The world’s first-ever real money online casino was launched 25 years ago by InterCasino, a company that has subsequently struggled to compete with the companies that they, in turn, inspired.
The company, which was launched by William ‘Billy’ Scott, is an interesting case study of the development of the online gambling industry. In the early days, Scott recognised the potential of slot machines revenue and began using the lure of free spins to tempt new customers to sign-up to his fledgling site.
A decade after InterCasino was established, the business stood on the verge of bankruptcy after paying out a combined $9.7 million to two lucky slots players. To put that into perspective, those two payouts amounted to just under a quarter of the company’s total market value.
That example alone demonstrates the fine balance that online gambling providers have to navigate when basing their profit model around slot games. In this article, we’ll take a deep dive into exactly how much profits slots make and why they are the beating heart of any casino, online or land-based.
The UK is widely regarded as one of the strongest gambling markets on the planet, with thriving land-based and online sectors. In the year running from April 2019 to March 2020, the entire gambling industry generated revenues of £14.2 billion combined.
The largest contributor to this figure was the online sector, incorporating remote betting, casino games and bingo to produce a combined revenue of £5.7 billion. Slots were the powerhouse behind this figure, accounting for £3.2 billion.
In land-based casinos, the figures are a little harder to decipher with the revenues from slot machines being combined with those of classic table games such as roulette and baccarat.
Conservative estimates suggest though that land-based slot machines generated just under £4 billion in revenues in the same period. This means, in total, that slot machines accounted for around half of all gambling revenues in the UK last year.
Individually, slot machines don’t generate that much revenue, their profitability is instead cumulative.
Slot machines are the biggest money-makers for casinos all over the world, on the Las Vegas strip and on your favourite mobile casino app. The reason for that is the consistent profits that they generate for their owners. When you are choosing a slot to play online, you probably take a minute or two to read the description and familiarise yourself with the different winning combinations. If you look carefully though you will find the Return to Player (RTP) percentage.
This number represents the amount of money you can expect to be returned to you on average for every £100 wagered. Slot machines on the Las Vegas strip usually have around an 85 per cent RTP, meaning for every $100 wagered a player will lose $15.
Here in the UK, the RTP tends to be a little higher with most games offering a 90-95 per cent return on investment to players. What’s important to remember in relation to slots is that they generate their profits through attrition.
If for example, it takes a player on average an hour to spend up to £100 on their favourite slot then the hourly profit of the machine could be as low as £5-£10. However, when you factor in that hundreds of these slots are being played at the same time, the profits start to stack up.
You may well be wondering after everything you’ve read, why people bother playing slots if the amount they will lose on average is there in black and white for them to read before they spin the reels? Well, apart from the obvious reasons for relaxation and fun, the biggest attraction to a slot machine for any player is the possibility of winning big. In order to entice customers to keep spinning those reels, casino owners tempt them with the allure of huge winnings.
This can be a double-edged sword for some providers though, as the example of InterCasino earlier in the article illustrates. However, this usually only becomes a problem when operators offer customers unsecured progressive jackpots.
These are jackpots that increase in value until they are won, although they are usually capped at a certain amount. If the jackpot climbs to too high a value or if a series of progressive jackpots are won in short succession, companies can quickly fall into financial trouble.
In order to offer more enticing jackpots and not risk their future financial stability, many online providers are diversifying their offering and branching out into online bingo. The game, which was a staple of British culture in the mid-20th century, is just behind slots in terms of profitability. It is also growing in popularity year on year in the UK and with a fair wind, could begin to rival slots within the next decade.
If poker and blackjack are the glamorous face of gambling, slot machines are the beating heart working hard under the surface to keep everything running smoothly. They account for almost a half of the UK’s total gambling revenues and nearly two-thirds of most individual casino’s profits.
Rational gamblers who don’t play for fun and focus only on profits would give slots a wide berth, but do you know anyone like that?
