Slot Machines versus the Lottery

Scratch-off Lottery Games on Left with a Row of Slots on Right

Which is a better way to spend your gambling money?

Is it better to bet on slot machines or bet on the lottery?

Honestly, both are lousy bets, but they also each have their own pros and cons.

This post looks at both the advantages and disadvantages of playing the lottery versus playing slot machines.

Understanding the Concept of Expected Hourly Loss

Crucial to the discussion of whether it’s better to gamble on slot machines or the lottery is an understanding of expected hourly loss.

Luckily, it’s not a complicated concept.

With any kind of casino game – like a slot machine – a game has a “house edge.” That’s the statistically predicted amount of each bet that a player can expect to lose.

If you bet $1 on a game with a 5% house edge, over time, you’ll average a loss of 5 cents per dollar.

I won’t get into a lot of detail about how the house edge is calculated other than to point out that it’s literally just the difference between the odds of winning and the payout odds on the bet.

The formula for expected hourly loss is bets per hour X average size of bet X house edge.

If you make 500 slot machine spins per hour at $3 per spin, and the game has a house edge of 10%, your expected hourly loss is 500 X $3 X 10%, or $150.

Of course, this is a long-term expectation (or prediction). In the short run, you might win money in any given hour of slot machine play. Or you might lose more money than the predicted amount (more common).

Once you get in enough bets, though, your actual results will start to resemble the predicted results. The longer you play, the likelier this is to be true.

When Comparing Gambling Games, You Should Look at Multiple Factors

It’s tempting to just measure one gambling game against another by the size of the house edge. For example, if I say that the average house edge on a slot machine in the United States is 25%, and the average house edge for a lottery game in the United States is 40%, the slot machine is the better bet.

But that’s too simple.

Here’s why:

The average slot machine player spins the reels between 500 and 600 times per hour.

How many tickets does the average lottery players buy per hour?

Even if you’re dealing with a lottery nut who buys 500 tickets a week, he’s still not going to do as badly as my friend Patrick the slot machine player.

Lottery Ticket With Pen Next to It

Patrick visits the Winstar World Casino once a week and spends an average of 4 hours playing slot machines. He’s usually playing a game with a minimum bet of $3 per spin, too.

That’s about $6000 a week in action compared to my lottery nut friend’s action of $2000 a week.

If the slots at Winstar have a house edge of 25%, Patrick has a predicted loss of $1500 per week.

If the lottery in Texas has a house edge of 50%, my lottery nut friend has a predicted loss of $1000 per week.

They both lose money, but Patrick loses more.

You Can Calculate the House Edge on the Lottery but Not on a Slot Machine

When you calculate the house edge for a game like the lottery or a slot machine, you multiply the probability of winning each prize by the amount of that prize. You add all those numbers up to get the expected return for the game.

Subtract that expected return from 100%, and you have the house edge for the game.

Most lotteries publish the probability of winning each prize. It’s a simple matter to create a spreadsheet that will calculate the return on a lottery game. Even in a game where the jackpot increases from week to week, you can get an up-to-date number just by updating that cell in that spreadsheet.

But when you’re dealing with slot machines, you have no way of knowing what the probability of getting each winning combination is. Slot machines use random number generators, but what the settings are for those programs is only known by the casino and the slot machine manufacturer.

When I choose a gambling game, I always err toward the game where I can calculate my disadvantage. I think there’s something fundamentally shady about running a gambling game like a slot machine where it’s impossible to know what the house edge is.

In fact, slot machines are the only games in the casino where you can’t calculate the house edge. There’s a lot wrong with that.

I prefer the lottery, although it’s not my favorite gambling game, either, for a variety of reasons.

Probability of Winning the Jackpot

With the big lottery games, where you have a jackpot of $1 million or more, the odds of winning the lottery jackpot are infinitesimal. The bigger the minimum jackpot is, the worse the odds are of winning it.

With a slot machine game, this is also true, but most slot machines have smaller jackpots. If you stick with the games with a fixed jackpot, the average jackpot is 1000 coins.

The odds of winning $1000 on your $1 bet are always better than your odds of winning $1 million on your bet.

From this perspective, a slot machine game is a better game than the lottery.

Someone whose only goal is to win a jackpot is going to see a jackpot more often on a slot machine game than they will on a lottery game.

Row of Casino Slot Machines

Even if the probability of hitting the jackpot on a slot machine is 3000 to 1, which allows for a huge house edge, you’ll still see a jackpot every 2 or 3 sessions on average – assuming you’re playing like Patrick does with his 4-hour sessions.

Most people, though, won’t ever win the lottery even once in their lifetime, even if they buy 50 or 500 tickets a time. The odds are just too long.

You can find scratch-and-win games with better odds, though. Lotteries often offer smaller games like keno or pick 3 games where you have a reasonable probability of winning a jackpot.

But the house edge on those smaller lottery games goes up dramatically. The house has a 50% edge on a pick 3 game, for example.

Which Is More Fun? The Lottery or a Slot Machine Game?

This is a matter of your temperament. You should think about how much fun you are (or aren’t) having every time you play a gambling game, though. Gambling games should be treated like other entertainment expenses, like movie tickets or your cable TV bill.

I have an English professor friend who plays the lottery on a regular basis, and he understands how terrible the odds are.

But he only buys a ticket twice a week – once for each of the major drawings.

He told me that even though the odds are terrible, he gets enough entertainment value for dreaming about changing his lifestyle that it’s worth playing.

That’s not a bad way to spend $4 or even $6 a week.

On the other hand, Patrick the slot machine player seems to be enjoying his slot machine hobby when he’s coming off a winning session. And I’d guess that I hear from him once a month where he’s had a winning session.

I hear from him less often when he’s had a losing session, which is most of the time. During the weeks he’s having a losing session, he seems depressed and irritable. He also seems like he lacks a choice in whether he’s going to the casino each week.

Either game can be fun depending on your temperament. I write about gambling for a living, and I still play slots some of the time.

And I know how bad the math behind slot machine gambling really is.

In Summary

What’s the bottom line?

Should you play slot machines or stick with the lottery?

Mathematically speaking, you should play neither. The house has a big edge with either game, so you’re going to lose more money than you win either way.

But gambling isn’t all about math. You also get to decide how much entertainment you’re getting in exchange for your money.

My best advice is to keep a gambling diary regardless of which game you choose. If you do have a big win, you can claim your losses as an expense on your tax returns.

But you can also get some clarity on which games are more fun for you.