Slide outline: How electronic gambling machines work

1. How do electronic Gambling Machines do what they do?

Dr Charles Livingstone,

Gambling & Social Determinants Unit

2. Disclosure

  • Charles Livingstone has received funding from the Victorian Responsible Gambling Foundation, the (former) Victorian Gambling Research Panel, and the South Australian Independent Gambling Authority (the funds for which were derived from hypothecation of gambling tax revenue to research purposes), from the Australian and New Zealand School of Government, and from non-government organisations for research into multiple aspects of poker machine gambling, including regulatory reform, existing harm minimisation practices, and technical characteristics of gambling forms. He has received travel and co-operation grants from the Alberta Problem Gambling Research Institute, the Finnish Institute for Public Health, the Ontario Problem Gambling Research Committee, and the Problem Gambling Foundation of New Zealand. He is a Chief Investigator on an Australian Research Council funded project researching mechanisms of influence on government by the tobacco, alcohol and gambling industries. He has undertaken consultancy research for local governments and non-government organisations in Australia and the UK seeking to restrict or reduce the concentration of poker machines and gambling impacts, and was a member of the Australian government's Ministerial Expert Advisory Group on Gambling in 2010-11.
  • This presentation and associated report was funded by the AGRC/AIFS.

3. This presentation

  • What are the principles that support Electronic Gambling Machines (EGMs)
  • How do these make the devices attractive and addictive?
  • What accoutrements have increased the harmful effects of EGMs?
  • What can be done to reduce harm associated with EGMs?

4. Randomness

  • EGMs are highly articulated random number generators – computers - dice on speed’
  • They convert a series of randomly generated numbers into a pattern on a screen
  • This appears as though it were the result of a series of reels spinning
  • EGMs are like a big barrel of marbles …

5. Random, but predictable

  • Random numbers are converted to a set of symbols
  • But the number and type of symbols are predetermined and consistent
    • For example – ‘Dolphin Treasure’ has four ‘reels’ of 30 symbols and one ‘reel’ of 44 symbols
    • This means there are 304 x 44 = 35,640,000 possible outcomes

6. Harrigan et al 2014 (table)

The table that shows the real patterns and the pay table for this Dolphin Treasure machine,  from a paper which was led by Kevin Harrigan, a colleague from Canada, and on which I was a co-author, and it shows some analysis that we did of the Dolphin Treasure.  So, the important thing to look at here is the number of symbols on each reel.  So, if you look at the second set of five columns on the right of that table you will see that, on reel one, if you go down to the king symbol, there is one king on reel one, there are two kings on reel two, four on reel three, five on reel four and three on the last reel.

7. Paytables and reels

  • Reels (in Australia) must remain consistent
    • The order in which symbols appear stays the same
    • But because there are different numbers of symbols on each reel, the odds of a specific symbol appearing may vary from reel to reel
    • Which affects the odds of winning a prize
    • So – the outcome is predictable in the long run, but unknowable in the short term
      • And the long run is 35.64 million spins (e.g.)

8. Return to player ratio

  • In Australia, the minimum RTP is 85%
    • This varies between states and venue types
    • That means the average loss per bet is 15%
    • It does not mean you will get 85% of your stake back, even over a long period of use
      • RTP is a function of the relationship between pay tables, and the reelstrip configuration

9. How is RTP measured?

  • In Victoria, by the performance of every EGM in a venue over a period of the calendar year
  • In other jurisdictions, by the theoretical performance of the game over its game cycle
    • Which can be many years
    • Dolphin Treasure’s game cycle requires a minimum period of 5.6 years played 24 hours/day at 5 sec intervals on a single line.

10. Unfortunately,

  • Evidence is clear that users have little conception of price
  • demand is highly inelastic
  • Many users think EGMs are guaranteed to return 85%
  • But that also includes the amount re-staked
  • So even if you get in front, the machine will inexorably eat away until your stake is almost invariably gone

11. Which means?

  • A user operating an EGM with a price of 15% will, on average, lose 15% of their wager at each spin.
    • The effect is cumulative. So, if a user inserts $10 and wagers $1 each spin, even if the game performs exactly as predicted (and this is extremely unlikely), the user would exhaust their funds in a little more than five minutes (at the rate of one wager every five seconds). With $5 bets, this process would occupy a little over one minute.

12. So, why do people use EGMs?

  • Two well known psychological principles apply:
    • Operant conditioning
    • Classical conditioning
    • Both are core elements of all gambling machines, including early mechanical devices
      • But have been heavily developed via EGMs

13. Operant conditioning

  • B. F. Skinner demonstrated (via animal experiments) that:
  • Animals (including humans) will respond to unpredictable stimuli (rewards) by developing patterns of behaviour that are hard to extinguish
  • A random schedule of rewards creates habitual behaviour
    • Much more than predictable rewards can

14.   Skinner box

This is a little box which was designed for Skinner's experiments and which has been elaborated upon many times in the last half century in which the animal pushes down on a lever, it's taught to push down on the lever because, every now and then whilst operating the lever, a little pallet of food comes in and it gets a buzz and continues to push the lever.

