What Happens When You Win a Jackpot?

The Southern California Gaming Guide's, www.TheGamingGuide.com, April issue has a neat article describing what happens when a player actually wins a big jackpot.  Before that, what is this publication?  This magazine is geared for the casino player here in Southern California.  It has information on the various local tribal casinos such as: where they are, driving directions, bus pickup locations and schedules, special offers, etc.  It also highlights recent jackpot and other notable prize winners (free cars, etc.).  For the local casino patron, a pretty good place to shop around if you're looking to partake in casino gaming.

In this issue, there's a short article on what happens when you win a big jackpot.  The article describes in more detail, but what happens when a large jackpot is hit boils down to a few things:

1. Is the jackpot legitimate
2. Pay the taxman
3. Pay the player

What happens when a big jackpot is hit is that the machine will alert the casino and slot manufacturer (assuming a wide area progressive) that a jackpot has been won.  At that point, both the player and machine are secured by casino staff.  The machine is put out of service until the slot manufacturer's staff can verify the machine is working normally and that the jackpot result was a normal result, and not the result of an external influence.

At the same time, the player needs to wait.  But the casino will treat the player right and typically have them relax in the VIP area (as of course the player IS a VIP since they've won a big jackpot)!  They might be offered a room and other perks, but at minimum, they'll be lounging in a great spot, and will be eating some great food while awaiting verification of the jackpot.

When that is complete, its paytime!  Well, not for the player, but for the taxman.  You see, taxman wants their money (or at least know who you are and how much you have won so they know how much they'll be getting).  Depending on the jurisdiction, withholding amounts can vary.  The casino will have the player provide identification and fill out tax forms.  After that, and if there is any withholding, then the player will be given a choice to take the payout in a lump sum, or in installments.  Depending on the choice, that will impact the amount of withholding and timing of the payout.

What isn't mentioned in the article, but also another step would be the celebratory pictures and things like that, which again goes right back to the fun and excitement of winning.  The casino wants to trumpet big winners and of course the player wants to have that picture of them with their winning machine and a big cardboard check showing one and all how much they've won!  Woo Hoo!

Slot Machine Myths

A pretty nice article from a Tunica, Mississippi television station helps burst the bubble regarding some myths regarding slot machines. The story is linked here. The essence of the bubble bursting is the presence of a random number generator inside each slot machine. It determines wins and losses.

From the article the myths are (with my commentary):

1. "Hot" and "cold" machines. The random number generator, being an electric component, can become warm when inside and operating in a machine, but other than that on a per-pull basis, the result is the result. What happened last pull doesn't have an impact on the result of the next pull. Sad but true. That being said, just because a jackpot was won the last pull, doesn't mean you won't get a jackpot on the next pull. Highly unlikely given the typical payout distribution of the machine, but it is theoretically possible.

2. Using a player's club card helps you win. Nope. Those cards help track your play, which if plentiful can earn the player benefits and perks, but the slot machine doesn't modify its payouts depending on who is playing.

3. Casino management controls who wins. If that were true, you'd be seeing LOTS of lawsuits. No, the machines operate independently from casino management's ability to control who wins and when. Machines typically go through vigorous regulatory testing to ensure proper operation before they are approved for use.

4. Machines alter payouts depending on how much money is bet. Again, the result is determined on a per-pull basis, not on a per-bet basis. Is it possible that if you had wagered on more lines than just the minimum you may have won on a particular pull? Sure. But remember you would be wagering a lot more money per slot machine pull, which may mean your bankroll would potentially go away a lot faster (unless you win of course).

5. You can determine the odds of the machine based on physical examination of the reels. Not even close to being accurate. Hate to break this to you but with newer games, the reels have no impact on whether you win. Huh? Yep. I posted this back in 2008 explaining this, which you can read here. What happens in modern slot machines is that when you push the button (or still pull a handle), the machine determines if you win and if so, how much, THEN the reels will spin and stop on various symbols in order to reflect that resulting win (or loss). A bit disappointing, isn't it?

