Psychology, Design and Economics of Slot-Machines

6 writes "Technology isn't just about design and hardware; sometimes it's about psychology, politics, sociology, and economics. The website of Stanford design prof Michael Shanks is hosting a student project by William Choi and Antoine Sindhu, a fascinating online course about slot machines. From the site: 'Much research has been devoted to studying gambling behavior from various points of view, including the psychological, social, economic, and political bases and implications of gambling ... [just the same,] focusing on slot machines reveals and inspires the study of many sociological issues that have come to express themselves specifically and notably on these machines. Here, we examine a number of these issues, attempting to link slot machines to them in an effort to better understand and explain them.'"

Comments

Variable Ratio Conditioning

[anagama]

If you give a rat a bit of food every time it presses a bar (or on every n presses) -- it'll learn to press the bar the requisite number of times when it is hungry. If you provide a food nugget on a varying number of presses, e.g., 1 press=win, 3 presses=win, 10 presses=win, 4 presses=win -- it'll punch the bar all day.

At least, that's how I recall a psych prof of mine from college explaining why slot machines were so profitable.

Re:Variable Ratio Conditioning

[Anonymous Coward]

You're missing the point completely. And yes - it was/is a pretty significant finding in behavioral research.

If you pay out every time - or consistently pay out after a reasonable number of pushes the rat figures that out, pushes the bar until he's eaten enough, then goes on his way until he's hungry again.

However - if you make the payout random, the rat will push the button all day long. Even after he's had enough to eat. Nothing like the behavior you described.

This article is not based on facts.

[Anonymous Coward]

[i]
Just like a real slot machine, we found that the online simulator had a very high frequency of "near misses." Nearly every one in four reel spins had two of the same symbol, and the third matching symbol just slightly off on third reel. This is precisely the technique used in real slot machines to keep people addicted--it creates the illusion that you have "almost" won. In addition, small payouts happened with surprising frequency, replenishing the pool of available money and keeping the game dynamic.
[/i]

I work for a company that makes video and mechanical slot machines. This quote is just plain wrong. In fact, intentionally displaying "near misses" is illegal in pretty much every single gaming jurisdiction. It is simply the perception by the player.

Additionally, a game with many small payouts is normal! Games that pay out many small amounts and rarely a large amount are known in the industry as "bleeders." However, it isn't an intentional scheme that is devised to separate the player from his money. There is a concept of machine "volatility" -- the math for a set of reel strips can be devised to be more or less volatile. Less volatile means frequent small payouts and very very infrequent large payouts. More volatile means there aren't a lot of small payouts, but a large payout is a little bit more likely than on a less volatile game. In either case, the machine hold percentages can be the same (or whatever the casino configures -- as long as it is legal in that particular jurisdiction. In my experience, most places will configure paytables with the lowest legal payout percentage in that particular jurisdiction -- especially if a game is new on the floor.)

Re:This article is not based on facts.

[Graff]

In fact, intentionally displaying "near misses" is illegal in pretty much every single gaming jurisdiction. Actually there is a very easy way of legally doing this. You set up the wheels so that certain wheels have more of some symbols than others.

Suppose there are 3 wheels and 3 symbols - a, b, and c. The wheels have the symbols in the following amounts:
wheel 1: a a b c c
wheel 2: a a b b c
wheel 3: a b b c c

In other words, two wheels have two copies of symbol "a" and one wheel has one copy of symbol "a". The same goes for the other symbols.

You now have a much greater chance of getting 2 of any symbol than you do of getting all 3. This is just a simple example, there are many more ways of setting up the wheels so that you get a large amount of "near misses" and are goaded into playing the machine more. It's not illegal to set up the wheels in this manner, what is illegal is pre-deciding the result of a random spin of the wheels. This kind of setup is just obfuscating the chances of getting a certain layout of symbols.

Oh, it's a student project

[Animats]

It's a student project, and it shows. The article is superficial. The first two sources listed are Wikipedia and HowStuffWorks. There's a page on the Simpsons. You get the general idea.