15. Classical conditioning

  • Pavlov demonstrated that animals (including humans) respond to stimuli associated with a reward
    • If you play a metronome when you feed your dog, the dog will salivate when it hears the metronome – regardless of whether it’s fed or not
    • If you hear a specific sound when you get a reward, you will rapidly associate that sound with a reward

16. Pavlov’s dog

In Pavlov's classic experiments he played a metronome, he set a metronome off when he fed a dog and he had a little device that measured the extent to which the dog was salivating, and eventually, what happens if you feed the dog and played a metronome, the dog comes to associate the sound of the metronome with the reward, the food, and eventually you can play the metronome, not give the dog any food, and the dog will also salivate.  So, that's a conditioned response.

17. So, what’s going on?

  • Our brains (and animal brains) recognise and anticipate rewards
  • This is done through our brains’ systems, esp. the brain’s dopamine system
  • When a reward is received or anticipated, dopamine is released, causing a pleasurable, euphoric experience
    • Both classical and operant conditioned responses derive from this

18. Why are EGMs so good at this?

  • EGMs can be programmed for multiple ‘tricks’, which increase the reward rate
    • ‘near misses’, losses disguised as wins, jackpots, game features, along with the lights and sounds, maximise reinforcement
    • And many do it without costing the operator anything

19. Losses disguised as wins

Illustration of the lines which you can use on a 50 line machine.  So, if you look at the top left-hand corner you'll see that line 1 goes through the middle, that is, the middle row of the three available, line 2 operates on the top row and line 3 operates on the bottom row, that's pretty straightforward

Line 4, on the other hand, starts at the top-left corner, goes down to the centre reel at the bottom and then zips up to the top-right corner, row 5 is the inverse and so on.  So, you can see that, using this quite elaborate set of constructions of rewards, it's possible to derive 50 possible outcomes, in some cases you can do even more than this but we'll stick with 50 for the time being, I think it's probably easier to comprehend.  So, it's important to understand the concept of losses disguised as wins, in order to do that, you have to understand how the lines operate.

20. LDWs need multiple lines

  • The illustration shows how machines can offer multiple lines for betting
    • Most serious users select as many lines as possible – the mini-max strategy is common
    • This means a ‘win’ is possible on a specific line
    • However, the net result will be a net loss
    • Bet $1, ‘win’ $0.10, result net loss of $0.90
    • But this produces reinforcement and can double the reinforcement rate

21. Near misses

  • Some machines have differing numbers of winning symbols on some reels
  • This allows for ‘near misses’ to occur more frequently than if symbols were equally distributed across reels, esp. where uneven reels are used
  • As with Dolphin Treasure

22. more Near misses

  • The odds of obtaining five King symbols are 1/30 x 2/30 x 4/30 x 5/30 x 3/44 = 120/35,640,000 or 1 in 297,000.
  • Given that there are multiple King symbols on later reels, however, it is not particularly unusual to see a grouping of multiple King symbols on the screen i.e., the odds of seeing a King on the last three reels are 1/660, and on both the third and fourth reels they are 1/45.
  • Such combinations will therefore occur relatively frequently. However, the game pays rewards from left to right, and the odds of achieving three kings on the first three reels (and achieving the most modest reward for King symbols, a prize of five credits) is 1/30 x 2/30 X 4/30, or 1 in 3,375.

23. Features

  • Game features are very popular with serious users
    • They offer ‘free spins’, when a combination of symbols appear on the screen, often with increased prizes
    • They’re not free, however: the probability is factored into the RTP
    • Nonetheless, they provide another reinforcement, at no net cost to the operator

24. Jackpots

  • Jackpots (distinct from max prizes) are funded by a contribution from each spin
    • Often this will be around 2% or more of the wager
    • On a machine with 87% RTP this means the actual RTP is reduced to 85%
    • Often machines fund multiple jackpots – e.g., ‘local’ and ‘linked’
    • Both reduce RTP for those who don’t win a jackpot – i.e., almost everyone

25. So, are there policy implications?

  • EGMs can be modified readily
  • All EGM parameters are open to change
    • The ANZ Gaming Machine Standards offer a vehicle
      • Which is underutilised from a consumer protection perspective
      • In some jurisdictions, harm protection standards have been implemented

26. Current examples

  • Maximum bet – NSW $10; Vic, Tas $5
  • Load up – NSW $7,500; Vic $1,000; Qld $100
  • Bank notes – NSW all notes; Vic $50 max; SA coin only
  • LDWs – Qld no sounds permitted

27. What could be changed?

  • Load up limits
  • Max bet
  • LDWs
  • Starved and uneven reels
  • Communication of RTP and its meaning
  • Accessibility (the major predictor of harm)
  • Venue size
  • Precommitment

28. Useful links

29. Acknowledgements

Thanks to:

  • AIFS/AGRC staff including:
  • Julie Deblaquiere, Anna Thomas, Angela Rintoul, Alister Lamont
  • Anonymous reviewer
  • And multiple others incl: Richard Woolley, Kevin Harrigan, Mike Dixon, Natasha Schüll, Peter Adams, Neil Lawrence, Jane Manning, Andrea Lang, Caroline Pegram

Note – references available in the Discussion Paper


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