YOU ARE HERE: LAT HomeCollections

Slot Machines Beating the Odds in Computer Age : Gambling: Microchips replace reels and gears, offering far greater game variations and operational flexibility. Nationally, they absorb 65% of wagers.


RENO — A century ago, Charles Fey--avid tinkerer, accomplished machinist--quit his partnership in a California electrical supply company to bet on chance.

One hundred years later, the clinks, clanks, whoops and whistles that evolved reverberate worldwide.

Fey, a German immigrant, was neither the first person to make a slot machine nor to mass-produce them. But his three-reel game called the Liberty Bell is considered the granddaddy of slots, paving the way for what has evolved: a booming, high-tech industry that has millions of people plunking billions of dollars into increasingly sophisticated machines.

"The table games are more complicated. You have to know something about them," said Eugene Christiansen, president of Christiansen-Cummings Associates Inc., a financial services and consulting firm in New York City.

"The learning curve on a slot machine is zero. You walk up to it, you touch it, and it plays."

Since 1983, Las Vegas' take from slot machines has outpaced earnings from table games.


In 1985, there were 90,612 casino slot machines in Nevada; a decade later, there are 160,083, and the house winnings are $4.4 billion a year--62% of all the money the casinos win.

Nationally, 65% of the $18 billion that gamblers wagered last year was poured into slot machines, Christiansen said.

Poker machines appeared as early as 1890 in the San Francisco Bay Area, where gambling flourished in the rowdy days after the Gold Rush. Many of the "jackpots" were paid in "trade checks" rather than cash. A royal flush could bring as many as 100 free cigars or drinks.

Working in the basement of his Berkeley home, Charlie Fey developed his slot machine in 1895--maximum payoff, $5.

He opened a factory the following year at 406 Market St. in San Francisco.

Even in those days, the allure of chance was a lucrative venture.

When the San Francisco Board of Supervisors outlawed slots in 1909, there were about 3,200 machines in operation, grossing about $12 million annually and generating $160,000 in tax revenues.

The eve of the ban was depicted in a June 30, 1909, report by the Associated Press: "Thousands of dollars were poured into the slots and players stood in crowds for hours to get a chance to play favored machines. The cigar stands advertised 'farewell specials.' Crowds of men stood about until toward midnight five and six deep and the card reels were kept whirring without a moment's pause for hours."


Gambling in general, and slots in particular, have gone through periods of boom and bust. The latest boom began when New Jersey legalized casino gambling in Atlantic City in 1978. Now, slots whir on Indian reservations and riverboats, a few steps from checkout lines in Nevada supermarkets or the dryers in coin-operated laundries.

Microchips have replaced Fey's reels and gears.

Computer technology "just opened up unbelievable numbers of models and variations and flexibility for casinos to offer a broader range of product that appeals to different kinds of people," said Bob Bittman, vice president of marketing for International Game Technology, the world's largest manufacturer of slot machines.

"That paved the way for casinos to open with bigger places that could handle thousands of machines. In the old days, it wasn't practical."

Besides more variety, computers opened the door for huge jackpots that were unimaginable in the days of Fey's $5 payout. On Oct. 18, a Las Vegas college student won $10.9 million--the largest slot jackpot in history--on IGT's Megabucks, a progressive network that links 726 machines in 137 Nevada casinos.

Gambling without currency is on the horizon. Some casinos have tried machines that accept debit cards purchased for a specific amount that are inserted into slot machines.

"The money handling is a nuisance for the casino and the player," said Dick Sadler, IGT product design vice president. "The casinos spend a lot of time handling money, counting it, processing it. It's just a real big expense. Wrapping coins alone costs big bucks."

Bittman envisions slot machines with "little touch pads" that gamblers will use to access accounts via a PIN number, much like banking at automatic teller machines.

"Any other of our visions, of course, we wouldn't necessarily want to share with the world," he said.

Los Angeles Times Articles