Considerable work has been done on gambling psychology, but they didn't find it. There's an online Journal of Gambling Issues, with papers like Slot machine structural characteristics: Distorted player views of payback percentages. There's an annual trade show, Global Gaming Expo, and even an institute of higher learning devoted to the subject, the International Gaming Institute, part of (inevitably) the University of Las Vegas.

Their "experimental work" consisted of playing "freeslots.com". They didn't even notice that the "free slots" programs are set to have an expectation greater than zero when played in free mode. In fact, it's quite difficult to lose at "freeslots".

Industry analysis of player psychology has gone way beyond the stuff mentioned in this student paper. The big breakthrough was when slot machines started accepting player affinity cards. Today's casinos have the player's entire history, at the per-click level, on file, and considerable effort goes into mining that data. Some studies have compared what players have thought they won versus the casino's history of their track record. Many players don't even know that they're losing, let alone how much.

If you want to read about this subject, start with Super Casino, an 1999 inside look at some major Las Vegas properties.

Re:Oh, it's a student project

[Vicissidude]

It's a student project, and it shows.

I agree. Having actually worked at a casino on the slots, I find the article lacking and in one area outright false. They say nothing about how the individual slot machines and their network actually works. Further, they are wrong in that casinos do not operate under a "laissez-faire" or unregulated free-market economy. The idea that casinos operate under "minimal government regulation" is so ridiculous as to be completely laughable.

Casino gambling is one of the most highly regulated industries in our nation. Every worker who applies to work at a casino has to fill out a literal inch of paperwork, just for the background check. They have to supply a ten year work history, and you are told not to skip any months. Their fingerprints are taken and supplied to federal databases. Those fingerprints are compared to see if any matches come up, and then they are permanently stored for future reference. If any problems come up in your record, then it's very likely you will not be licensed to work there.

Once you are actually hired, that only begins the regulations. There are literally regulations for everything that a employee can and can not do, even after work. Those regulations are monitored by surveillance, casino management, state authorities, and the feds. Breaking those regulations could mean a suspension, pulling your license (effectively firing you), or even jail time. Casino gambling used to be controlled by the mob, so the authorities are deadly serious about making sure everything is done legally.

Re:Oh, it's a student project

[stonecypher]

The idea that casinos operate under "minimal government regulation" is so ridiculous as to be completely laughable.

No, it isn't. You should see the regulations other companies have for gambling machines - they specify the entire payout structures, the hit likelihoods, the amount of noise the machines are amount to make, the volume of brightness allowed to be put out in lumens, all sorts of stuff. All the American gaming services do is require regular random testing of the machines, honest posting of stats, no rigged machines, and a cap on expected draw. America has about the most open and liberal market possible while still intending to verify the honesty of a proprietor.

Just because it's hard to regulate gambling honesty doesn't mean that we're doing a particularly overbearing job of it. In general, it's not appropriate even as a professional to suggest that one country's regulations are or are not strict until you have experience with the regulations of other countries (as usual, Canada doesn't count.)

Casino gambling is one of the most highly regulated industries in our nation.

Nonsense. Again you are confusing your lack of personal experience with something more strict with that there is nothing more strict. Neighborhood banks go through regulations that make casinos look positively lax. The local UPS hub has an on-site police force (and no, your 20-dude goon squad in casino floor 3 isn't a police force, I mean an actual went to the real police acadamy people with badges that mean something in court type police force;) that's there for a reason. Your local airport guys are rolling their eyes right now. Any place that sells chemical fertilizer (not dirt) is pretty pissed at you right now. A gas station goes through more verifications per-machine than a casino does, though given how many more machines a casino has than a gas station, the validity of that point is ... curious.

Then you get down to places with real security - prisons, power plants, dams, stock exchanges, CDC Level 3+ quarantine sites (there's at least one in almost every major city and one at most strong medical schools,) ports of call, military bases, missile silos - you say gambling's securer than those places around the people who keep them secure, you're likely to get a punch in the mouth.

