A short while ago I published The Truth Behind Poker Machine Mathematics, an article that explored how poker machines can pay out 90% while still taking every dollar you bet. I wrote about Gladys, the hypothetical resident of a hypothetical nursing home whose losses were sadly all too real.
But it’s true that not everyone always loses their money on the pokies. Sometime people win. It happens.
The key question here is: what really happens when someone wins?
Let’s take the case of five mates: Andy, Bob, Chris, Davo and Ed. These five likely lads head out for a meal at their local club. It’s $9.90 steak night, always a good night! Afterwards, they decide to have a “flutter” on the pokies. Just for an hour, to let the beer settle before driving home. They’re good boys, these blokes. Responsible.
Now, just like our friend Gladys from Poker Machine Mathematics I, these boys are not hardcore pokie players. They joke around and have a laugh, and as a result they don’t play that fast. On average, they each play about 10 games a minute. Pretty slow for a poker machine really, considering that the poor soul in the corner feeding notes into his machine at an alarming rate is playing at close to 30 games a minute. And they only bet $1 per game; it’s all just a bit of fun, after all.
Let’s not forget that poker machines are programmed to return somewhere between 85 and 90%, over time, to the player. That’s across the board, after millions and millions of games are played. The pokies at this imaginary club operate at an average 90% rate of return.
The boys take their seats and start playing, and it turns out that this is Andy’s night. He slips $20 into his machine, and gets lucky. He has a big win, and another one a little while later. His machine seems to be on fire, and after playing for the allotted hour he hits collect. His payout? $120. Andy’s got his money back and made $100 profit; he’s a happy man.
His mates, however, have not done so well. In this hypothetical situation, we’re looking at a 90% rate of return across the group. Andy’s blown that out of the water… at 10 games a minute for an hour, he’s pressed the Bet Now button 600 times. That’s $600 worth of bets on his poker machine, for a $720 payout… leaving him with his $120. Given that a 100% rate of return would have simply given him his money back, that equates to a rate of return of 116.67%.
The pokies don’t like that. They’re programmed to return 90%… not 116.67%. So they did what they do best, and made up the difference somewhere else. That’s where the rest of our boys come in.
What happened to Bob, Chris, Davo and Ed? Just like Andy, they sat down at their machines, slipped their $20 in and started playing. But they weren’t so lucky, because really, luck has nothing to do with it. The 90% average had to be maintained.
They each blew their $20 in 12 minutes.
That’s how it works. Each of them had to lose MORE than the average, in order to offset Andy’s win. And because they were only spending $20 each, that means they had to lose it fast.
But it could have been worse. Imagine if our four “losers” decided to play “just a little bit more”, to keep playing for the full hour? Happens all the time. “A little bit more” won’t hurt, really, and they’re just marking time until Andy’s done.
If Bob, Chris, Davo and Ed had decided to keep playing for the full hour, they would have ending up losing $100. Each. Simply to offset Andy’s win. That’s the only way the magical 90% figure could be maintained.
In both scenarios, Andy’s four mates ended up with a rate of return of just 83.33%. No matter whether they lost a small amount of cash quickly, or a larger amount over the full hour, that’s what their rate of return had to be. HAD to be. Simply because Andy won.
And that’s the thing about poker machines; when one person wins, countless others lose. It’s the way they’re programmed, and there’s nothing anyone can do to change it. For every Andy who wins a modest amount on a casual “flutter”, there’s a host of Bobs, Chrisses, Davos and Eds who walk away with nothing. The bigger the win, the bigger the losses.
In closing, I have to point out the third option. It’s possible that Andy’s mates didn’t have to lose their cash so fast, or in such unexpectedly high amounts, to compensate for his win. Remember that poor soul in the corner? He’s still there, still feeding notes into his machine and hitting that button close to 30 times a minute.
He’s down hundreds of dollars every day. Thousands every week.
And there’s tens of thousands just like him, around the country.
That’s where the winnings really come from; the pockets of those who can’t stop.
That’s poker machine mathematics.