Unlike other industries, the birth of slot machines isn't very well documented. That lack of facts leaves some space for different versions of how the history of slot machines began and who invented these iconic casino games. Some think that first slots were created by Charles Fey. Even though it's widely believed so, this opinion can be a little bit inaccurate.
The term slot machine (short for nickel-in-the-slot machine) was originally also used for automatic vending machines but in the 20th century came to refer almost exclusively to gambling devices.
First Slot Machines: Sittman and Pitt
Bally was the first company to create a slot machine with electric reels, called Money Honey. The game still needed to start with a mechanical lever, but the electric reels were a game changer. Resorts Casino was the first casino to open its doors after gambling became legal. As such, it houses the city's first slot machine. Today, the machine is guarded by plexiglass just inside the. 311 slot machine, a more complicated machine, was developed in Brooklyn, N.Y., by Sittman and Pitt in 1891. With five drums inside, the machine held 50 card faces and used the rules of poker to win. The very first slot machine was called the Liberty Bell and was invented by Charles August Frey. It was named as such because the highest payout available from the machine occured from matching three bell symbols. How do you pick a winning slot machine? There are no slot tricks to choosing a winning machine, as they are entirely luck based.
According to one version, first slot machines were developed by a New York company called Sittman and Pitt in 1891. If this company really was behind this incredible gambling invention, it would be a mistake to picture first casino slots as three reeled machines.
Sittman and Pitt created five reel slots. That's because those were poker machines and like in poker, players had to get five cards. It was similar to playing poker game, but you don't compete against other players and just hope to collect a pair of kings or a higher combination. KK was the lowest paying combination.
There are 52 playing cards in a regular deck. Slot reels each could accommodate only 10 cards. Therefore, Sittman and Pitt's machines were missing two cards – J and 10. That resulted in a lower payout ratio.
One of the key characteristics of those poker machines was that payouts weren't automated. Players had to ask for a venue owner or employee to collect their winnings. It wasn't just money they could win, but also variety of products like chewing gums, drinks, etc.
For instance, one of the first slot machines had maximum payout of 100 cigars paid to anyone collecting Royal Flush. Wager size was fixed at that time – 5 cents per spin. Those slots were usually placed in bars to attract more visitors as poker was very popular.
History of Casino Slot Machines. Charles Fey
First Slot Machine Invented
This version doesn't provide specific dates. It's believed that Charles Fey created his first slot machines somewhere between 1887-1895. But many think that his invention came as a modification of Sittman and Pitt's poker machines. If they are right, Charles Fey's product was created in 1891-1895.
Charles Fey introduced automated payouts, and this was a big deal at that time. To make this happen, he had to make the slot as simple as possible. That was the beginning of the three reeled slots era. Along with three reels and automated payouts, he introduced a few symbols instead of fifty different cards. There were just three playing card suits (hearts, diamonds and spades), horseshoes and Liberty Bell. The latter symbol was the most valuable, and slots were named after it. Those changes made a huge impact and greatly influenced the history of slot machines.
After Charles Fey came up with simple and his innovative machines, a lot of investors rushed in and started investing in this industry. Fey failed to patent his invention and therefore others started to copy his work. As Charles Fey lived in the USA, there's no doubt about the country of origin of the first slot machines. But naming the author is a bit tricky.
Charles worked as a mechanic and had passion for inventing. Some say that he first had the idea of creating a slot machine as early as 1887. That's several years before Sittman and Pitt introduced their own product. However, we don't know when this company came up with the idea, and when they started to actually started building the machine. So, there is no exact answer to the question of who is the author. But one thing is clear – Charles Fey indeed can be called Father of Slots, at least for his contribution to the development of the industry. It's clear that his work gave the slot production a huge boost.
History of Slot Machines. First Mass Production Companies
Soon after Charles Fey started developing Liberty Bell, this industry became an attractive investment opportunity. As companies with bigger resources entered the market, it wasn't rational to try to compete with them alone, and Charles Fey joined Mills Novelty Company Inc. Their first slot machines were called Mills Owl. Later on they launched the production of Mills Liberty Bell and then came Operator Bell featuring first fruit symbols.
In the 1930s, while still working on Mills Novelty, Charles Fey created Silent Bell. Older machines a lot of noise and Silent Bell was designed to reduce noise level. The machine also offered twice the usual maximum payout.
In 1906 one of Mills Novelty employees established Industry Novelty company. At first they specialized on fixing existing slot machines, but later launched their own production. One of their most significant contributions to the history of slot machines was figuring out how machines could recognize coin values. They also invented the mechanism that prevented coins from being stuck inside the slots if they were released too quickly.
Many companies jumped the trend at that early days of slot machines, but most of them ceased to exist. One of the first slot machine developers that still operate today is Aristocrat. The company was established in 1953 and distributed its products globally. Its founder, Len Ainsworth, later lost control over his company and left it. He then started a new company, Ainsworth Game Technology.
History of Slot Machine Names
One of the earliest names given to slots was 'nickel-in-the-slot'. That's because machines accepted only 5 cent coins. Later this long name was shortened to 'slot'. At the same time, machines were called one handed bandits, and there was a good reason for that. When fruit symbols were introduced, players started calling slots 'fruit machines'.
