SLOT MACHINES

SLOT MACHINES. A slot machine known as a "fruit machine" or "fruities" (British English), "puggy" (Scottish English),[1] "the slots" (Canadian English and American English), "poker machine/pokies" (Australian English and New Zealand English), or "slots" (American English), creates a game of chance for its customers. Slot machines are also known as "one-armed bandits" because of the large mechanical levers attached to the sides of early mechanical machines and the games' ability to empty players' pockets and wallets as would thieves. The "slot machine" term comes from the slots on the machine for inserting and retrieving coins. "Fruit machine" comes from the traditional fruit images on the spinning reels such as lemons and cherries.

A slot machine's standard appearance features a screen displaying three or more reels that "spin" when the game is started. Some modern slot machines still include a lever as a design trait to trigger play. However, the mechanics of early machines have been replaced by random number generators; most are now operated using buttons and touchscreens.

Slot machines include one or more currency detectors that validate the form of payment, whether coin, cash, voucher, or token. The machine pays out according to the pattern of symbols displayed when the reels stop "spinning". Slot machines are the most popular gambling method in casinos and make-up an estimated 70% of the average U.S. casino's income.

Digital technology has resulted in variations on the original slot machine concept. As the player is essentially playing a video game, manufacturers are able to offer more interactive elements, such as advanced bonus rounds and more varied video graphics.

Sittman and Pitt of Brooklyn, New York developed a gambling machine in 1891 that was a predecessor to the modern slot machine. It contained five drums holding a total of 50 card faces and was based on poker. The machine proved so popular that any bars in the city had one or more of them. Players would insert a nickel and pull a lever, which would spin the drums and the cards that they held. The player hoped for a good poker hand. There was no direct payout mechanism, so a pair of kings might get the player a free beer, while a royal flush could pay out cigars or drinks; the prizes were entirely dependent upon what the establishment would offer. To improve the odds for the house, two cards were typically removed from the deck, the ten of spades and the jack of hearts. This doubled the odds against winning a royal flush. The drums could also be rearranged to further reduce a player's chance of winning. Because of the large number of possible wins in the original poker-based game, it proved nearly impossible to make a machine capable of awarding an automatic payout for all possible winning combinations.

Some time between 1887 and 1895, Charles Fey of San Francisco, California devised a much simpler automatic mechanism with three spinning reels containing a total of five symbols: horseshoes, diamonds, spades, hearts and a Liberty Bell. By replacing ten cards with five symbols and using three reels instead of five drums, the complexity of reading a win was considerably reduced, allowing Fey to design an effective automatic payout mechanism. Three bells in a row produced the biggest payoff, ten nickels (50¢). Liberty Bell was a huge success and began a thriving mechanical gaming device industry. After a few years, the devices were banned in California, but Fey still could not keep up with the demand for them elsewhere. The Liberty Bell machine was so popular that it was copied by many slot-machine manufacturers. The first of these, also called the "Liberty Bell", was produced by Herbert Mills in 1907. By 1908, "bell" machines had been installed in most cigar stores, saloons, bowling alleys, brothels and barber shops.

The first Liberty Bell machines produced by Mills used the same symbols on the reels as did Charles Fey's original. Soon afterward, another version was produced with patriotic symbols, such as flags and wreaths, on the wheels. Later, a similar machine called the Operator's Bell was produced that included the option of adding a gum-vending attachment. As the gum offered was fruit-flavored, fruit symbols were placed on the reels: lemons, cherries, oranges and plums. A bell was retained, and a picture of a stick of Bell-Fruit Gum, the origin of the bar symbol, was also present. This set of symbols proved highly popular and was used by other companies that began to make their machines.

A commonly used technique to avoid gambling laws in a number of states was to award food prizes. For this reason, a number of gumball and other vending machines were regarded with mistrust by the courts. The Iowa court cases of State v. Ellis and State v. Striggles are used in criminal law classes to illustrate the concept of reliance upon authority as it relates to "ignorance of the law is no excuse". In these cases, a mint vending machine was declared to be a gambling device because the machine would, by internally manufactured chance, occasionally give the next user a number of tokens exchangeable for more candy. The courts ruled that "the machine appealed to the player's propensity to gamble, and that is a vice."

