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Slot Machine Payback Percentages: The Devil is in the MomentS

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Listed:
  • Robert Scott Farrow
  • Jackson Costa

Abstract

The average payback percentage from slot machines is important to gamblers, casinos and governments. While apparently simple to define several complications can exist, among them which measure to average and potentially misleading formulas to calculate the average. Daily slot machine data from the state of Maryland for 19 months are analyzed for the expected value of the average payback ratio per machine and per dollar gambled. On a per dollar gambled basis, the payback percentage meets legislative requirements that the gaming floor payback be at least 90 percent. On a per machine basis, that requirement is not met which can imply a significant shift of money from gamblers to casino operators and the state. Other payback measures are hypothesized to also be less than the per-dollar gambled measure but data are lacking.

Suggested Citation

  • Robert Scott Farrow & Jackson Costa, 2014. "Slot Machine Payback Percentages: The Devil is in the MomentS," Journal of Gambling Business and Economics, University of Buckingham Press, vol. 8(2), pages 55-71.
    • Handle: RePEc:buc:jgbeco:v:8:y:2014:i:2:p:55-71
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    Keywords

    slot machine; payback; gambling statistics;
    All these keywords.

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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