Slot Machines RTP in the US Lower Than Ever

Have you ever gone to a casino intent on making it big at the slot machines, only to leave broke and disappointed? No matter how many times you spin the reels, absolutely convinced that you will hit a good combination next time, you just can’t seem to win anything bigger than peanuts. You might chart it off as bad luck, or maybe a bad day, but in fact, it’s not just that – slot machine RTP has decreased almost 15% over the last 15 years across the country, according to new statistics.

For those of you who are unfamiliar with the term, RTP, also known as “return to player”, is the amount returned to the players, under the form of winnings, out of all deposited cash. For example, if a slot machine’s RTP is set to 95% and $100 are deposited in it, on average $95 will be distributed among the various players as winnings while $5 will be kept for the casino. The opposite of RTP is known as “hold”, which is the percentage that the casino keeps for itself (in the example above, the hold would be 5%).

Throughout all of slot history, players have complained about them being “unfair”, but those complaints have often being dismissed as just sore loser talk. Well, Marcus Prater, executive director of the Association of Gaming Equipment Manufacturers, finally decided to address these complaints by hiring Las Vegas-based advisory firm Applied Analysis to inspect slot machines nationwide and compile statistics that show whether or not there’s anything to the gamblers’ accusations. As it turned out, they were quite a lot more substantial than anyone had suspected.

According to the study, the nationwide hold in 1990 was only 5.9%, which has increased to 7.7% in 2014, which may not seem like much, but it’s a dramatic change, meaning that players were now a lot less likely to win than they were in 1990. The study examined statistics from each of the 12 states in which gambling is currently legal, determining that perhaps a part of the problem might be the decrease of gambling-free states. While in 1990 only 3 states allowed casinos on their soil, that number has grown 4 times over 15 years. In states such as Nevada, where gambling is a big part of the culture, the hold is as low as 6.4%, while in others like Iowa the hold percentage is 9.37% – almost twice as high.

However, that’s not the only possible answer to the riddle that Applied Analysis are contemplating. As sad as it is, a much more likely answer would be a “self-fulfilling prophecy”. Gamblers complain about slot machines being “too tight” and stop playing, and since there’s less people playing casinos are forced to increase the hold in order to profit, which makes gamblers complain, and the whole circle starts from the beginning. While certain slot machines (mostly the ones where profit is shared with the manufacturer) do not allow any adjustment to the RPM, most have left it almost entirely at the owner’s leisure. In theory, they could even make the hold 100%, though of course it’ll never come anywhere near that level. My point is that it’s mostly up to casino owners to adjust the RPM in order to meet market demands… And that adjustment isn’t always good.

To add some weight to this hypothesis, Applied Analysis have also collected statistics on casinos’ average profits throughout the 15-year period of the study. As it turns out, slot machine revenue has decreased by a full 5% over 10 years, from $7.09 billion in 2004 to $6.74 billion in 2014, which, again, might not seem like much, but we’re still talking hundreds of thousands of dollars here, especially when you consider that the all-time high for slot profits in Nevada came in 2007, where they brought a grand total of $8.4 billion – not even close to what they’re making these days. Sure, a lot of things could be blamed for this, such as the economic crisis and the subtle decrease in casino’s cultural relevance, but it’d be naïve to believe that the gradually increasing hold didn’t have anything to do with it. So we can quite clearly see that despite the decreased RTPs profit is not only not going up – it’s actually decreasing at an alarming rate.

Keep in mind, the above statistics were purely for the profit of the slot machines – how much the hold allows casinos to keep for themselves. But when it comes to overall player interaction, the numbers tell a similar story. In Nevada, slot machine wagering has gone down an astounding 23%, from $138 billion in 2006 to only $105.4 billion last year. If this rate keeps up, slot machines may continue to lose relevance and become nearly obsolete in the eyes of gamblers in the US. “Consumer spending has improved in most major gaming markets throughout the United States in recent years, while gaming volumes continue to contract”, the firm explained in their report.

According to executives of the trade association’s board, the study was done “to open a dialogue” between manufacturers and casino operators in order to come up with a solution to the problem that can benefit both parties and restore slot machine performance. According to Tom Jingoli, Senior Vice President of Konami Gaming, the study was meant “as a talking piece and not a broad brush stroke for the gaming industry”. Certain elements might help revitalize the declining medium, such as the legislative changes that were approved this year to allow for skill-based elements (such as the ones found in various videogames) to be aded to slot machines, but as a whole the future of slot machines remains in peril. While the decrease in profits may not seem dramatic or serious at the moment, if it continues it could snowball into something that could potentially hurt the entire industry.