Delaware Sports Betting Bill Progressing

The legislation to authorize sports betting in Delaware passed a legislative hurdle this week. The Delaware House Gaming and Parimutuels Committee released the bill from their committee this week. Certain gaming interests, the NCAA, NFL and anti-gambling interests had been against expanding sports gambling, but the State's need for revenue to relieve a projected shortfall outweighed the special interests' lobbying. More detail on the bill can be found in the Forbes.com article.

The bill keeps the number of casinos at three, but increases the tax rate on slot revenue and institutes a $4.5M sports betting license fee, split among the three casinos. I understand the need for revenue, but increases in gaming taxes don't always translate to increased revenue. In addition, it is important that the casinos are able to generate a profit as well. They are the entities that are taking the business risk.

The sports betting license fee is a bit steep. Assuming the win % on sports betting is 5%, the casinos would have to generate $90M in wagers just to cover the license fee. That doesn't take into their costs of betting lines, sports book property, plant and equipment, advertising and labor costs. The sports bets provided had better be attractive in order to generate sufficient wagering interest. If Delaware just sticks to a sports lottery, requiring a parlay of two or more bets, that offering alone may not be sufficient.

Delaware needs to offer the full spectrum of sports wagers, to include the new pari-mutuel fantasy sports wagers. Fantasy sports is big business, and the three Delaware casinos are racetracks as well, very familiar with pari-mutuel wagering. Also, these tracks already have the proper pari-mutuel equipment in place, just requiring minor software modification to allow pari-mutuel fantasy sports wagers. With almost 30M fantasy sports players in the US, there's a large potential market. Since the population base within a 90 minute drive from Delaware is approximately 35M, there may be as many as 3.5M fantasy sports players as an addressable market by Delaware casinos.

With the pari-mutuel concept, the takeout is much higher than that for parlay bets or straight bets. Pari-mutuel takeout percentages are often 18% or higher. Assuming just a 15% takeout,
only $30M in pari-mutuel fantasy sports wagers would be required to generate the $4.5M to cover the annual license fee. Since the significant portion of the pari-mutuel infrastructure is already in place, this concept could be an easy and profitable portion of the overall sports betting offering.

To learn more about pari-mutuel fantasy sports wagering, see the YouGaming.com website.

Slot Machine Sleight Of Hand

Do you think that when you "almost" win a jackpot, the machine is "due?" Think again. It's all part of the designed illusion to entice you to stick around. The Ottawa Citizen has a great article that explains the operation of modern slot machines. The good thing about newer machines is that there is the potential of huge jackpots. The bad thing is that there are a lot more losing plays.

The sea change in slot machines came with the Telnaes patent in 1984. His description of the invention says it all: "It is important to make a machine that is perceived to present greater chances of payoff than it actually has within the legal limitations that games of chance must operate."

What does that mean? Well basically, when you play, the microprocessor in the machine determines if you win some, lots or nothing. What's so bad about that, right? Well...there's a kinda bad and a really bad. The really bad you won't see in North American casinos, but the kinda bad you will.

The kinda bad is that modern machines program the non-winning symbols (usually blanks, but they count as symbols) to show up much more than winning symbols. For example, lets say the machine you're playing has 3 strips with 22 symbols on each strip, half of them blank. Assuming random chance, you would think a blank would happen 50% of the time on each strip, which would be correct. What if you knew the blanks were programmed to happen 90% of the time on each strip? The visual representation, however, lets you make the logical mental assumption that each symbol has an equal chance of occurring. Nope.

The really bad is when you play, the microprocessor determines if you win some, lots or nothing. If nothing, then the microprocessor tells the machine what symbols to stop on. That's not really bad. The really bad is that the microprocessor programs a loss to look like an almost win to make you think you just missed. That's really bad. Again, no North American jurisdictions allow this kind of machine. However, even with the kinda bad, you tend to get a lot of "near misses."

So why do this? So you will play longer. Read "play longer" as "lose more money."

"Near-misses create an "Aww, shucks" effect that keeps slots players glued to their stools. Studies have shown that frequent near-misses lead to significantly longer playing times. As one researcher put it: 'The player is not constantly losing, but constantly nearly winning.' "

So, if you know that, and keep that in mind while playing, you hopefully will continue to enjoy playing, but not get caught up and let your play get away from you.