Are Slot Machines Really Profitable for Casinos

slot machines profitable for casinos

Slots have been a mainstay at land based casinos for decades and have been steadily growing in popularity with online casinos. This has been due to the major advancement in technology as well as a growing acceptance of the security and safety of online casinos. The question is whether or not slot machines are profitable for casinos. To be clear, there are no loss leaders in a casino. That means that casinos are not in the business of offering games that have anything but a house advantage built into it. So the easy answer is yes, they are profitable. Another question is whether online slot machines are more profitable than land based slot machines.

Over time, land based casinos have nestled into payout ratios of around 75%. When you factor in the cost of development, manufacturing, as well as the casino overhead, that still leaves in a healthy cut for the casino. This payout means that players can expect to return $0.75 for each $1.00 that they put in play. Of course, this is an average, and takes into account the payouts in aggregate over a long period of time. For an individual night, or a bank of machines, or even just a particular machine for an hour, the payout ratio may be quite different.

For online casinos, the nature of the slot machine is much different. Its payout ratios are much higher, and are slightly higher than 90%. When you consider the types of expenses associated with the traditional land based casino, such as manufacturing and massive overhead, you realize that they are irrelevant to an online casino.

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There is development cost associated with the creation of the casino software, and it requires much more expense as it relates to running the application, however it can massively deployed much cheaper than land based slot machines and is extremely scalable from a business model stand point. For that reason,, they can be programmed to have a higher payout ratio for the player, making it much more attractive from that aspect.

When considering all of the various factors involved, it is easy to see why online slot machines have had such a meteoric rise in popularity. They have been a great alternative to land based casinos. Most people don’t live close enough to a casino to enjoy an evening of playing slots in a traditional casino, which is another reason why online casinos have become so popular. When you can make back 90 cents on the dollar, you can really stretch your enjoyment dollar. On top of that, it is win-win proposition since given their cost structure; it is still a profitable endeavor for the casino.

Regardless of whether we are talking about land based or online slot machines, the fact is that they will continue to be a mainstay in casinos throughout the world and the internet.

Colin Jones

Colin Jones is a born and raised Chicago writer specialized on topics related to the casino and gambling industry. Having years of experience on the field, Colin will keep you in touch with the latest news and advances on the casino industry.

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