New Zealand law allows pokie machines in certain premises for entertainment purposes only. Some people play pokies with money they can’t afford to lose, sometimes they play for the wrong reasons.

This booklet will explain how it is impossible for a ‘system’ to beat a pokie machine; how the result of every spin is purely random and how each outcome is independent of any preceeding spins. The pokie machine is programmed for the machine to win, they are designed to make a profit for the benefit of others, not the player. Most forms of entertainment cost money, it’s the same with pokies, the longer you play, the more you pay.

“Whether you win credits or lose the spin, the pokie machine sits, like an electronic mugger, waiting for you to either cash up or play again. It waits,  ready to sap every last dollar from your wallet. It cannot know who you are, or what you can afford. It knows not what you wear, or how long you’ve been there.  Only you know what you really have to lose.”

The only thing you can control when playing the pokies is you.

This information is based on data from various sources, including traditional electronic gaming machines. To the best of our knowledge, the information provided accurately describes how electronic gaming machines, including online pokies, are programmed and how they are operated in gaming machine premises in New Zealand. However, attention is drawn to the fact that due to technological advances and legislation changes, it is possible that differences in the design, programming, and operation of the machines, including online pokies, may vary from the description in this booklet.

Introduction

New Zealanders lost $941 million on pokie machines in 2003.  The majority of this money came from lower socio-economic areas where the machines are strategically placed by the gaming industry.  Those people that can least afford it are drawn to the machines in hopes of improving their lifestyle.  The consequence of which results in a variety of social problems to both the individual and the community.

Almost 90% of problem gamblers name pokie machines as their mode of gambling.  They state easy access, use and availability of the machines as attributing to their addiction.  The gaming industry operates behind a ‘wall of secrecy’ keeping details of the technology and ‘odds’ of winning on the machines well hidden from public view. This is a guide to assist you in learning how these machines operate.  It does not contain in depth technical data.  It is written for ‘everyday’ people, in an attempt to raise awareness to the harm these machines can cause.

Historically

·      When pokie machines were first invented they were mechanical. Each symbol on each reel corresponded to a mechanical slot on each reel. Most of these machines had 20 stops (slots) on each reel. Each reel was identical to the other reels on the machine.

·      Players could calculate their odds of winning by counting the number of symbols on each reel and multiplying the results.

·      The problem with the old pokies is that there were a small number of possibilities (8,000) – thereby only relatively small prizes could be won.  Pokie machines were therefore only a small percentage of gambling revenue in the old days. Today they contribute over 50% of the taxes taken from gambling.

Changes

·      When computer chip technology came along, it didn’t take the gaming industry long to figure out they could use it to change from mechanical stops to virtual stops – increasing the number of possible results, increasing the prizes that could be offered, and of course increasing profits.

·      Today, pokies account for about 80% of casino gaming revenue.

·      Video lottery terminals (VLTs) are very similar to pokies and in fact, are generally referred to as pokies.  The differences are complicated, but VLT’s tend to have more than 3 reels and can be linked to other machines to provide a ‘lottery’ or jackpot.

Speed is the name of the game

• Today’s VLTs and pokies are much faster than the original pokie machines.
• The player can bet every 5 seconds (at least). There is currently no limit in New Zealand on the spin duration, however, it is possible legislation may be introduced to allow for a 3.5 second duration.
• If the player is betting 9 lines on a 5 cent machine, and 5 credits per line (max bet possible on a non-casino machine) they’re wagering $2.25 every bet. Doesn’t sound like much does it?
• However, if the player is playing the machines fast, in an hour that works out to wagering: $2.25 x 12 spins a minute x 60 minutes = $1,620.

How much can I bet

• On some pokie machines players can wager as little as 1 credit or up to 200 credits per spin. Depending upon the denomination of the machine, players can end up wagering as little as 1cent, or up to $2.50. The maximum bet allowed is currently $2.50 in New Zealand on non casino gaming machines. On casino pokies it is unlimited, although there are certain regulations casino operators must abide by.

