the great jackpot swindle

Jackpots are synonymous with poker machines. I don’t believe there’s a poker machine room in the country that doesn’t offer jackpots; clubs, pubs or casinos, the jackpots are a constant.

They’re a lure to play. When you see that big sign with the numbers ticking over, often in the thousands of dollars, who wouldn’t be tempted to drop in a few dollars and try their luck? Jackpots are a tried and tested method of getting people in front of the machines, even though the chances of actually winning the “big one” are millions, sometimes billions to one.

The industry knows it. The current proposal to introduce $1 maximum bets includes a reduction in the maximum jackpot amount to $500 (down from $10,000). This has been vigorously attacked by Clubs Australia; their CEO, Anthony Ball, has been extremely vocal on the subject. As he wrote on The Drum last year: “Who would play a machine where the most you could win was $500?” Clubs Australia even issued a media release in January this year attacking the Greens for “hiding” the “bad news” about jackpots.

The manufacturers know it too. All of the big poker machine manufacturers have their own jackpot systems that work with their machines. Every year existing jackpot systems are refined and new ones introduced, because they know that jackpots are a lure to get people playing. And once they’re playing, statistics show that many of them don’t stop.

Everyone thinks that poker machine jackpots are a bonus prize, an “extra” that you can win on top of whatever your machine might pay you… but this isn’t true. Poker machines never pay out more than they have to, and that includes jackpots. The truth of the matter is simple.

Jackpots are a con.

It works like this. Poker machines have to return a certain percentage of all money bet to the player, over time. This is called the return to player (RTP) determined by legislation and is different for every state and territory. Right now, the percentages look like this:

ACT – 87%
NSW – 85%
NT – 85% for clubs, 88% for casinos
QLD – 85/92% for clubs/pubs, 90% for casinos
SA – 85% for games installed before 1/10/01, 87.5% for games installed after 1/10/01
TAS – 85%
VIC – 87%
WA – 90% (casino only)

That seems high… but as I explained last year, any poker machine can pay out exactly what they’re supposed to, and still take all your money. Simply put, most poker machines have to return 85 – 90% of all bets to the player.

Jackpots are included in this. They are not some generous bonus prize, but are paid for and incorporated into that RTP percentage.

Every time someone plays a game on a poker machine with a jackpot, a small amount of money is added to the jackpot. That money counts as part of the RTP. And what THAT means is that the actual money returned to players during normal game-play on jackpot-enabled poker machines is LESS than the legislated minimum.

And it’s legal.

What does this mean? Well, it depends on the jackpot. There are two kinds of jackpots for poker machines; stand-alone, and linked.

Stand-alone jackpots only apply to a single poker machine, and are usually displayed above the screen. If you’re playing a poker machine with a stand-alone jackpot, you’re the only person who can win it. So if you’re in Victoria (like I am) where the legislated minimum RTP is 87%, it’s common for stand-alone jackpot poker machines to pay a small percentage (3%, for example) into the jackpot pool, and the rest (84%, for example) to the player. This isn’t such a big deal, as it’s all happening on the same machine for the same player. But the jackpot certainly isn’t any kind of bonus prize; it’s offset by the fact that the poker machine returns less in regular game-play.

Linked jackpots are a little different. This is where multiple poker machines (usually four or more) are linked to a single big jackpot. That’s when you get the big sign over a bank of poker machines displaying the jackpot amount; any of those machines is eligible to win that jackpot.

Money is added to linked jackpots in the same way as it is to stand-alone jackpots; the only difference is that it takes that money from all of the machines connected to it. Every time someone plays a game on any of the poker machines attached to a linked jackpot, the jackpot goes up.

Again, this means that a linked poker machine will pay a small percentage into the linked jackpot, and the rest to the player. But now you’re competing against all the other players… and if you don’t win (and let’s face it, these big jackpots hardly ever go off) then you’re stuck with a poker machine that’s paying you less than the legislated minimum.

Still legal.

Some linked jackpots only take 2% or 3% from a poker machine’s RTP. That’s bad enough, as it decreases the chance of winning anything and, therefore, increases the chance of losing. But some take far more.

