How much profit do casinos make on slot machines?
Most slot machines are games of pure chance, requiring no experience, skill or strategy. As such, they offer each player an equal, random chance of winning a jackpot but, at the same time, offer casinos a constant, stable source of profit. Indeed, with few exceptions, slot machines generate far and away the highest profit and highest percentage of annual revenue for casinos worldwide.
Modern slot machines can be configured for any Return to Player (RTP) percentage or, in other words, the ratio of total ‘coin in’ to total ‘coin out’ over time, according to one of a series of Pay Table and Reel Strip (PARS) sheets, supplied and licensed by machine manufacturer. Once installed, the PARS determines the house edge – also known, confusingly, as the ‘hold’, or ‘hold percentage’ – of the slot machine in question. Theoretically, the house edge of slot machines can vary between 1% and 50%, according to legal jurisdiction, competition and so on, but typically falls within a narrower range, between 5% and 10%.
In terms of total revenue, slot machines typically account for at least 30% of the gambling income of any casino, but can account for a much higher percentage. On the Las Vegas Strip, for example, where high-stakes table games are very much in evidence, 50% is typical, but elsewhere in Las Vegas, in so-called ‘locals’’ casinos, the figure is closer 88%. In fact, according to a report published by the Center of Gaming Research at the University of Nevada, Las Vegas, in 2018, slot machines contributed $7.71 million, or 64.7%, of the total annual revenues for casinos across the whole of the State of Nevada.