• On some VLTs and pokies, players can play multiple lines (up to 9 lines on VLTs and up to 25 lines on pokies). If players are wagering multiple lines on pokie machines, then on each spin they could be wagering up to $2.50 per spin on non-casino machines or unlimited amounts on casino pokies.
• For example if the limit was removed from a 1cent, 25 line machine, with up to 10 credits per line playable, then at $1 per credit instead of 1 cent, the maximum bet would go from $2.50 to $250 per spin!

• For video poker, players can wager up to 25 credits per hand, which on a 20 cent machine is $5.00 per bet on a casino pokie.

How much can I lose?

• A formula has been developed that calculates how much a player would be expected to lose an hour on VLTs and pokies.
• On a 20¢ machine (return rate of e.g. 95%) playing at maximum bet and every 5 seconds, the formula works out to an expected rate of loss of approx. $80/hr.
• If players play on average for 3 hours their expected loss is $240. If they play 3 times a week their expected losses per week would be $720.

·      If players are gambling on pokie machines where the maximum wager can be more than $2.00 per spin, they can be losing in excess of this amount.

What is visible to you when playing a pokie machine:

The examples used below are based on three reel pokie machines, which due to advances in technology are now fairly rare in New Zealand, however, we have used these examples for ease of explanation.

Payout Table

Centre Line Pays:

Spinning Reels

·      Pokie machines and VLTs have spinning reels that players can see on a video display.

·      A typical video display reel has 22 symbols ( e.g. cherries, plums, watermelons, oranges lemons, blanks).  Newer video machines have video display reels with up to 90 symbols.

·      When the player pushes the spin button, the display reels “spin”.  This has nothing to do with how the machine determines the results.  It is intended only for entertainment purposes.

·      After a few seconds the display reels show the player the result of the “spin”.

What isn’t  visible to you when playing pokie machines:

Virtual Reels

·      Unlike pokie machines of old, new pokie machines and VLTs use virtual reels and virtual stops.

·      These virtual reels and stops are in the computer chip program, and they determine the number of stops assigned to each symbol.

·      The number of stops on a virtual reel does not coincide to the number of symbols on the reels that players can actually see.

·      The number of each winning symbol on the virtual reel does not coincide with the number of each winning symbol on the display reel either.

More on Virtual Reels

·      A typical 3 reel pokie machine or VLT has 64 virtual stops on each reel – not the 22 symbols on the video display screen that players can see.

·      Newer machines may have reels with up to 512 virtual stops per reel.

·      The virtual stops allow the industry to program the exact number of stops to each symbol on each reel.

·      Different reels are not programmed with the same number of winning symbols.

The RNG

·      Pokie machines and VLTs have a random number generator (RNG) that runs all the time, choosing thousands of numbers every second.

·      The RNG determines which stop on the virtual reel will be the result of the spin as soon as the spin button is pushed.

·      For 3 reel games, the RNG picks 3 numbers, which are then divided by the number of virtual stops.  On a 64 stop reel the numbers would be divided by 64.  The remainder (remember old math??) would be between 0 – 63.  All 64 possible results of the  remainders are assigned game symbols.

·      The game symbols for the picked numbers on the virtual reels are displayed for the player on the display reels.

Virtual stops – an example

Reel 1 Mapping

Reel 2 Mapping

Reel 3 Mapping

What happens when the button is pushed?

·      As soon as the player pushes the spin button (or pulls the handle), the RNG picks 3 numbers.  As indicated these numbers are then divided by the number of virtual stops – in this example 64, and the remainders are then the numbers that will be used in the mapping program.

• For the 1^st spin the RNG chose numbers with remainders that were 20 for Reel 1, 3 for Reel 2 and 23 for Reel 3.

