Slot machine players are among the most valuable players in today’s casinos, both online and offline. Casinos know that too. Reward slot players with free cash or play along with meals, free or discounted rooms and other rewards.
In fact, reward systems for modern players that record how much you play evolved from the “slot clubs” that emerged in the early 1980s, starting with Club 24K at the Golden Nugget in Atlantic City.
Casinos had been compiling table players for decades, relying on the pit team to estimate how much a customer played. That’s not practical on slot machines, with many more players, so Golden Nugget introduced a loyalty card.
The amount of information collected, the sophistication of player rating systems and the diversity of comps has been growing ever since. Video poker players are also valuable, but receive much less in casino games than slot players.
It is common for ranking systems to award slot players twice as many points for every dollar played as video poker players, meaning slot players accumulate prizes twice as fast. In some casinos, the difference is even greater: up to 10 times the rewards for slot players vs. video poker. And some casinos don’t award rewards at all in the highest paid video poker games.
That didn’t used to be the case. In the early days of player rewards for electronic games, video poker players earned points and rewards at the same pace as slot players.
Why the change?
It has to do with the relative recovery rate of slots and video poker games and the amount of winnings that players are expected to generate for the casino.
Let’s do some arithmetic.
Suppose a player is playing 9-6 Double Double Bonus Poker, which returns 99 percent with expert play, betting $1.25 per hand: five coins per hand on a 25 cent machine.
Now suppose another player is betting 3 cents per line on a 40-line, 1 cent video slot that returns 90 percent to players. That’s $1.20 per hand, just to put two players on the same betting court on a realistic level.
If each wins 500 players per hour, then the video poker player bets $625 per hour and the slot player bets $600.
What are the average losses?
With a performance of 99 percent, the average loss of the video poker player is $6.25 per hour. There will be winning sessions, even big wins when a royal ladder or four Aces appears with a low card kicker, and there will be sessions with bigger losses, but the average will be $6.25.
The one-cent slot player who gets a 90 percent yield sees an average loss of $60 per hour. There are also winning sessions on slot machines, with the occasional jackpot, but the average loss given an almost equivalent amount of play is almost 10 times greater than that of the video poker player.
There is a much greater incentive for the casino to tempt the slot player to return, so the slot player gets more rewards.
Faced with this explanation, a slot player replied: “But I do NOT bet so much on penny slots. I’ll bet one coin per line. So my bets are only a third of what my husband makes in video poker, but I still get more rewards than him. I don’t complain, but sometimes it gets a little confused with everything.”
Re-run the numbers for the slot machines, but this time with a 1 cent bet per line on a 40-line slot at 500 spins per hour.
The total bet is now only $200 per hour, but with a 90 percent recovery, the average loss is $20 per hour. That’s still more than three times the loss of $6.25 per house for a 9-6 double bond double bond player who bets $625 per hour.
Casinos sometimes offer several days of points and those can not only increase your comps, but they can also increase the effective recovery of the game you play.
If applied equally to video poker and slot machines, those multi-point days could sometimes make some video poker games profitable for players, but they can’t do the same on slot machines. For many years, video poker focused on multi-point days to gain an advantage.
That has led casinos not only to accumulate rewards at different rates of slots and video poker games, but also to offer different multiples in points.
Let’s create an example of how that might work. Suppose a player rewards club is set up to give you one point for every $4 in play, and for every 100 points you accumulate, you can redeem for $1. That means $400 in play brings $1 in cash or free gambling, so you’re getting 0.25 percent of your bets.
Normally, that would increase the effective recovery rate from 9-6 Double Bonus Poker to 99.25 percent, a thinner shave than the casino really likes. The effective rate in a 90 percent penny slot would increase to only 90.25 percent. It’s worth the casino to raise a little goodwill.
What if the casino had a 5x point day, where points were awarded at five times the normal rate?
That would raise effective recovery in the slot for that day to 91.25 percent. Casino operators still make a good profit, and promotional value can generate enough extra play for the casino to earn more money overall than on single point days.
Even on slot machines that pay more and return 95 percent and some do so online or offline, the effective yield of 96.25 percent with 5 points still generates profit for the casino.
But at 9-6 Double Double Bonus Poker, those 5x points in a club that normally returns 0.25 percent turn 99 percent into a 100.25 percent winning chance for players.
In higher-rewardvideo video poker games, the profit opportunity would be even greater, as 9-6 Jacks or Better would go from 99.5 percent to 100.75 or Not So Ugly Deuces Wild from 99.7 to 100.95.
Then the casinos adjust the rewards on a couple of fronts. It may require $8 in play instead of $4 to earn a point on video poker, reducing the club’s basic performance from 0.25 percent to 0.125 percent. You can limit several days of points to 2x or 3x in video poker while offering higher multipliers in slot machines. And it could offer very small or no rewards in video poker games that pay 99 percent or more.
By doing so, traders make sure that the biggest rewards will be for players who generate the most casino winnings: slot players. And avoid turning marginally profitable video poker games into losing proposals for the operator.
From the operator’s perspective, this is how it should be, with more benefits for slot players than for video poker players because they are more valuable to the casino.