poker machine mathematics II

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.

8 thoughts on “poker machine mathematics II

  • July 18, 2011 at 5:42 am
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    Thanks for the explanation. I never really believed this hype of ‘return to the player’ rubbish because my experience was completely the reverse. The breakdown you have given proves that.

    I think these explanations belong in a community education strategy and for one wild (and unrealistic) moment, I fantasized about people having to get a licence to gamble. As with motor vehicle licences, they would have to undergo education about the risks. It won’t happen, will it?

  • July 18, 2011 at 5:53 am
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    Something that I always wondered ……

    Sometimes the machines at a particular venue would seem really flat. Nobody seemed to be winning much. Could this be explained by the ‘computer’ recovering wins from a previous session …………..when the machines were buzzing? We have all seen those times.

    And is the ‘equalisation’ confined to each venue … I mean does the balancing out of odds apply just to each venue …. or is it computed across regions or the whole of Melbourne?

    It is an even more cynical exercise if that is the case. It means that the odds don’t apply to the individual, if I am understanding you correctly.

  • July 18, 2011 at 8:40 am
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    Braveheart, I am currently looking at putting together a short publication comprising these first two pokie mathematics articles with a few more, with the aim of making it available as a resource for the gambling education programs being run in our schools (in Victoria at least).

  • July 18, 2011 at 8:44 am
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    My understanding is that all pokies are random by law… but that is within the limitation that over the course of millions of games, the payout percentage can be prescribed. I don’t believe the pokies in a venue would go “flat” to compensate for earlier wins, the timeframe is much greater than that. But I can certainly believe that dry spells would occur.

    My understanding is that the percentages are applied across the board to all poker machines, not individual machines or venues. And yes, if that’s right then the percentages do not apply to the individual. That’s another deception.

  • July 18, 2011 at 9:14 am
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    Excellent article Tom…I wish I had ‘got it’ years ago and not when it was almost too late to do something about it.

    Tim Falkiner’s information was the very first time I ever was given any ‘odds / money spent/ deception’ information that made any sense at all…and that was at a conference for gambling addicts and the care sector in 2007…past the END of the road…not at the BEGINNING in 1993.

    This is the sort of ‘maths’ information that every potential pokies gambler should be given before they ever begin to use pokies. Registration of the target market allows important information about odds and misleading ploys of pokies to be handed out in a form that is appropriate for each pokies gambling consumer. Braveheart’s suggestion of licensing would be excellent to achieve that outcome.

    Education in schools is fine but alone does not stop later ‘over-drinking’ and harmful drug taking…so where should interventions follow on? TV ads may have some effect with families…but most pokies gamblers tend to shy away from them as not applying ‘to me’…as is evidenced by the low level of access to care groups. Signs in gambling venues do little to stop over-spending. People do not understand ‘odds’ as they DO see others ‘winning’ and every now and then they DO have a win. Every pokies gambler also needs to get such information before gambling.

    Gamblers like other consumers must be given every opportunity to set budgets. Registration would assist there also since all pokies gamblers could receive their legally entitled transaction records. Too often pokies gamblers ‘spend the lot’ because a) they misunderstand the ‘odds’ issues and b) they do not effectively recall their TOTAL gambling spending…and THEN look for budgeting help…TOO LATE to do a lot about it.

  • July 18, 2011 at 9:23 am
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    It is also my understanding and experience that machines ‘go flat’, Braveheart. I also suspect that it is not ‘random’ coincidence. Just like slower download speeds can slow a computer application, I wonder if a variation of ‘speed’ can also be applied to gambling machines, that alters the payout?

    Also some patented ‘games’ have around 7-8 different patents to cover different ‘pay out’ versions so consumers would not know what version is being applied at any time in venues. The machines can be altered. Consumers using a poker machine one day are not always using the same game version the next!

    I would like to see all technician reports being public information lol!

  • July 20, 2011 at 8:07 am
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    Thanks for the responses. I wish I understood the mathematics as they apply across the board a little better. I once knew a former problem gambler who managed a hotel venue and he said that it was known that particular venues would go flat at different times but this comment is anecdotal, not evidential.