In 1963, Bally developed the first fully electro-mechanical slot machine called Money Honey although earlier machines had exhibited the basics of electro-mechanical construction as early as 1940. Its workings made Money Honey the first slot machine with a bottomless hopper and automatic payout of up to 500 coins without the help of an attendant. The popularity of this machine led to the increasing use of electronic games.

The first video slot machine was developed in 1976 in Kearny Mesa, California by the Las Vegas–based Fortune Coin Co. This machine used a modified 19-inch (48 cm) Sony Trinitron color receiver for the display and logic boards for all slot-machine functions. The prototype was mounted in a full-size, show-ready slot-machine cabinet. The first production units went on trial at the Las Vegas Hilton Hotel. After some modifications to defeat cheating attempts, the video slot machine was approved by the Nevada State Gaming Commission. Fortune Coin Co. and its video slot-machine technology were purchased by IGT (International Gaming Technology) in 1978.

The first American video slot machine to offer a "second screen" bonus round was Reel ’Em In, developed by WMS Industries in 1996. This type of machine had appeared in Australia from at least 1994 with the Three Bags Full game. With this type of machine, the display changed to provide a different game in which an additional payout may be awarded. (1)

Slot machines were not originally associated with gambling. In 1891 the Boston Traveler reported that slot machines were being used to dispense candy. (2) In 1891 the Dubuque Daily Herald reported that there was an estimated 12,000 nickel-in-the-slot machines in use across the country. English postal authorities had altered the machine for the sale of postage stamps. Beating the nickel-in-the slot phonographs found two people dropping in one nickel and then each holding a tube to his ear. (3) The Dubuque Daily Telegraph editorial writer reported that hardly "a railway station or place of popular resort" was not furnished with one or more of the latest products of mechanical genius offering various wares in exchange for a trifling fee." The writer continued that "certainly the low-working expenses incurred should conduce to render them a food investment for their proprietors." (4)

Glowing forecasts did not lessened attempts as early as 1900 to rig the machines. A Dubuque resident was arrested for boring a hole in a slot machine, inserting a needle, and stopping the dial wherever he desired. (5) It was later noted that some men were seen in Dubuque standing a long time feeding nickels into machines which "sold cigars." While there were no reports as of July of problems in Dubuque, Chicago leaders were hearing similar stories. It was alleged that some of the slot machines were "geared up" to yield a return for the owner of as much as 500%. (6)

Mayor Berg's administration in Dubuque, rather than enforce a grand jury ruling against slot machines, chose to "fine" operators. Those who did not pay their "fine" risked having their machine confiscated. So-called licenses on sixty-two slot machines were paid in June at $20 per machine. This generated a monthly income of $1,320--the equivalent of $42,662.40 in 1922. ($1 in 1900 is equivalent in purchasing power to about $33.32 in 2022, an increase of $32.32 over 122 years. https://www.in2013dollars.com/us/inflation/1900?endYear=2022&amount=1&future_pct=0.03) Operators claimed that an advantage of having a license was that it offered police protection from individuals who used slugs in the machines to cheat the owners. "They (the city) get our money and we must be protected." (7)

In May 1900 municipal authorities decided to enforce a law providing that only those holding certificates from the state board of health could be midwives. The newspaper commented that "these same gentlemen have made laws against slot machines, gambling...and other iniquities. The laws against the men may not be enforced, but the women generally have to toe the mark. (8) The writer undoubtedly referred to the varying number of slot machine owners who had paid "fines." In August, 1900 seventy owners had paid while in September the number had fallen to thirty-four. (9) At the end of the term of the grand jury, forty-two operators of slot machines were indicted. Several plead guilty and paid fines. Two stood trial and the jury in each case disagreed on a verdict. The other cases had not been brought to trial by January, 1901. Operators were encouraged by the court's failure to prosecute or win convictions.

The municipal election of 1900 brought the slot machine issue into the political realm. The Democrats led by former Mayor Charles J. W. SAUNDERS campaigned against licensing slot machines done by the Citizen's (Republican) administration led by Mayor (BERG, Christopher|Christopher BERG]]. The Citizen's Party responded by saying that the marshal the Democrats renominated had power under the ordinance to suppress slot machines and did not. (10) Berg won the election.

