How to Detect Hidden Price Increases in a Slot Machine

Slot is a narrow depression, perforation, or opening, especially one for receiving something, such as a coin. Also: a place or position within a schedule or sequence; an assignment or job opening. Also: a period of time, as in I’ve slotted this appointment for four o’clock.

The first slot machines were mechanical levers with a fixed number of reels and symbols on them. When the handle was pulled, the symbols landed randomly on the reels, and the player won a prize if they lined up with a payline. The invention of electromechanical slots in the 1880s made these games more reliable, and they dominated casino floors until the introduction of video slots in 1975.

In spite of their popularity, slot machines have long been criticized as exploitative and addictive. The reason is that the house advantage, which is the casino’s profit margin, can be hidden from players. But even small hidden price increases can add up over the long term, making a game unprofitable for the player. Fortunately for players, casinos are not allowed to raise prices too much because they could lose their all-important slot business. To avoid this, casinos often conceal their house advantage by adjusting the frequency with which they reward players for winning. This creates a conflict between casino management and players because it is difficult for the former to increase their slot revenue while keeping player satisfaction high. This study demonstrates how to detect hidden price increases in a slot machine using a simple measurement.