet, machines returned an average of $89.94. Seven of the 12 casinos showed increased payout rates. In 2007-08, the first full fiscal year for any Pennsylvania casinos, the statewide rate peaked at 91.3 percent.
Video poker fan Kim Comley of Bethel Park said she’s had good luck lately.
“I think it’s better than Las Vegas,” she said while playing at the Meadows, Washington County, where payout rates rose slightly the past two years.
Sharon Sweder of Lake Lynn, Fayette County, playing her favorite Double Diamonds progressive jackpot machine, hasn’t sensed a change.
“I’m not one of the lucky ones,” she said.
Payout rates measure how much money slot machines return to players over millions of spins, so a player who starts with $100 won’t walk away with $89.94 at the end of the night. Anything can happen in a single visit, from winning the jackpot to losing everything.
While the statewide payout rate rose, so too did the casinos’ winnings: from $2.32 billion in 2013-14 to $2.34 billion.
The higher payout rate coincides with a drop in free play, which casinos hand out to entice gamblers to return. Players must put free play through a machine at least once. They can cash out their winnings or continue playing. Casinos hope players put in their own money once the free play is exhausted.
Pennsylvania casinos gave away $681.2 million worth of free play in 2012-13. That fell to $652.5 million in 2013-14 and to $622.4 million in 2014-15.
While players are interested in how much slots pay out, casinos track what they keep, known as the hold percentage. Experts liken that to what customers pay for the pleasure of gambling.
For years, the hold percentage has increased nationwide, meaning payout rates have fallen. Global Market Advisors, a consulting firm with offices in the United States, Taiwan and Thailand, tracked rates for casinos in six states, including Pennsylvania and New Jersey but excluding Nevada, from 2003-13. In 2003, casino hold averaged 7 percent; in 2013, it was 9.21 percent.
Even with the higher payout rate for 2014-15, Pennsylvania casinos kept 10.06 percent of slot bets.
“In other words, we’ve increased the price of the product by 40 percent,” said Andrew Klebanow, a founding partner of Global Market Advisors.
He and Steve Gallaway, the company’s other founding partner, say overuse of free play is a prime factor because it gets counted with real-money wagers and casinos must tighten the machines to maintain their overall hold percentage. Another factor is the boom in penny machines, which use 1-cent credits but encourage bets of up to 400 credits, or $4, per spin even though they are programmed to have lower payout rates than higher-denomination machines. The two also blame a shift to fewer big jackpots in favor of frequent small payouts, many worth less than a player’s bet. “So gamers aren’t winning as much,” Gallaway said. “And gamers know it.”
While people playing traditional slots are unable to tell a loose machine from a tight one, they know what happens over time, Klebanow and Gallaway said.
“They simply start winning less,” Gallaway said. He suggested slot players should be able to enjoy a winning session on one out of four casino visits.
“If you gamble four, five, six times in a row and you don’t win anything, why are you going to come back?” he said. “It’s not fun anymore.”
Michael Jankoviak, slot operations director at Meadows, said the casino changed several video poker pay tables to allow a 99 percent payout —over the long term — for players who use the proper strategy.
Some reel slots offer 98 percent payouts, he said.
A minor uptick in payout rates for one year doesn’t mean a trend, but slot players can hope it’s a start.
“Have we reached a point of diminishing returns where casino operators have realized they’ve raised the hold too high?” Klebanow asked. “I don’t think so.”
Gallaway sees it differently.
“The slot machine experience today is lousy,” he said.
“(Casino) executives are concerned about it. Hopefully, people are experimenting.”
Mark Gruetze is administrative editor for Trib Total Media. He can be reached at 412-320-7838 or [email protected]