In February, 1901 a total of sixty owners of slot machines were paying for their monthly license. (11) A grand jury in May, 1901, however, ordered the closing of slot machines and directed the city not to license their operation. This loss of licensing, in addition to the licensing of "houses of ill fame," cost the city $32,000 in 1902. (12) Aware, however, that owners of slot machines stood ready to resume business, the grand jury announced that any of the owners who did so would be indicted by the next grand jury. (13) Before they adjourned, some jurymen agreed to personally gather information of any machines in operation. (14) While the order was carried out in the city, no attention was paid to the county where they continued in business. In Dubuque the machines known as "trade machines" were soon opened and ran openly for chips.

In February, 1902 the Knights of Fidelity, the liquor distributors association, issued a declaration to be observed by all members.

                     All persons keeping, letting or using in saloons slot machines or
                     other gambling devices are guilty of the violation of the law of
                     the state and the ordinance of the city, and subject to arrest,
                     prosecution and punishment therefor. (15)

On May 4, 1901 the district grand jury officially notified owners of machines to remove them from their businesses or suffer indictment when the jury reconvenes on May 27th. "The jury has done what the city administration would not do....remove a strong temptation out of the young man's path...to save him from becoming a moral wreck." The profits on a nickel-in-the-slot machine ranged from $100 to $500 monthly with the former number realized only when the machine was played only a few hours. " (16)

By June, 1902 Police Chief Morgan had given orders to the police to seize all machines found in operation. A raid on June 6th had resulted in five nickel slot machines being seized. Evidence indicated that others had been removed by the business owners and hidden. (17) Mayor Berg was not willing to easily return the machines. Despite the grand jury being unable to find indictments against any of seven slot machine owners, he refused in November, 1902 to return them without pursuing the individual cases in court. (18)

On January 1, 1903 when it was estimated that there were no less than one hundred cigar machines in the city, the announcement was made that the police department would begin a "crusade" against all kinds of slot machines. (19) Candy machines placed on the sidewalks were threatened with removal unless they paid for a license. (20) Not unlike a virus, various of the traditional coin-operated slot machine developed. In January, 1903 police began looking for "check machines." These were identical to slot machines, but used checks instead of coins. Checks were sold for five cents and cashed at the same value. (21)

By 1904 the further involvement of the grand jury and the increased use of police time to find and confiscate slot machines had soured Mayor Berg. The mayor claimed that the grand jury had taken the issue out of the hands of locally elected officials. The "check machines" had proven too slow for the business operators so they had simply returned to coins in the machines which had been brought out of hiding. The grand jury had found the business owners could not be compelled to pay a fine or license. Berg remarked that neither the city or county was deriving any income and that he had received no complaints despite the machines giving the player a one-in-six chance to win. (22)

Police officials issued a schedule of licenses for slot machines to begin June 1, 1905. The schedule read:

                 Twenty-five cent machines-----$30.00
                 Pot machines------------------$15.00
                 Ordinary five-cent machines---$10.00
                 Counter machines, cigars, etc.$ 5.00
                 Gum machines------------------$ 2.50
                 Marble machines---------------$ 1.50

According to police officers who observed businesses, there were ninety machines in operation. Owners who refused to pay their licenses had their machines confiscated. (23) The minimum fine for operating a slot machine in 1905 was fifty dollars with an additional seven dollars for court costs. (24)

In October, 1905 Mayor Berg remarked that he had nothing to hide. He cited the 1901 grand jury of 1901 ordering the closing down of all slot machines. According to Berg, the order was carried out in the city, but ignored in the county. Faced with the situation, Berg claimed the city then decided to levy a fine on the machine owners. As a result, $4,800 was collected. Once the county learned of the city's action, another grand jury was called. Police officers were called to testify. Berg concluded,"What ever comes, we are ready for it." (25) In November, authorities began publicizing the names of those who were indicted. (26) In November, 1905 another grand jury was expected to hand down 100 indictments. (27)