'Course, if by "regulated" you meant investigated by the government, well, then you obviously have no experience in finance, transportation, the fuel sector, alcohol, tobacco, pornography, television decency, abortion, cosmetic surgery, car sales or cell phone region mapping. Indeed, if you take a good solid look at it, casino regulation is pretty much on par with other industries making that amount of money. You want something better regulated, you move up the dollar chain, you get religious ethics involved or you make a genuine stab at the public health.

Frankly, prostitution is a better regulated Nevada state industry than gambling is; that's why they can spot disease trends across small brothels but not theft trends across major casinos on the same street. You seem to think that any enforcement in a casino is government enforcement. The vast bulk of it isn't. No government agency says that a casino has to look for cheaters. They're doing that themselves because it's in their financial best interest. Gambling regulation is just a set of rules saying how far they're allowed to set the statistics, how long they're allowed to milk a given customer, and a lot of random sampling to make sure people are telling the truth.

You want real regulation, you look at the drug war. That's regulation that works better than casino regulation, and everybody being regulated is fighting it as hard as they can, unlike casinos, who cooperate quite openly.

Re:Oh, it's a student project

[Vicissidude]

Me: The idea that casinos operate under "minimal government regulation" is so ridiculous as to be completely laughable.
You: No, it isn't. You should see the regulations other companies have for gambling machines - they specify the entire payout structures, the hit likelihoods, the amount of noise the machines are amount to make, the volume of brightness allowed to be put out in lumens, all sorts of stuff. All the American gaming services do is require regular random testing of the machines, honest posting of stats, no rigged machines, and a cap on expected draw. America has about the most open and liberal market possible while still intending to verify the honesty of a proprietor.

I worked as a Gaming Agent in Washington state and actually helped set up a brand new, 2000-slot casino, so excuse me if I know more about this than you do.

All new video lottery terminals (slot machines), games, and templates are checked and verified by the Washington State Gambling Commission. They have a Testing Lab specifically set up strictly for that purpose. If those machines do not pass the test, then those machines are not allowed anywhere in the state of Washington. If those games do not pass the test, then those games are not allowed anywhere in the state of Washington. If the templates do not pass, then they are not allowed in Washington.
http://www.wsgc.wa.gov/egl/mission.asp

At the Tribal level, machine processors are kept under 24-hour lock and key and surveillance. Each processor for each slot is individually, electronically checked and confirmed against state signatures. The machines come straight from the manufacturer in sealed trucks. The machines are installed under the eyes of Tribal Gaming, Slot Maintenance, Security, Surveillance, and the manufacturer's technicians. They are tested by Slot Maintenance and the manufacturer, observed by Tribal Gaming, Security, and Surveillance. The machines can only be put into play once Tribal Gaming and the State Gambling Commission has checked and verified that the machines are operating properly.

Washington state has some of the most strict laws around gaming and slot machines in the nation:
Laws http://apps.leg.wa.gov/RCW/default.aspx?cite=9.46
Rules http://apps.leg.wa.gov/WAC/default.aspx?cite=230

Those laws and rules are underneath the federal laws around gambling and above the individual Tribal Compacts which also regulate gambling. I studied and learned all of those laws and was tasked with the duty of enforcing them. As a member of the Tribal Gaming Agency, we were at the casino 24 hours a day, 7 days a week. By law, the casino was not allowed to remain open if one of our staff were not on the premises. We had complete and full access to every area in the casino at any time we wanted, regardless of the wishes of casino management or workers. At least half of our agency were former police officers. Were we badged members of Tribal Government with the authority to arrest and detain suspects.

Saying there is "minimal government regulation" of casinos is abjectly false. Saying that this industry is not highly regulated is also abjectly false. Your arguments are disingenuous at best, and outright lies at worst.

The near misses are not "programmed."

[dada21]

I've spent some time with slot machine code -- I actually love the old reel machines (which are generally the only ones you can own based on most state laws), and I've done some minor consulting with casinos in Las Vegas. The near misses are not encoded into the machine.

