# How Did That Happen?

I have been analyzing casino games for about 30 years.  Given that I’m in my mid-40’s, that is quite a statement.  When I first learned to program computers in High School, my father asked me to create a program that would analyze blackjack.  That was the beginning of it all for both of us.  Through the years, between the two of us, we would analyze the most popular games in the industry – video poker, Three Card Poker, Let It Ride, Mississippi Stud, Ultimate Texas Hold’em and many more.

Despite all of this, there is still one burning question that I simply cannot answer.  How did the casinos ever allow video poker machines paying over 100% to get to the casino floor?  When I work on a table game, questions always come up about whether there are ways to count cards or use knowledge of other Player’s cards to get a Player advantage.  Generally speaking, most games do allow for the Player to reduce the house edge if he knows other Player’s cards and can alter his strategy accordingly.  To date, I have not yet discovered a case where the Player can turn the tables on the house, but rather reduce somewhat the house advantage.  The response I invariably get from the inventor is – as long as he can’t push the payback over 100%, we’re good.

So, if a bunch of friends head over to a Let It Ride table and start sharing information about their cards and by doing so can push the payback of Let It Ride all the way up to 99.9%, that’s okay.  But, if it goes to 100.01% there is a problem.  At 99.9%, the Player will still lose in the long run.  At 100.01%, in theory, he will win in the long run.  This is a line the casinos (and inventors) do not want to cross.

So, given this, how did so many video poker machines hit the floor with a payback of over 100% and while they have been greatly reduced, how do so many still exist today?

For the first part of the previous question – I haven’t a clue.  I can only speculate.  My best guess says that somehow it eluded the inventors, gaming companies and even the Nevada Gaming Control Board that there was a discrete mathematical solution to the perfect payback of video poker.  Or, based on the computers readily available at the time, they believed that calculating such a payback was nearly impossible.

Of course, as we all know, my father proved them wrong.  Despite relatively limited programming skills and a computer that by today’s standards would seem to be less powerful than most of our phones, he managed to determine the best way to play each hand and calculate an exact payback for most of variations of video poker that existed at the time.  Much to his surprise, many of these variations would have paybacks well over 100%.  Even the most popular variation (jacks or better) had a payback of about 99.6%, which seemed high.  However, as I stated earlier it was still below 100%, so while perfect play might cut into profits it would not eliminate them.  Games with a payback of over 100% might slice into profits.

So, one train of thought could be that so few people would play the game correctly, what harm could it cause?  Let’s take a look at just how much someone could win.  If we use Deuces Wild paying 100.76% as an example and use a \$1 machine, an expert Player would wager about \$4000 per hour (800 hands times \$5 – max coin).   With a 0.76% Player advantage, a Player would win about \$30.40 per hour.  If someone were to choose to make this a profession, he could win more than \$1200/week or about \$60K per year.  You won’t become a millionaire this way, but it’s not a bad wage.  Now, what if someone were to train a team of people and play an entire bank of 8 or 10 machines paying out 100.76%.  He would reduce the volatility and could pay people \$20-30K to play video poker per year and keep  \$200K+ for himself!  Take it one step further and imagine if he can find a \$2 machine or a \$5 machine or even a higher denomination.  Throw in cashback and comps and someone could take the casinos for a lot of money.

Of course, one the casinos figure all this out, they’re just going to lower the payouts on these machines, right?  Well, that certainly happened too.  It is much more difficult to find machines paying over 100% today than it was 10-15 years ago.  However, they still exist in rather large amounts.  What has changed then?  Mostly the denomination.  The casinos have made it so that it is very difficult to find a machine playing more than quarters paying out over 100%.

If we perform our earlier calculation using a quarter machine, we find that a Player can earn an average of about \$7.50/hour.  This translates to a yearly income of \$15,000 which isn’t exactly a living wage.  Thus, it isn’t likely to attract ‘professionals’.  Instead, casinos get to scream how they have video poker machines paying over 100% knowing that 90% of the Players who play it will probably not use the proper strategy and will actually play it a lower payback.

This is truly the definition of a win-win scenario.  The casinos are willing to leave the machines on the floor which gives the knowledgeable Player the opportunity to take advantage of them.  What is interesting is that virtually all of the positive machines can be found at casinos frequented by locals – i.e. not the Strip casinos.  As I’ve discussed many times before, it would seem that many (too many?) people would rather make a donation to Caesar’s than a withdrawal from Red Rock Canyon.

To find machines with top paybacks, I highly recommend the database at http://www.vpfree2.com.   I have absolutely no affiliation with this site and do not profit in any way if you choose to use the database.  I just find it a very good resource to find full-pay machines.  Of course, another good resource is our “Expert Video Poker for Las Vegas” which is an excellent beginner’s guide to video poker.  For the month of May, it is available at special price of \$7.95 (reg. \$9.95) for Gaming Today readers.  If you would like to order, please send a check or money order to Compu-Flyers, P.O. Box 132, Bogota, NJ 07603.