On January 26, 1906 Mayor Berg, claiming to be tired of the criticism made of his policy, declared the police department would begin seizing machines. He pointed out that the grand jury had returned more than 150 indictments against slot machine owners. Seventeen cases had been continued with the new grand jury passing over them without returning any indictments. He indicted that about twenty-five machines had reappeared and were in operation. There would be no favoritism shown nor "licensing." (28)

The fines and "licenses" charged to the the saloonkeepers led in February, 1906 to a petition read to the city council for a return of the machines and the money paid to the city. The claim was that the city had no legal right to collect the money. The reading of the petition was immediately followed by resolution written by Alderman Needham, then an independent candidate for mayor. (29) In May, 1905 following reports of slot machines in operation, Mayor Schrunk ordered the known operators to ship the equipment out of the city. (30)

In February, 1907 Judge Bonson took action in the long-delayed criminal charges brought against slot machine owners in 1906. The October Grand Jury of that year indicted ninety-one businesses for maintaining and operating slot machines. Six of those indicted plead guilty on one charge and were fined $50 and court costs. Two cases were tried with the jury being unable to convict. The rest of the cases were continued. On February 25, 1907 Judge Bonson agreed to dismiss the actions if the court costs of $20.30 each were paid or they could proceed to trial. The judge explained that in cases across the state it had been difficult obtaining testimony fro witnesses regarding the operation of the machines. It was also brought to the attention of the court that at the time they were indicted, the owners were paying a license fee into the city treasury. Bonson also found that one member of the grand jury had been a judge at the preceding election. This should be disqualified him from acting as a grand juror.

Judge Bonson gave the indicted business owners that day to pay the court costs or face trial. He added that he would not ask that the gambling devices be removed or demand it, "but I will be here for four years and I will instruct my grand jury to investigate these facts and this is the dead line. If you cross it you do so at your own peril. You need not expect clemency or leniency from me." (31)

The indecision about slot machines continued through 1941 when an syndicated editorial appeared in the "Telegraph-Herald. On the brink of WORLD WAR II the United States Senate was debating whether a federal tax on slot machines should be reduced from $200 to $50 annually.

                          ...For a national which can stand fearlessly before slot machines will
                          never wither before the Stuka or Blitzkrieg of Hitler and his minions...

In July, 1947 the Iowa Legislature enacted a sales tax, but failed to include gambling devices. Attorney General Robert L. Larson ordered county attorneys and sheriffs, therefore to continue enforcing the state's gambling laws and confiscate slot machines. Reacting to what it saw as a loss of potential revenue, the legislature returned in the fall and extended the levy to include slot machines, pinball machines, juke boxes, billiard parlors and fortune tellers. By January, 1948 state officials were confident the state was collecting "a lot of money" although the exact figures were unknown. Merchants paid a flat two percent on their gross receipts. The state tax commission took no action against a merchant unless it had reason to believe the merchant was failing to accurate report his/her income. The issue of the federal tax had been resolved by this time with the tax being lowered to $100. (32)

In 2015 Iowa casinos have some of the tightest slot machines in the country, holding back one-third more money than they did a decade ago, a recent study showed. A slot machine "hold percentage" is the amount a casino can anticipate earning from a machine over the long run. The study of data from 16 states found Iowa casinos had an average slot hold of 9.37 percent in 2014 — far more than the average 6.4 percent hold in Nevada, the smallest hold in the study. The machines had software that monitored what money came in and how much came out. The machines were tested before they are put on the casino floor and monitored by the Racing and Gaming Commission. Individual casino managers decided what the average hold should be, and that could range from 0 to 20 percent. (33)

FACILITY AND PAYBACK PERCENTAGE AT IOWA CASINOS

   Prairie Meadows in Altoona: 92.1%
   Wild Rose in Jefferson: 91.9%
   Wild Rose in Emmetsburg: 91.4%
   Catfish Bend in Burlington: 91.2%
   Riverside Casino in Riverside: 91.2%
   Rhythm City in Davenport: 90.9%
   Wild Rose in Clinton: 90.9%
   Grand Falls In Larchwood: 90.8%
   Mystique Casino in Dubuque: 90.7%
   Diamond Jo in Dubuque: 90.5%
   Lakeside in Osceola: 90.5%
   Ameristar in Council Bluffs: 90.4%
   Hard Rock Casino in Sioux City: 90.4%
   Diamond Jo Worth In Northwood: 90.3%
   Isle Casino in Bettendorf: 90.2%
   Lady Luck in Marquette: 90.1%
   Isle Casino in Waterloo: 90.0%
   Harrah's in Council Bluffs: 89.5%
   Horseshoe in Council Bluffs: 89.2%