• The computer program then uses the mapping program of reels 1, 2, and 3 to look up these numbers on each reel to determine what is the assigned game symbol. On   Reel 1 the number 20 spot is an Orange symbol.  On Reel 2 the number 3 spot is a Blank symbol.  On Reel 3 the number 23 spot is a Blank symbol.  The player will see these results on the payline.  The result of the spin is 0 credits won.

Let’s look at the results of a second spin and go through the process again.

• The player pushes the spin button a second time. The numbers chosen by the RNG result in remainders of 5 on Reel 1, 12 on Reel 2, and 46 on Reel 3

On Reel 1 the number 5 spot is assigned a Blank symbol.  On Reel 2 the number 12 spot is assigned a Blank symbol.  On Reel 3 the number 46 spot is assigned a Blank symbol.  The player will see these results on the payline.  The result of this spin is     0 credits won

• The following table shows the results of 2 more spins that the player made.

·      On the 4^th spin the player won 2 credits.  For many players this win may trigger a range of thinking errors like “The machine is now getting hot, and I’m going to keep winning”, or “I’ve got the machine figured out now, and I know what I’m doing now”.  The small win is re-invested by almost all gamblers back into the machine, in the hopes of winning again.

Mapping Program

• The mapping program assumes that over the long-term, all possible combinations from the 3 reels will be hit an equal number of times.
• With the RNG choosing thousands of numbers randomly every second, every combination is indeed possible.
• These 2 features, working together, are what produces the results that players see after the spin.

Short- term vs Long-term results

·      It’s important to understand that over the short-term, random results will vary considerably from the long-term results.  In the short-term, machines may pay out frequently; including larger prizes, or may not pay out very much at all.

·      It is also important to note that machines are never “due” to pay out the larger prize.  Over the long-term, and millions of spins, results tend to reflect the programming rate (the Law of Large Numbers).

·      However, a machine is no closer to paying out the larger prize after 1,000,000 spins than it was after 10 spins.

·      It is common for all gamblers to have difficulties understanding how after hours of playing a pokie or VLT machine that they are no closer to winning than they were when they started.

·      Due to this difficulty there is a tendency to continue playing the same machine longer or more frequently than players would otherwise if they understood how the machines really worked.

·      Combined with the graphics, sounds, themes, and other components that are designed to attract players and keep them gambling longer, it is not surprising that pokies and VLTs account for so much of gaming revenue.

How payout rates are calculated

·      For a 64 virtual stop 3 reel machine the total possible results are 64 stops on reel 1 times 64 stops on reel 2 times 64 stops on reel 3 = 262,144 possible results.

·      The payout rate for this machine is calculated by multiplying each possible result for each winning possibility by their respective payoff.

·      So for example for 3 bars there are 4 stops on reel 1 times 3 stops on reel 2 times 1 stop on reel 3 (4 x 3 x 1) divided by the total number of possible results (262,144) times the payout of $5,000, equalling 22.89%.

·      On non-casino pokie the maximum payout is $500 for a standalone machine or $1000 for jackpot machines, i.e where machines are linked.

How payout rates are calculated:

Machine A

How payout rates are calculated contd…..

·      A simple programming change can either increase or decrease the return rate for the machine.  However, such changes may not necessarily improve the odds of winning at the machines.  Machine B looks to be an identical machine to Machine A to players.  However, in Machine B the number of assigned stops to many of the symbols has been changed on each reel.

How payout rates are calculated: Machine B

• Although Machine B has a higher payout than Machine A, the chances of wining 4 of the top prizes have been greatly reduced, while the number of $25 wins have been greatly increased.

·      Machine C provides an example of what the programming may look like for pokie machines with a large jackpot top prize.

How payout rates are calculated: Machine C

How payout rates are calculated         contd…..

·      Such changes could be made to any of the stops – thereby either increasing or decreasing the number of winning stops, and increasing or decreasing the return rate of the machine.

·      In actuality, machines come with a number of different payout programs (up to 30), and the industry can determine which of the payout programs are used on each of the machines.

What are the real odds of winning?