Many of us have experienced embarrassment, shame or even anxiety when having to talk about income, finance management and other money-related topics. As inspiring as it is to see so many subjects previously considered taboo being openly discussed online as well as in real life, unfortunately, money talk seems to have slipped through the cracks of the new generation’s unforgivable wokeness.
But what if we all started speaking honestly about our finances? What if, instead of approximately guessing each other’s incomes based on the state and location of our flats, we actually asked directly and, even better, received a straightforward answer in return? While this may sound like a recipe for disaster to some, journalist and author of Open Up: The Power of Talking About Money Alex Holder has been advocating for honest money talk for a while now.
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Screen Shot sat down with Holder to discuss exactly what talking openly about money could teach us, both about our finances and ourselves. As a contributor to Asto’s recent report The Cash Flow Revolution, Holder strongly believes in the message that it delivers: money is not just maths, it’s personal—emotional even—which means that understanding someone else’s approach to financial management will help you understand your own approach to it, and vice versa.
And in order for you to understand how others think about money, there needs to be an honest conversation taking place at some point. That’s exactly what Holder discovered about herself and her group of close friends, “We shared a lot. They were the ones who I went to if I wanted to discuss anything vaguely taboo—all my sex education came from my friends, they were my career coaches, etc. But with money, we all skirted around it, which made me realise how many of the conversations we were having were inauthentic because we weren’t talking about the money bit or we weren’t mentioning any figures,” she explained.
Holder mentioned the example of one time when one of her friends came to her for advice on whether she should move in with her boyfriend of 6 months to save on rent. “Of course, during that conversation you have to ask them how much they like their boyfriend but also how much money they’re going to save. Is that going to add up in the long run if you have to move out sooner? Getting those figures out meant we could actually discuss the emotional side as well as the money side.”
Once Holder started talking about money with friends, she felt a collective relief, “We were all really happy to start discussing it, because it’s such an important issue in all the areas of our lives.” Since then, she has been on a mission to tackle financial taboos and won’t stop until then.
Before defining six Money Mindsets in its report, Asto wasn’t looking for anything in particular, Holder explains, “We wanted to speak to as many small and medium business owners as possible—Asto surveyed over a thousand—and again, having conversations, asking those questions and listening carefully to the answers that were coming up led us to find patterns that certain people fell into. That’s how the different Money Mindsets were created.”
The report’s aim isn’t to slot anyone into a box, but more to help you understand how your emotions, your upbringing and socialisation as well as how well your business is doing, make you take certain decisions in a certain way at that moment in time. What makes a true difference is being aware of how you deal with problems—there’s no one way of dealing with money, and learning about how others approach those issues can lead you to fix your own. After all, we learn from others, right? Why should it be any different when it comes to money?
“There’s no normal, but there are a lot of different tools and ways to help you out, and there might be a better way for you to do it,” explained Holder. But what about once this type of open conversation has taken place—where do you go from there? Then, it’s time to act. Speaking about personal financing, Holder advises, “Look at your money: you should know exactly how much you have and how much is going out of your bank account at any time. This is even more important when it comes to business finances. Make sure your money is really transparent to you, don’t hide it behind five different passwords—you need to be looking at your bank account every single day.”
Both in personal and in business, it has become so easy for money to just leave our account. How many times have you forgotten about that extra expense at the end of the month which always takes you by surprise? I sure have. Transactions are now so effortless that being mindful of your money simply isn’t enough anymore—Holder also advises people to tune into their emotional relationship with their finances.
People are slowly realising that talking about money can be really helpful. After all, money plays a crucial role in our lives and relationships. It’s time for us to destigmatise the way we talk, think and feel about money, be that through talking with friends, partners, business owners and freelancers or by sharing our salary on Instagram like Holder did.
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“We all have really pocketed knowledge about money and how much people get paid. We might know about our industry and how much our parents earn but when that knowledge doesn’t stretch out to more people, it affects power dynamics and that’s how unfair pay practices can go unsolved,” shared Holder. Only transparency will help us get to a place where we all speak openly about money and where asking for money advice isn’t shameful but actually normal and helpful.
There are no stupid questions, only stupid answers, right?