Source: Iowa Racing and Gaming Commission

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Source:

1. "Slot Machines," Wikipedia, Online:https://en.wikipedia.org/wiki/Slot_machine

2. "The Society Slot Machine," Dubuque Daily Herald, January 23, 1891

3. "Nickel in the Slot," Dubuque Daily Herald, April 5, 1891, p. 6

4. "Wonderful Mechanism," Dubuque Daily Telegraph, January 8, 1891, p. 2

5. "News in Brief," The Dubuque Herald, February 13, 1900, p. 5

6. "Cigar Machines," Dubuque Telegraph-Herald, July 31, 1902, p. 5

7. "$1,26.56 From Slot Machines," "Dubuque Telegraph-Herald," June 7, 1905, p. 11

8. "Midwives Must Have License," Dubuque Herald , May 17, 1900, p. 5

9. "City News in Brief," Dubuque Herald, September 11, 1900, p. 5

10. "Slot Machines Takin," The Dubuque Herald, May 20, 1900, p. 8

11. "Will be Indicted," Dubuque Daily Telegraph, June 26, 1901, p. 3

12. "Local Brevities," Dubuque Daily Telegraph, February 6, 1901, p. 3

13. "Will Not Reduce," Dubuque Telegraph-Herald, March 21, 1902, p. 8

14. "City Briefs," The Dubuque Herald, April 3 1900, p. 5

15. "After Slot Machines," Dubuque Daily Telegraph, August 6, 1901, p. 3

16. "Knights of Fidelity Resolutions," Dubuque Telegraph-Herald, February 2, 1902, p 8

17. "Slot Machines Banished," Dubuque Telegraph-Herald, May 9, 1901, p. 4

18. "Raid on Machines," Dubuque Telegraph-Herald, June 7, 1902, p. 3

19. "About Slot Machines," Dubuque Telegraph-Herald, November 1, 1902, p. 3

20. "A Sweeping Order," "Dubuque Telegraph-Herald", January 8, 1903, p. 2

21. "Candy Machine Must Go," Dubuque Telegraph-Herald, January 29, 1903, p. 2

22. "Stop Easy Graft," Dubuque Telegraph-Herald, January 2, 1903 p. 4

23. "Slot Machines Are Becoming Numerous," Dubuque Telegraph-Herald, November 4, 1904, p. 3

24. "City Licenses Slot Machines," Dubuque Telegraph-Herald, June 2, 1905, p. 5

25. "Jess Attacks Grand Jury," Dubuque Telegraph-Herald, November 28, 1905, p. 3

26. "Mayor Makes No Denial," Dubuque Telegraph-Herald, November 27, 1905, p. 3

27. "100 Indictments Are Scheduled," Dubuque Telegraph-Herald, November 12, 1905, p. 7

28. "Make Known Who Were Indicted," Dubuque Telegraph-Herald, November 23, 1905, p 3

29. "Will Drive Out Slot Machines," "Dubuque Telegraph-Herald," January 26, 1906, p. 3

30. "Petition Goes to Committee," Dubuque Telegraph-Herald, February 16, 1906, p. 5

31. "Slot Machine Cases Ended," The Telegraph-Herald, February 25, 1907, p. 1

32. "Slot Machine Tax Brings in Lot of Money," Telegraph-Herald, January 1, 1948, p. 1

33. Rood, Lee, "Iowa Slots Some of the Tightest in the Nation," Des Moines Register. December 10, 2015, Online: https://www.desmoinesregister.com/story/news/investigations/readers-watchdog/2015/12/10/iowa-casinos-slots-some-tightest-nation-study-released/76988428/