The gaming industry is big business in the U.S., contributing an estimated US$240 billion to the economy each year, while generating $38 billion in tax revenues and supporting 17 million jobs.
What people may not realize is that slot machines, video poker machines and other electronic gaming devices make up the bulk of all that economic activity. At casinos in Iowa and South Dakota, for example, such devices have contributed up to 89 percent of annual gaming revenue.
Spinning-reel slots in particular are profit juggernauts for most casinos, outperforming table games like blackjack, video poker machines and other forms of gambling.
What about slot machines makes them such reliable money makers? In part, it has something to do with casinos' ability to hide their true price from even the savviest of gamblers.
The price of a slot
An important economic theory holds that when the price of something goes up, demand for it tends to fall.
But that depends on price transparency, which exists for most of the day-to-day purchases we make. That is, other than visits to the doctor's office and possibly the auto mechanic, we know the price of most products and services before we decide to pay for them.
Slots may be even worse than the doctor's office, in that most of us will never know the true price of our wagers. Which means the law of supply and demand breaks down.
Casino operators usually think of price in terms of what is known as the average or expected house advantage on each bet placed by players. Basically, it's the long-term edge that is built into the game. For an individual player, his or her limited interaction with the game will result in a 'price' that looks a lot different.
For example, consider a game with a 10 percent house advantage – which is fairly typical. This means that over the long run, the game will return 10 percent of all wagers it accepts to the casino that owns it. So if it accepts $1 million in wagers over 2 million spins, it would be expected to pay out $900,000, resulting in a casino gain of $100,000. Thus from the management's perspective, the 'price' it charges is the 10 percent it expects to collect from gamblers over time.
Individual players, however, will likely define price as the cost of the spin. For example, if a player bets $1, spins the reels and receives no payout, that'll be the price – not 10 cents.
So who is correct? Both, in a way. While the game has certainly collected $1 from the player, management knows that eventually 90 cents of that will be dispensed to other players.
A player could never know this, however, given he will only be playing for an hour or two, during which he may hope a large payout will make up for his many losses and then some. And at this rate of play it could take years of playing a single slot machine for the casino's long-term advantage to become evident.
Short-term vs. long-term
This difference in price perspective is rooted in the gap between the short-term view of the players and the long-term view of management. This is one of the lessons I've learned in my more than three decades in the gambling industry analyzing the performance of casino games and as a researcher studying them.
Let's consider George, who just got his paycheck and heads to the casino with $80 to spend over an hour on a Tuesday night. There are basically three outcomes: He loses everything, hits a considerable jackpot and wins big, or makes or loses a little but manages to walk away before the odds turn decidedly against him.
Of course, the first outcome is far more common than the other two – it has to be for the casino to maintain its house advantage. Facebook casino games free. The funds to pay big jackpots come from frequent losers (who get wiped out). Without all these losers, there can be no big winners – which is why so many people play in the first place.
Specifically, the sum of all the individual losses is used to fund the big jackpots. Therefore, to provide enticing jackpots, many players must lose all of their Tuesday night bankroll.
What is less obvious to many is that the long-term experience rarely occurs at the player level. That is, players rarely lose their $80 in a uniform manner (that is, a rate of 10 percent per spin). If this were the typical slot experience, it would be predictably disappointing. But it would make it very easy for a player to identify the price he's paying.
Raising the price
Ultimately, the casino is selling excitement, which is comprised of hope and variance. Even though a slot may have a modest house advantage from management's perspective, such as 4 percent, it can and often does win all of George's Tuesday night bankroll in short order.
This is primarily due to the variance in the slot machine's pay table – which lists all the winning symbol combinations and the number of credits awarded for each one. While the pay table is visible to the player, the probability of producing each winning symbol combination remains hidden. Of course, these probabilities are a critical determinant of the house advantage – that is, the long-term price of the wager.
This rare ability to hide the price of a good or service offers an opportunity for casino management to raise the price without notifying the players – if they can get away with it.
Casino managers are under tremendous pressure to maximize their all-important slot revenue, but they do not want to kill the golden goose by raising the 'price' too much. If players are able to detect these concealed price increases simply by playing the games, then they may choose to play at another casino.
This terrifies casino operators, as it is difficult and expensive to recover from perceptions of a high-priced slot product.
First Slot Machine 1887
Getting away with it
Consequently, many operators resist increasing the house advantages of their slot machines, believing that players can detect these price shocks.
First Slot Machine Made
Our new research, however, has found that increases in the casino advantage have produced significant gains in revenue with no signs of detection even by savvy players. In multiple comparisons of two otherwise identical reel games, the high-priced games produced significantly greater revenue for the casino. These findings were confirmed in a second study.
Further analysis revealed no evidence of play migration from the high-priced games, despite the fact their low-priced counterparts were located a mere 3 feet away.
Importantly, these results occurred in spite of the egregious economic disincentive to play the high-priced games. That is, the visible pay tables were identical on both the high- and low-priced games, within each of the two-game pairings. The only difference was the concealed probabilities of each payout.
Armed with this knowledge, management may be more willing to increase prices. And for price-sensitive gamblers, reel slot machines may become something to avoid.