·      The use of display reels that players can see and virtual reels that players can’t see all with differing number of stops and symbols creates problems for players to know their odds of winning.

·      The display reels may over-rate players’ chances of winning the top prizes, and may under-rate the chances of winning small prizes.  The spinning display reels create a false impression of possible game outcomes.

• The player may have smaller wins but over time can expect these wins will not cover the total amount bet.

·      Players are not provided with any information to determine their odds of winning on pokie machines or VLTs.

·      The odds of winning the top prize on pokie machines may vary from 1:40,000 to 1:33,000,000.

• For example when playing a game like Black Rhinos, to have a 50% chance of getting five rhinos, playing one line at a time, it would take

6.7 million button presses and cost nearly $330,000.

How machines are programmed

·      All results on a VLT or pokie machine are pre-programmed into the virtual reel.

·      This includes near misses – where winning results almost line up on the payline – but where the player doesn’t win. Near misses are a tactic used by the gaming industry to encourage prolonged play.  These near misses use the ‘frustration theory’ – failing to filfil a goal produces frustration which energises behaviour and results in increased levels of play.

·      The machines are programmed to encourage the individual player into believing a degree of skill is involved.  Encouraging the player to be more active in the game develops the illusion of relationship between the player and the machine.  The increased familiarity falsely creates a perception of skill.

·      Machines that have “bonus” features games, also have the bonus feature programmed into the virtual reel.

·      Although all the results are “random” the programming on the machines ensure that the machines payback at a pre-determined percentage.

* Productivity Commission 1999,  Australia’s Gambling Industries Inquiry, Report No. 10

How the machines work     

·      The results of the spin are already determined when the player first presses the spin button (or pull the handle).

·      The player cannot control or effect the results. The machines are programmed to pay out less than put into them, so the odds are the player will lose.

·      On reel games there is no skill involved and no strategy that can effect the outcome of the play.

·      Players decide how many credits they are wagering, how many lines they are playing, insert their money and either press the spin button or pull the pokie handle.

·      There is no difference in game outcome between pushing the button or pulling the handle or touching the screen.

• The machines and their environments are usually designed to ensure play for prolonged periods of time. For example, they use red lights instead of blue lights due to their less inhibitory effects. Lighting is dim to increase the focus on the flashing lights of the machine and to discourage eye contact with other players and therefore prevent social interaction, which may result in a ‘break’ to the entrancing effects of the machines.*

*Barrington Centre Pty Ltd, 2002,  Tattersals Market  Research Briefing.

Video Poker

·      While there is some strategy involved in playing video poker, this strategy does not increase players’ winnings, it only helps decrease players’ losses.

·      The return rate is set at players making all the best decisions for that particular game.  This is called optimum playing strategy.

·      Player decisions that do not follow this optimum playing strategy result in players experiencing a lower return rate – and increased losses.

·      Different variations of poker (e.g. Jacks or Better, Jokers Wild, Bonus Poker) have different optimum playing strategies, and players would need to make different decisions on differing games with differing winning payout tables.

·      Even with the same variation of poker, different machines may have different payouts for the same winning hands, and players would need to make different decisions based on the different payouts.

·      In single hand video poker, when the player pushes the play button 10 cards are chosen by the RNG.

·      The player is shown the first 5 cards.

·      The best result of the deal has already been chosen.  The player’s choice is to attempt not to throw away the wrong cards and thereby reduce the winning results.

·      The player decisions are really not about winning strategy, but about reducing losing strategy.

How payout rates are calculated: Video Poker

References:

Christensen, S., Saskatchewan Health, 2002, How Machines are Programmed.

Department of Internal Affairs, 2004, Consultation on Possible Regulations, Gambling Act,2003.

Gregory, D., Woollard, S., Barrington Centre Pty Ltd, 2002,  Tattersals Market  Research Briefing

Productivity Commission 1999,  Australia’s Gambling Industries Inquiry, Report No. 10