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Feb

21

2017

Why is There a Higher Payback on $1 Slots than Penny Slots?

As long as I’ve been paying attention – and this goes back to the 1980s – slot players have been told that higher denomination slots pay back a higher percentage than lower denominations.

Statistical reports in various U.S. jurisdictions have long shown the pattern: $5 slots pay more than $1 slots, which pay more than quarters, which pay more than nickels, which pay more than pennies.

That doesn’t mean you should rush right out and play $5 games. The difference in risk is important, and you average more money in losses per spin on $5 games than on dollars, quarters and so on.

A slot player acknowledged that in an email, then asked why. With penny slots being the most popular games, shouldn’t casinos cater to penny players?

The main reason casinos pay lower percentages on low-denomination games is because they can. Low payback percentages do not deter players from crowding the games, so there is little incentive for casinos to raise the payouts on low-denom games.

When three-reel games with one payline ruled the floor, there was additional reason in machine cost vs. profitability. It cost as much to purchase a quarter machine as a dollar machine, but the dollar games produced more revenue per play

Probably more important was that the higher payback percentage on dollar games was a marketing tool. Some player would step up to dollar play to get the higher percentage.

Today, with multiple paylines, you can bet as much on a penny video slot as on a dollar three-reel slot, but the payback percentage remains higher on the dollar game.

In part, that’s because most penny player don’t really bet the max. On a 40-line game, most players are betting either 40 cents or 80 cents, so casino profit per spin is still higher on the dollar three-reel game despite the payback percentage difference.

But the main reason is that players embrace the games as they are. Players find value in the animation, video, bonus events and everything that goes into video slots to play them in preference to higher-paying high-denomination slots.

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