I dropped in to a poker machine venue near my work this morning to take a look. Yes, it was open at 8am and yes, there were half a dozen people playing… that’s a story for another day. But I pressed the “information” button on a one-cent Oceanus poker machine, one of several attached to a Grand Central jackpot worth more than $9000. This is what I saw.

While this poker machine had a “theoretical” RTP of 93.07%, which was higher than the minimum, 9.49% of that was being returned to the jackpot. The rest (83.58%) was what was being returned to the player.

Some machines are even worse. Gaming machine approval records show that there are poker machines out there (such as Double Happiness, Zorro Unmasked and 5 Koi) that actually have an RTP of around 78% or less. The difference is “paid” into the jackpot.

So next time you’re tempted to play a jackpot poker machine, remember that the jackpot isn’t a bonus. You’re paying for it with every bet you place, and lowering your chances of winning at the same time.

No wonder the industry loves jackpots.

21 thoughts on “the great jackpot swindle

  • April 19, 2012 at 3:53 pm
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    Most people who play machines know that this is the case. The fact that you have just “stunbled” on it now doesn’t mean that there is a huge conspiricy by the venues. ALL jackpot contributions go back to the player when the jackpot is won so it is ALL returned to the player. Like anytime you play the machines, you have to press the button at the right 1000th of a second to win. But this would interfere with your scare campaign. Can’t have that can we???

  • April 19, 2012 at 4:02 pm
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    Peter,

    1. No. Most people who play poker machines do NOT realise that their chances of winning on their machines are REDUCED, often significantly, if they are playing for a linked jackpot. The common misconception is that the return on all poker machines is the same, and that jackpots are a bonus.

    2. Show me where I say I just discovered this, or where I say there is a conspiracy. My point is that the industry knows how lucrative jackpots are for them (rather than the players).

    3. This is not a scare campaign; everything in this article is true, backed up by documentation from the controlling bodies for poker machines in three states.

    But of course, you and I both know that YOUR line of work is somewhat dependent upon a flourishing poker machine industry. Interesting that you didn’t declare that when you accused me of running a scare campaign… and it may also explain how you already know all this.

  • April 19, 2012 at 4:14 pm
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    ALL monies are returned to the players via the jackpot, so why would the industry think jackpots are lucrative? Doesn’t make sense.

    I’ll survive no matter what happens to the industry so don’t worry about me.

    I just believe that people should be given a balanced approach when it comes to pokies and not a one sided approach by someone who has a history.

    PS Is this why you stopped following me on twitter?

  • April 19, 2012 at 4:17 pm
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    “PS Is this why you stopped following me on twitter?”

    I wasn’t aware I started. Industry apologists aren’t my type.

  • April 19, 2012 at 4:45 pm
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    Industry apologist??? LOL

  • April 19, 2012 at 6:14 pm
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    Tom

    Depends on the type of jackpot some indeed are above an beyond the return of the machine and the machine can legally operate without them. In other instances its not the case.

    You still don’t seem to have grasped the concept of how gambling works. Most people will get less than the advertised return to player, in order that a few lucky people get a much higher return. Nobody would gamble if for every bet they were guaranteed to get a return of 90%.

    For instance last year my lotto return was an amazing 0%. That’s right the few times I played I got absolutely nothing back, I am sure I am not alone. On the other the lucky sod who won the jackpot got a massive return. Overall the lotto would have returned the legislated minimum.

    The volatility of returns is the exact reason why people decide to make a bet in the first place. Reduce that volatility and you reduce the appeal of gambling for all (not just problem gamblers).

    I certainly wouldn’t buy a lotto ticket or play a pokie if most times I got 80% of my meny back and occassionally I could win $500. And I’m certainly not a problem gambler, nor at risk of ever becoming one.

    Ted

  • April 19, 2012 at 6:58 pm
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    Ted,

    You may work for Clubs NSW but I’d say I have a far better understanding of gambling than you do.

    What you’ve avoided mentioning in your comment about volatility is that, by law, every poker machine has a legislated RTP that it must meet over time, generally 12 months. Yet for some poker machines the actual RTP is significantly lower than the legislated minimum, because they contribute a percentage to the jackpots instead.

