Congratulations, You've Lost! How Slot Machines Disguise Losses as Wins

Photo: firepile

Casinos are designed for a single purpose: to separate you from your money. And they’re good at it. Commercial casinos in the U.S.  made nearly $35 billion in revenue last year, up a percent from 2009.

While they represent just a fraction of that revenue, slot machines are the casino gateway drug for the least savvy gamblers. It’s why they’re by the door. More than any other casino game, slots condition people to keep playing through positive reinforcement (bells and whistles). And the odds have gotten worse as technology has improved.

Though today’s sophisticated multi-line machines have a higher “win-rate,” the amount won is negligible, and often less than what was originally gambled. A recent study by researchers at the University of Waterloo in Ontario, finds that these multi-line machines are more effective than their single-line predecessors at taking money from the gambler by disguising losses as wins.

Casino slots today are dominated by multi-line machines, which allow you to bet on a multitude of combinations: up, down, diagonal, rather than just hoping for the three 7’s to line up across the middle on an old-school single-line machine. While that may seem like an advantage, it’s harder for the average person to accurately calculate the odds of multi-line machines.

The table below shows how losses are disguised as wins based on the number of lines the user has bet on:

Though you may win more, the pay out is often lower than what you’ve already put into the machine to begin with. So you get the bells and whistles, but it’s really just a fancy loss.

Joshua Northey

I am not really sure why casinos are legal. They are the definition of unproductive economic activity. A lot of money spent in them is government money too as the population is so skewed towards the aged, uneducated, and unemployed.

I mean we could legalize highway robbery too, or fraud, those would be "growth" industries, but no one thinks that is a good idea.


I enjoy gambling. I treat it as what it is, entertainment. I go a couple times a year, bet relatively small amounts, play games that maximize my playing time/enjoyment per dollar loss, and have a set amount I'm willing to lose as I enter the casino. Why should I be penalized by not being allowed to patron a casino because some people aren't responsible?


Since when is only "productive" economic activity legal? You're basically making a case that all forms of entertainment should be illegal.


I prefer to think of the casino's edge as entertainment cost. the longer one plays the machines, the more the casino realizes it's take - what 5-9%. However, for less entertainment, the gambler can always stand up and take any winnings that happen his/her way. But, eventually, the odds favor the casino so one needs be realistic and consider that share as cost of entertainment. With reasonable bets, even Keno will allow one to play for many hours with few dollars cost - less than a movie. Plus, if you use a casino membership card, you can get an occasional free meal. If that's your version of fun, go for it. But if you are in it for the money - well, casinos are traps for people poor at math.

Joshua Northey

If I thought the majority of a casino's traffic was there for entertainment I would be all for it, but from the people I have known who frequent casinos 90% of them as just pissing money away in the hopes of striking it big.


So we should ban it for everyone because some people you know can't control themselves?

Joshua Northey

No we should ban it for the simple reason that the cost of the activity outweigh the benefits (which are almost nonexistent).

Liberty is not the only value.


I am not sure if I am reading the charts correctly.

What these seem to tell me is that if I wager on multiple lines, my probability of a regular win increases? (with the exception of 6).
So, If I have $300 to wager, I am better off betting $20 each on each of the 15 lines in one single spin (RW=14.2%) than betting $20 on a single line each time for 15 different spins (RW=5.1%)

I think we need to compare this with the RW% of a single line machine.


What's missing here is the mean amount won. The chart is saying that more than 14% of the time a 15-line bet returns more than you put in -- but often it may return much less (as a multiple of your total bet) than a single-line bet. The intuition here is simple. Suppose the machine only had three end-states for a $1 bet on a line: Jackpot ($5000, which happens once every 10,000 spins); Cherries ($2, which happens once every 5 spins); and lose ($0). The total expected value in any bet is .5 + .4 + 0 = 90 cents out for your dollar in.

If you bet one line, you'll win 2001 times out of every 10,000, on average, with an average win amount of 9000/2001 (just over $4.5 per winning spin).

If you bet on two lines (5000 plays of $1 per line), you still have an expected value of 90 cents per dollar bet (or $1.80 per play). Now, you'll likely lose about 16/25 of the time (or be real precise, and say (7999/10000)^2). About 4% of the time you'll win $4 (both win $2). About 1 time in 5000 you'll win about $5000 ($5002 1/5 of the time, $5000 4/5 of the time). And the rest of the time (about 32% of the time), you'll "win" exactly the $2 you bet. If we count those as wins (which the casino would), then your $9000 is spread across a greater number of winning plays, so your average win is smaller.

Of course, this highlights the big difference between playing "for entertainment" and playing "to win." If you really want (or need) to win, even knowing that you're playing against the odds, you should put all the money you plan to bet into one wager (e.g., one blackjack hand or craps bet). If you play well, about 49% of the time, you'll succeed (and come away with the win you need), and 51% of the time you'll lose it all. You won't waste any time gambling (scale to larger-odds bets and lower chances if you need to triple or quadruple your money). Some people do this, but for most of us, it is no fun.

By contrast, if you play for hours and hours (leaving out games like poker or even sports betting, where a skillful player has an advantage), your chances of leaving as a winner at all get smaller and smaller, and the distribution shifts more and more towards losses and small gains. That's the price you pay for entertainment.

Personally, I'm happy with that. I don't think we should outlaw going to baseball games either. I pay for the privilege, and when I leave I have less money (tickets, hot dogs, and the rest) and just the memory of having been (well or poorly) entertained. Society is no better off. Nothing productive has happened. And I probably enjoyed that.



I am not really sure why restaurants/movies/DVD rental/music/concerts/alcohol/cigarettes/candy/fast food/buffets are legal. They are the definition of unproductive economic activity. A lot of money spent in them is government money too as the population is so skewed towards the aged, uneducated, and unemployed.

I mean we could legalize highway robbery too, or fraud, those would be “growth” industries, but no one thinks that is a good idea.

Joshua Northey

I think the idea is that in most of those cases the people are getting more or less what they expect, casinos are built around deceiving people.

Its not a big issue for me, but I used to spend a fair amount of time playing cards for money (and winning a couple thousand/year) in some casinos, and nearly everyone I saw there who wasn't playing cards or sports betting was there for horrible horrible reasons. Depressed impoverished low class people desperate for some glimmer of hope.

Casinos as entertainment don't bother me much, but at least in the native run casinos in Minnesota mostly they seem to be a way to bilk Social Security/Assistance checks and pensions out of depressed grandmas, and the unemployed. You don't really see any well dressed or even happy looking people outside of the card rooms or sports betting areas.


I'd like to see a table showing the average payout for each number of lines bet. Or is it the same regardless?


When I first saw these “multi-line” machines, my first thought was that since many of the lines overlap, they are not independent, so playing 5 lines increases your potential loss by 5 times but increases your potential win by less than 5 times. If you only play one line, though, the machine taunts you by pointing out the combos you missed by not playing those lines.

Also, does anyone else find it extremely creepy when “frequent gamblers” have those cards on lanyards that they plug into the machine? It’s really unnerving to see rows of people with totally expressionless faces physically tethered to the machine like some weird sci-fi dystopia.