The conclusion that a lower payout means more money for the lottery and less for the players is wrong. If a player receives a lower payout than expected either through bad luck or cheating on the part of the video machine they are more likely to stop playing. There is an online gambling company here in the UK who strive to maintain a 95% payout across all their games because it is deemed the most profitable long term strategy. The chances are that a higher payout for video poker will result in higher earnings for the lottery company which means there is a possibility that the auto hold behaviour is as a result of lazy programming rather than deliberate maliciousness.
Yeah, they just have to keep you there long enough to get all the money you are willing to gamble with. Changing the odds a few percentage points one way or the other won't make any difference. The only reason the house needs an edge at all is to discourage investors with huge bankrolls.
What if they claimed and displayed 95% payout, but actually only paid out 92%? Don't you think that would be more profitable? Because that is basically what they're claiming is happening here. Do you think enough people will keep track of their winnings for long enough to catch the discrepancy?
That's hard to say. In the case in the article, the machine is obviously mis-leading players by suggesting a less than optimal strategy. At the same time, if the manufacturer of the machine wanted to lower the payout without indicating anything to the player, they could simply adjust the probabilities of the cards as they are dealt (I assume that is how most video poker machines work anyway). I don't believe that individual players will have any idea whether or not they are receiving the advertised payout, they can only respond the the outcome of the game. Gambling companies do often advertise high payouts but I suspect this is only attracts new players while the real odds affect how long the players continue to play.
if the manufacturer of the machine wanted to lower the payout without indicating anything to the player, they could simply adjust the probabilities of the cards as they are dealt
Having a different payout than the advertised one is definitely illegal in the US. What Oregon seems to have done is to find a neat loophole to get around that law.
(I assume that is how most video poker machines work anyway)
At least based on how I understand the law, you cannot tinker with the randomness of how the cards are dealt. The only thing you can use to alter payout percentages is alter the actual payout amounts for different events.
Do the machines' operator in the UK need to be competitive? How about in Oregon? I am sure question 1 is Yes. Just from reading the article, I guess only the State Lottery can run machines in Oregon.
There's plenty of evidence that gaming machines in the UK are set to far lower than a 95% payout, namely that each machine displays this percentage on it, and they are almost always below 95%
The people installing these machines aren't fools, they know that lowering the payouts increases their profits.
I would guess there is a difference between the effect of various payout percentages in online games vs physical machine games. I would assume online players tend to have more time to spend playing on average which gives them more time to hit their spending limit.
I would love to give a source for the 95% figure but I only have that info second-hand from an ex-employee.
Regardless of whether or not you believe that statement, you should see that the logic that lower payout ratio equals a lower payout amount simply doesn't hold. Imagine if the payout turned out to be 50% rather than 90%. Would you expect the company make more or less money? Even if players believe they were simply unlucky, that will still be enough for some of them to stop playing. The optimal payout in terms of revenue for the company is something that can only be determined by real world experiments and there is no evidence in the article about this case that the lottery company determined that an advertised payout of 90% and an actual payout of 87% by experimental analysis. Hence my tendency to believe this was not an act of deliberate deception.