    Show me where in this article I talk about problem gambling or addiction. Oh, you can’t… because this article was about returns and percentages, and poker machines that pay out lower OVER TIME than people would otherwise expect.

    Don’t let your agenda hit you as you leave. I will not publish any more of your comments.

  • April 20, 2012 at 6:50 am
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    Section 3.6.1 of the Victorian Gambling Regulation Act provides:

    “3.6.1 Returns to players
    (1) A gaming operator or a venue operator who holds a gaming machine entitlement must ensure that the pay-out table on gaming machines at each venue is set so as to return to players the players’ proportion of the total amounts wagered each year at that venue, after deduction of the sum of jackpot special prizes determined as prescribed and payable during that year.
    (2) The players’ proportion is—
    (a) not less than 87%; or
    (b) if the Commission determines in accordance with subsection (3), a fixed percentage greater than 87%.
    (3) A determination under subsection (2)—
    (a) must be made by notice published in the Government Gazette; and
    (b) must be expressed to have effect on and after a specified date.”

    The key words in sub-section 1 are “at that venue”

    It is the whole venue that must comply not individual machines. Machines specifications are found in the machines standards. The Machine RTP is over the spin cycle of the machine. That is somewhere between 80 and 200 million spins.

  • April 20, 2012 at 7:46 am
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    Paul,

    I did say it was legal, more than once. Legal does not automatically mean ethical.

    And again, the misconception is that each machine must meet the minimum legislated RTP. Thank you for highlighting another way by which this isn’t the case.

    Appreciate your support.

  • April 20, 2012 at 9:31 am
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    Interesting piece! The other aspect of this is that pokies earn the house 10%-13% at least, as against table games which earn the house (typically) 1% to 5% (although in Australian and US casinos the rules are often changed to increase the house take (i.e., by adding 00 to the roulette wheel). In casinos, pokies are known as ‘the grind’ – a large number of relatively small value transactions with a big house edge which make the casino’s bread and butter. The jackpot system also helps to skew the distribution of pokie outcomes so that most if not almost all players spend all their money – a small number of large events means that theoretical RTP will be achieved over the life of the game (maybe 5 to 7 years) but never over the duration of a session of play. Just another utilisation of the principles of probability to keep pokie players broke.

  • April 20, 2012 at 9:42 am
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    You keep referring to “legislated” yet when you have the legislation before you, you indicate that the legislation is somehow something else. Section 3.6.1 is what the legislation says not your misconception.

    Furthermore, all the gambler has to do to find out accurate information is press the prominently displayed ‘i’ button and the RTP is fully disclosed.

    There is nothing advertising any RTP other than what’s actually disclosed on the machine.

    Unlike every other state, Victoria is doing a great job in this instance. Totally ethical. Totally transparent. They should be commended.

  • April 20, 2012 at 9:53 am
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    I don’t know why you bother justifying yourself to these industry people cyenne. The Government and the industry players have their heads firmly shoved up their… but, one day society will realise that gambling will be our demise, then it will be too late. If you want to know my credentials to comment, I lost money on these toxic machines just last night in a late night binge, maybe I can head back in this morning at 9am to try to win it back… Hopefully I can resist. The Government and the industry players have no idea how deep the problems are.

  • April 20, 2012 at 10:30 am
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    OOOOOOOOOOOOOOOOO I see you have industry players on board here. Hey poker machine lackies can you answer a question or two for me. While the monies are in the clubs account waiting for machines to pay out their returns to players which could be any time eg years, who gets the interest on those monies and how much do you guys have in the account? Who are they directors of the account, is it a trust account and how much do directors get in salaries and perks. Perhaps Paul might know also. Do tell as that money is really the punters and they have a right to know. Me thinks silence and ignoring these questions will now prevail.

  • April 20, 2012 at 10:33 am
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    This is public domain information so I don’t feel in any way disclosing it violates any thing. Australian Leisure and Hospitality Group Ltd ABN 37 067 391 511
    PRIZE POOL ACCOUNT Westpac 341 George street ,Sydney , NSW is the account that the venue pays the cheque to a poker machine player that has won more than $1,000.I reiterate my earlier questions: How much is in that account,is it billions of dollars,does it draw interest, if so how much,who are the directors and how much is thier salaries and lurks and perks. Also a running balance of the above account for last three years in the interest and transactions going in and out for accountabilty and transparency Please.It is the poker machine gaming patrons and one and all of them has a right to know. Did any money come out of that account for lobbying ..not insinuating just questioning. Paul you seem very knowledgeable about it all do you have the answers also?

