Slot machine payout rates fall for 4th year in a row in Pennsylvania
By Mark Gruetze
Published: Friday, July 6, 2012, 4:56 p.m.
Penny slot fan Judy Matthews of Castle Shannon doesn't need statistics to know the machines are tight — and getting tighter.
“It's been bad lately,” said Matthews, who plays about once a week, varying her visits from Rivers to Meadows to Wheeling Island to out-of-area casinos.
“You can't win anywhere.”
Slot players across Pennsylvania are finding that winning is more and more difficult. For the fourth consecutive year, slot-payback percentages have fallen statewide and at individual casinos, according to figures released this week by the Gaming Control Board.
For the fiscal year that ended June 30, the statewide slot-payout rate was 90.03 percent. That's down from 90.23 percent for the 2010-11 fiscal year. The payout rate has fallen each year since 2007-08, the first full year of casino operations. That year, the statewide rate was 91.30 percent.
The rate shows how much money slot machines return from players' bets. A 90.03 percent rate means that for each $100 bet, the machines return an average of $90.03 —or $1.27 less than what the machines paid for every $100 bet in 2007-08.
The casino and the state get what's not returned to players. The state's share of the take could be one reason for the declining payback rates, said slot expert Frank Legato, editor of Global Gaming Business, the casino industry's leading international-trade journal.
Because the state gets 55 percent of slot-machine revenue in taxes, Pennsylvania casinos have a smaller profit margin than most of their counterparts, said Legato, a Pittsburgh native and graduate of Duquesne University. Although the 55 percent rate is not the highest in the country, Pennsylvania collects more gambling tax revenue than any other state, including Nevada.
Slot machines generate most of the gambling revenue in any casino. With taxes taking more than half the profit, casinos find it difficult to afford higher payback rates, Legato said.
“In Pennsylvania, it's out of necessity because they have a high tax rate and, subsequently, a very thin profit margin,” he said.
Another reason for the continued decline in slot payouts could be the replacement of machines during time.
“It's entirely possible that, as they replaced machines, they bought lower payback programs, which they're completely free to do,” Legato said. “As long as they're over (the state's minimum payback rate of) 85 percent, they can put in any programs they want.”
He said casinos replace slot machines “all the time” to keep up with customer demand for new titles and to winnow-out games that lose popularity.
Michael Jankoviak, director of slot operations at Meadows Casino in Washington County, estimated that he converts an average of 30 machines per month. On Tuesday, for example, the casino received 24 new games, including Cirque de Prime, Grease, Power Spins and Spartacus.
He said one reason for the drop in payout percentage is the growing popularity of penny machines.
“The lower the denom, the lower the hold generally for the guests,” he said. “The penny product is No. 1 here; whereas, the quarter-dollar product has fallen off. We reduced quarter-dollar product on the floor by adding more pennies.”
The new machines the casino recently purchased are penny games, he said.
Penny machines can cost far more than the name implies. Matthews, for example, said she typically plays 30 to 40 cents per spin. Players may wager multiple coins per line, multiple lines or both, so one spin can cost $3 or more, depending on the game and how much the bettor decides to risk.
While Pennsylvania's annual slot-payback rate hit a new low, it's not that different from casinos elsewhere.Legato said penny machines have the lowest payout rate in the casino, probably 88 percent or 89 percent in Pennsylvania or Atlantic City. In West Virginia, the statewide payout rate for slots is 89.81 percent.
A “locals” casino in Las Vegas — one away from the Strip or Downtown — might have a payout rate of 92 percent or 93 percent, Legato said.
Lack of competition is another factor in the Pennsylvania rate, Legato said.
If the state allows another casino or two in the Philadelphia area, the competition for customers might lead one to offer higher payback rates and use them as an enticement.
However, an average player will not notice the difference between a machine with 92 percent payback and one with 91 payback, he said. That's because payback percentages are best measured over millions of spins and months of play, so players simply can't tell which machine has a higher payout rate.
Brikis cashes for $44,110 at WSOP
Poker pro Josh Brikis of Murrysville won $44,110 on Thursday in a six-handed No Limit Hold 'Em tournament at the World Series of Poker in Las Vegas. Brikis finished 18th among 474 participants in the event, which had a $10,000 buy-in.
He outlasted notable pros Phil Ivey, Jonathan Duhamel and Joe Hachem.
It was Brikis' fourth cash of this year's tournament, taking his total to $56,402.
He was eliminated when he went all in with pocket 7s, and Carter Phillips called with Ace-Jack of Spades, then hit an Ace on the flop, Poker News reported.
Two other Western Pennsylvania players cashed this week in Event 56, a No Limit Hold 'Em tournament with a $1,500 buy-in.
Nicholas Immekus of Jefferson Hills finished 37th amonth 2,798 players, winning $12,541. James Tedrow of Youngwood finished 73rd, winning $6,270.
The WSOP's Main Event, the $10,000-per-seat No Limit Hold 'Em championship, starts July 7. It will have three opening days because of the size of the playing field, which organizers said could reach 8,000. Play will continue until the final table is set July 16. The final nine will return Oct. 28 to determine the champion. ESPN will broadcast the tournament.
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