It is easy to believe the machines are built to take your money, but it has nothing to do with preset expectations. They truly are random, but each wheel has a specific number of possible results. Each wheel is independently picked from a random number generator with numbers picked at the instant you hit the spin button or pull the lever.

All 3 or 4 wheels might have a number of possible positions, numbering as high as 1024 per wheel. The first half of those numbers (say, 0-511) will be "blank" hits, so the wheel will stop on a blank. Then another 256 or so might be a symbol with a low payout, and then you get progressively less hits on the higher paying symbols. As you move further down the wheel, you get even fewer high paying "hit" numbers. The big payout only occurs on one or two numbers per wheel.

When the right combination of random numbers occurs, you win a payout. The chance is slim, with most machines paying out a percentage avering 85-92% over infinite spins, based purely on the mathematical chance of hitting a specific combination of random numbers in a spin.

Seeing those "near hits" is only because white "loser" spots on the wheel are always surrounded by symbols. Those near misses are almost always symbols that would pay SOMETHING, but rarely do you get 3 symbols that are near misses of the jackpot.

This summer, I spent a considerable amount of time in LV -- I was on a consulting project each month and stayed at the Paris casino. Over two days, I decided to "track" the play on a given slot machine, by attempting to jot down the results. The machine is certainly random, and if you watch a machine long enough and write down the actual results (landed on white space between red 7 and blue 7, landed on red 7, landed on cherry), you can eventually come up with the percentage chance of hitting a particular symbol. You need thousands of spins on a particular machine, but you'll get those percentages eventually.

In a game with less of a mathematical payout chance than 100%, the casino doesn't need to cheat. It's already guaranteed a profit on the lifetime of the machine. Some players do win in Vegas -- those who walk away after their first penny of profit. Everyone else eventually has the math get the best of them.

SIDENOTE:I don't condone gambling, but I do like the entertainment value of meeting up with a few friends and spending a few hours at the craps tables. $25 bets over a 4 hour period, betting the pass line with full odds, has a very low risk of losing your money (1.4% risk of ruin with a $2000 bankroll). The comps you receive in exchange more than make up for any loss. That's the only game in Vegas I think still has a slight player's edge, with comps and freebies added in.

People always want to be a winner

[CrazyJim1]

I was thinking today: If someone wins at a slot machine, they tell other people and get them interested in the trip to a casino. Now when people lose, they don't go bragging like they do when they win so negative publicity is low. It's always,"Hey I bought a motorcylce with my winnings." or,"I played all day on one dollar."

Psychology of slot machine users: Depressed

[thc69]

The last time I was in a casino, I realized that out of the thousands of drones sitting at machines, not a single one was smiling. Aren't they there to have fun? Must be something like grinding and farming in an MMORPG...lots of unpleasant time spent "having fun".

I repeat: Thousands of people. Zero smiles. Legions of bleary-eyed bleak-souled drones.

I have no moral problem with gambling, and it doesn't bother me that there are four casinos within two hours drive of my house...but I just can't understand why any of those people are there, doing that. They sure don't look like they're having fun. (And, you may ask, why was I there? Restaurants.)

Fairness is in the casino's best interests

[Myria]

It is in the best interest of casinos for their games to be fair. They want their machines to follow the rules exactly, and be as random as possible - the math takes care of the rest. If they weren't following the rules, Nevada and the public would get them shut down very quickly.

I really don't like the way such places try to manipulate people. The near misses aren't manipulated by the machine's operation, but the game's layout is designed such that near misses are a natural result. The methods used by casinos very much the same crap as supermarkets micromanaging item placement to trick you and your children into buying more items and more expensive items. I dislike that more than the idea of going somewhere to lose money.

By the way, I'm one of those Vegas winners you speak of. I was bored and waiting for a show so I sat and played quarter video poker. I got a royal flush on the 4th hand - $1000. Walked away immediately, and haven't gambled since then. Lost a total of maybe $30 in my life before then on similar cheap games.