  • April 20, 2012 at 11:18 am
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    I think you are a sandwich short of a picnic… It’s a constant turnover of money each week. Money in less money out equals net revenue. That is then transferred into a trust account where Tatts and Tabcorp sweep their third and the governments third and the venue keeps the rest. The 87% in Victoria relates to 12 months.

  • April 20, 2012 at 11:22 am
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    Most venues operate their prize payout account with a zero balance and transfer money into that account when a cheque is written.

    I can see where you are coming from here but you have it all wrong. There are not billions sitting in an account waiting to payout. Punters must insert the money into the machines before it can be banked.

  • April 20, 2012 at 4:50 pm
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    No need to be offencive Peter……………Where does the 87 % that players insert into the machines that is suposed to go to players get banked? You say it gets paid out with in 12 months there fore according to you the machines are programmed to pay out the 87% within 12 months so if the gov takes it’s little share and the vebue takes it cut and tatts or Tabcorp that thier bit where is the billions of dollars kept during that 12 month cycle. It amounts to billions of dollars and it should be in a trust account as it does not belong to the venue or operator or gov and it must be non interest bearing account.You seem to be on the inside Peter so spill the beans and let us all know.

  • April 23, 2012 at 9:52 am
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    Familyman, I’m not sure if you’re taking the P15S because I don’t think anyone can completely misunderstand the system this much, but anyway I’ll try and explain…

    Each venue starts off with a float in their cashier, say $10,000 and they have backup funds in their strongroom of say $10,000.

    People come along and put notes into the machines or exchange coin for notes and put coin into the machines. They play away and most times they lose what the have put in. When someone wins the casier pays out the cash from their float or gives them a cheque and the venue then deposits money into the cheque account from their float to cover the cheque.

    At the end of the day the venue gets all the notes and coin inserted into the machines and counts it. They then reimburse the cashier and the strongroom and bank the rest.

    At the end of the week Tatts or Tab work out how much net revenue has been made by the machines during the week and take two thirds of that out of the venues trust account and the venue keeps the rest.

    So as you can see the payouts depend on how much is put into the machines over a day, week, month etc. It is impossible to know how much money is going to be put into the machines on a yearly basis so it is impossible to have x amount of $ in a fund waiting to be paid out.

    I seriously hope you understand this and are not taking the P15S.

  • April 23, 2012 at 12:36 pm
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    Peter you seem to be a dollar short! They know how much the poker machine industry turn over a year and a month and a day.It is in the public domain . For example the NSW poker machines alone in December 2009 turned over $5.259 billion dollars meaning an average of $117.809 WENT INTO THE MACHINES THERE EVERY MINUTE OF EVERY DAY in December.It would be quite easy for the industry to tell us how much the turn over was in December or for that matter for 2009 and how much the machines paid out and how much remained in the industry accounts and by the way you seem to know so much about it mate please tell does the monies in the trust or venue or float account get interest paid or not and who keeps the interest. That’s a lot of money pal and a lot of interest paid on it if they do get interest.You say it is impossible to know much is put into the machines but we have 20 years nearly of knowing exactly how much was put into machines and in each of those years how much was paid out and how much was left in accounts . The industry have those figures so how about leaving semantics alone pal and just cut to the chase and tell all. You don’t seem to understand English if you tell me your native language I will get an interpreter to translate it for you if you like. Cheers.

  • April 23, 2012 at 1:22 pm
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    I understand English alright, but you just can’t get your head around how this all works so I am not going to bother with you any more.

    I will say however, NO INTEREST IS COLLECTED FROM MONIES IN FLOATS, STRONGROOMS OR TRUST ACCOUNTS.

    The pokies will be around forever so my current income, future income and superannuation is very safe.

    Have a nice life like me familyman… 🙂

  • April 24, 2012 at 6:09 am
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    Ok. That’s quite enough for this one.

Comments are closed.