The Profitability of Slots: The Bread and Butter of Casinos

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Slots are arguably the most popular form of casino game in the world, making the profitability of spots substantial. Since their invention in 1887, slots became a favorite pastime of many players from every walk of life. And with the advent of iGaming, they gained even more credit as a fun way to spend time online.

Due to their massive popularity, it is no wonder that casinos from every country adopted slots as one of their main attractions. One example is WinStar World Casino in Oklahoma. While the casino offers 55 poker tables and a further 100 table games, it offers an astonishing 8,500 different slot games.

Online, this also holds true — with many online casinos offering hundreds and sometimes even thousands of different slot options. These constantly update, improve, or replace with newer and even more exciting games.

With such a massive following and supply of slots, one may wonder if these games are worth the effort and cost of sourcing and maintaining them. rersa

The Cost of Slots

Since the beginning, casinos paid a premium for quality slot machines to attract players and keep them coming back. Today, with so many online slots available, brick-and-mortar casinos need truly eye-catching machines to keep players engaged.

Because of this, the average cost of a slot machine for a casino is between $15,000 and $25,000. This accounts only for the machine and software and usually doesn’t include the delivery and installation of the slot.

While this amount may not sound excessive, it can be. Using the WinStar World Casino mentioned above (which hosts 8,500 different slots) as an example, it costs the casino $170 million to purchase all the available machines (if estimate uses $20,000 per slot).

Aside from this initial purchase, the slots also require regular maintenance and other expenses, like electricity. However, all these expenses do not necessarily make them cheaper than online slot games.

Unlike physical machines, online slots are purchased from several great game developers. These then “install” in an online casino and left to operate. The catch is that many online slots, like those provided by the popular (and constantly expanding) NetEnt, cannot usually be purchased outright by an online casino.

Instead, these games license out to the casino for a monthly percentage of the game’s GGR (gross gaming revenue). This variable license means casinos pay minimal fees some months and outrageous fees the next.

RTP and House Edge

The next important thing to analyze in terms of slot profitability is each slot game’s RTP (return to player) rate. This RTP automatically determines the house edge of the slot as well.

The RTP of each game determines the total percentage of money (of the amount collected) that a casino returns to players in the form of winnings. For example, if a slot machine generates $10,000 in revenue with an RTP of 95%, the machine will pay out $9,500 in winnings.

Inversely, the house edge, or profitability margin of the casino, calculates by deducting the RTP from 100%. Therefore, with a slot that has a 95% RTP, the house edge calculates at 5%. This means it earns $500 on every $10,000 the machine collects from players.

This RTP and house edge work together with other factors to determine the total profitability and, therefore, the success of a casino — both physically and online. However, RTP does not operate the same when comparing physical and online casinos.

The average RTP of online slot machines is between 95% and 97%, which is relatively high. This offers players great chances of winning while still making the casino money. Physical casinos usually only offer RTPs of between 93% and 96%. There is, however, a good reason for this.

Due to the additional overheads required to operate a physical casino, more profits spend toward maintaining the casino facilities, employing staff, and even upgrading gaming machines. Because of these expenses, physical casinos traditionally require slightly higher profit margins to survive.

Profitability of Slots

As reported by Forbes, 2021 was a record year for gambling and betting in the US. The industry generated a staggering $53 billion in revenue — topping the previous record of 2019 by 21%. Amongst the top-ten highest-earning cities were Las Vegas, Atlantic City, Detroit, and Philadelphia.

Of this massive $53 billion turnover, $32.53 billion generated from slots alone. In other words, 61.38% of all turnover in the industry generated only by the simple slot machine. Using a standard average of a 95% RTP and 5% house edge, casinos earned an estimated profit of $1.63 billion from slots alone (before expenses).

While this massive profit certainly isn’t significant compared to the industry’s overall revenue, it is still an incredibly sizable amount. This is especially apparent if you consider that outfitting a massive casino like WinStar World Casino with 8,500 slot machines only requires $170 million.

iGaming profitability was also significant, with a total of $3.71 billion in revenue. Unfortunately, it is unclear how much of this came from slots alone, as the AGA (American Gaming Association) doesn’t report on those numbers.

Final Say

Whether you love playing slots or are indifferent to this particular form of entertainment, there is no denying they are the bread and butter of most casinos worldwide.

Thanks to their excellent entertainment value, relatively low maintenance, and significant house edge (and RTP for players), it is no wonder that slots are so popular — and profitable.

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