    I don’t think that education campaigns work for all people at all times either, Libby. People generally have to try the ‘drug’ if they feel that way inclined and they may learn from experience.

    As you may be aware, my own experience was that prescribed neurological medication precipitated my own gambling. I would not have gambled had that not occurred. And unwittingly taking the medication every day meant that I simply had no chance of understanding what was happening. I sought help from GH professionals, psychiatrists and a psychologist to no avail. The ‘Women’s Weekly’ this month outlines the experience of other women who had the same experience.

    The point of this is that everyone’s experience is different. There is no universal cause for problem gambling.

    I think that problem gambling messages in venues are impotent, however. They say something like ‘no-one can really win’ but without understanding more, this message fails completely. The TC ad showing the woman digging up the park in search of buried treasure is quite effective, however.

    Explanations of the ‘odds’ such as those Thomas has given emphasize the systemic deceits and motivate us to continue to work for major containment of the pokie gambling industry.

  • July 21, 2011 at 6:08 pm
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    I have spoken with the SA Office of the Liquor and Gambling Commissioner (OLGC) on the “return to player” (RTP) issue.

    SA’s Gaming Machines Act 1992 Schedule 1—Gaming machine licence conditions…states

    n) that the licensee will not permit a gaming machine to be operated unless the machine, or the approved game played on the machine, returns winnings to players at a rate that is NOT LESS THAN —

    (i) in the case of a machine or game installed before the commencement of this paragraph—85 per cent;

    (ii) in the case of a machine or game installed after that commencement—87.5 per cent,

    of the total amount of all bets made on the machine;

    Failure to comply with the law makes the operator guilty of an offense.

    I found machines that had returned less than 85% over their lifetime (one had returned just 77%) and approached the OLGC to lodge an objection. At the time I did the investigating, the machines had all taken well in excess of millions of dollars of bets.

    What did the OLGC officers say? “You have to understand Ms Pinkerton, the RTP is theoretical”

    No matter that I said, the wording of the law – i.e. MUST NOT RETURN LESS THAN 87.5% – doesn’t sound ‘theoretical’ to me – it’s quite specific, they kept insisting “I didn’t understand”, that “it would be impossible to make all machines return 87.5% of each individual bet” and that “I just wanted to shut all the machines down” (which I did but that was irrelavent to my argument). I kept itterating that the machines I found were operating outside the letter of the law and should be shut down. They kept trying to explain that the RTP was calculated from millions of bets made over the life time of the machines.

    The OLGC officers then changed tack saying that “they calculated the RPT applies to THE AVERAGE RTP on all machines of the same type in SA”. Therefore, as long as all 1 cent, 9 line Dolphin Treasure machines set to return 87.5% in the state TOGETHER returned 87.5%, they were considered to comply with the law.

    As the law on RTP in SA relates to “Licence conditions” – and effects the operators right to operate poker machines – I asked how an operator in Adelaide city can know his machine is compliant given that he has no access to machines that may be paying out greater than 100% of monies bet on them?

    By this time the OLGC officers frustrations (and mine) were stretched to the limit. The OLGC offcers said, “As long as a machine is set to return more than 87.5% and that each machine approaches the set RTP OVER ITS LIFETIME, it can be considered to be complying with the law”….

    So regardless of what any machine actually returns it is considered to comply with the law. A machine could return just 20% of the value of all bets made for 15-20 years or more before being taken out of service, and be considered to be complying with the law that whole time because the “lifetime of the machine” cannot be known until it is taken out of service!

    Worse yet, if a machine returns less than 87.5% for 12 months or more, no one does a thing about it – the machine is deemed to be operating correctly…BUT should any machine suddenly return more than 100% of all bets made on it for more than a month, the operators call in the machine checkers to check if all is okay…if no fault is found, they remove the machine from service because any machine returning more than 100% over a 2 month period is considered to have some kind of “computer error” in it.

    So, if operators make more than they should, the regulators declare it’s an anomaly of the maths. If operators make less than they should, then the machine is deemed faulty and it gets taken out of service!

    Talk about screwing over the customers!!!

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