How VLTs relentlessly take players’ money

So, how fast can you lose $20 on a VLT?

Twelve years ago, when King’s students first investigated VLTs, we found out it could happen pretty quickly. We decided to try again, but this time we brought the results to gambling addictions specialist Elizabeth Stephen.

In this video of reporter Josh Hoffman playing a VLT game, Stephen helps us understand what’s going on from an addictions perspective. After the video, we’ll come back to how it works.

So, how does the machine eventually take all the money?

Imagine a retail store with a simple business model. Customers go to the cash, hand over a dollar and the clerk hands back 93 cents. Go in again, and the same thing happens. Every time you go to the store, the clerk takes seven per cent of whatever money you hand over. You get back the rest.

When you get past the flashing graphics, spinning reels and musical effects, that’s kind of how video lottery terminals work, on average.

The Atlantic Lottery Corporation and the Nova Scotia Gaming Corporation both reference this figure (which can vary from 91 to 95 per cent, depending on the game and province) when talking about how much of the money players bet is returned in prizes.

But it’s an easily misinterpreted number. It doesn’t mean that if you start with $100 you’ll finish the night with $93. Instead, it means that over millions of VLT spins, the machines return an average of 93 per cent of each bet made, including subsequent bets of your winnings.

That distinction is really important, because it explains why if you keep playing long enough, you’ll probably end up with nothing.

Unlike our imaginary retail store, the VLT doesn’t actually take exactly seven per cent of each individual bet you make. The seven per cent, sometimes called the “house edge” in the gambling business, is the average the machines take over the long run. On any one bet, a player may win nothing, may win a small prize or may win the biggest prize. Any one bet is a unique event, with the outcome determined using random numbers, the instant the player presses the play button.

Over time, the averages will work against the player, even if they win big in the meantime.

This chart shows what would happen if a player did lose exactly seven per cent of every bet, and started with $20.

As you can see, on the way to having no money left, you win a lot. You just lose a little bit more. This creates the ironic situation in which you won more than 10 times as much as your original stake, but still lost your money. This is the inexorable math of video gambling and similar electronic gambling machines.

Of course, any one player's experience is going to be different from that, as every spin is a random event. Here's what the session shown in the video above looks like when charted:

As you can see, the win line is irregular, as wins come randomly and are of different amounts.The line representing the amount bet rises inexorably, spin by spin. The player who cashes out after winning a bigger amount might walk away with extra money in their pocket, but many players just keep on playing with their winnings, as Josh did, and that's when the averages catch up with them.

Overall, in Nova Scotia, somewhere between 77 and 80 per cent of all the cash put into VLTs goes back to players when they cash out. This is what the government calls the net revenues from VLTs. You could also call it the players' losses.

Sources: Atlantic Lottery Corporation media relations, Turner and Horbay (2004)