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Competition drives casinos to pump up jackpot payouts

Jean DeThomas of Melrose reacted to a good slot spin after the Plainridge casino opened. Payoffs have since increased.
Jean DeThomas of Melrose reacted to a good slot spin after the Plainridge casino opened. Payoffs have since increased.John Tlumacki/Globe Staff/File/Globe Staff

New England casino operators battling for customers amid intensifying competition are substantially increasing the number of jackpots at their slot machines in the hope of attracting and keeping more patrons.

With a couple of minor adjustments to a slot machine, casino managers are able to change the mathematical formula that determines the chances of a player hitting a payout. Such changes can create buzz among slot machine aficionados and, the casinos hope, help fill seats on gambling floors.

“We always monitor payout percentages to ensure that we stay competitive in the market,” said Bobby Soper, president of Mohegan Tribal Gaming Authority, which operates Mohegan Sun. “We obviously look at what competitors are doing.”

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In the four-month period after the opening of the first slots parlor in Massachusetts in late June, rival casino operators in Connecticut and Rhode Island pushed up their payout percentages, according to a Globe analysis of data published by state agencies and confirmed by industry representatives and regulators.

At Foxwoods Resort Casino in Connecticut, the average payout percentage was 91.98 for the period between July 1 and Oct. 31, the highest in almost 20 years; at Twin River in Rhode Island, it was 91.87, the highest in 11 years; and at Mohegan Sun, it was 91.79, the highest since 2010, according to the data.

In the short period since it opened, Plainridge Park Casino, the first casino in Massachusetts, has raised its payout percentage by an even greater amount, from 90.07 points in July to 91.43 points in October, according to data published by the state Gaming Commission on its website.

Even small changes in payout percentages can have an enormous effect on a casino’s bottom line because of the very large amounts of money typically bet at slot machines.

Plainridge increased its payout percentage by almost 1.5 points, which seems like a minor adjustment. But it represents a monthly shift of about $2.25 million from casino revenues into player winnings, based on Plainridge’s current revenue levels.

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Annually, that would mean $27 million less in revenue for its corporate owners, and a loss of about $13 million for the state, based on current revenue levels and the state’s 49 percent tax rate on gross revenue from slots.

State regulators of casinos in Connecticut, Massachusetts, and Rhode Island said in interviews that the managers of casinos within their states adjust payout percentages for their own competitive reasons.

Some states have passed consumer protection laws that require casinos to provide a minimum payout percentage, which is usually well below what casinos ordinarily set on their own.

In Massachusetts, the minimum is 85 percent, meaning $85 of every $100 wagered is returned in winnings to the player. The Plainridge rate in October was 91.43 percent.

A man continued to play slots as the crowds dissipated at Plainridge Park Casino in Plainville.
A man continued to play slots as the crowds dissipated at Plainridge Park Casino in Plainville.Aram Boghosian for The Boston Globe

Casino operators do not advertise the payout percentages of their machines and are in general reluctant to speak in detail about overall market strategies. The Globe focused its review on the four-month period from July 1 to Oct. 31, the period during which Plainridge has operated, based on monthly payout percentages reported to regulators.

When determining payouts, casino operators often take a long-term view, that boosting jackpots will pay in the end by attracting and keeping customers won over by their sense that the slot machines are more generous — in the terminology of players, “loose.”

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Some of the most determined slots players track such details by reading a monthly magazine, “Strictly Slots,” that touts its “tips and strategies” for slot devotees. These include five pages that detail the payout percentages at casinos in 11 states (including Connecticut, but not Rhode Island).

Players are always searching for the casino with the “loosest” slots, said one regular slot machine player at New England casinos who asked to be identified only by his first name, Dave, to keep his gambling activities private.

“There’s a lot of competition among casinos right now, so you want to look around,” he said.

Though players like Dave try to gain an advantage by studying the payout percentages, the game of slots is one that players are guaranteed, in the long run, to lose, said Jason Elison, who works for a Las Vegas-based lab that state regulators, including the Massachusetts Gaming Commission, use to test slot machines for compliance with regulation.

“Slot machines are basically programmed to transfer wealth from patrons to the casino,” he said. “That’s just what they do.”

When payout percentages are raised, a slot player’s gambling sessions are punctuated with more wins. As a result, it takes longer to lose, giving the player more time to enjoy the ambience at the casino, and possibly buy more food and drink, said Clyde W. Barrow, a University of Texas professor who has closely studied the New England casino industry. It makes players more inclined to return — and lose again.

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“You lose $100 in 30 minutes and you are not happy. You lose $100 in three hours then, well, OK, you think of it as having had a good time,” Barrow said. “It doesn’t mean people are winning more, it means it is taking them longer to lose.”

Players at the state’s first Las Vegas style casino.
Players at the state’s first Las Vegas style casino. David L. Ryan/Globe Staff

Sean P. Murphy can be reached at smurphy@globe.com. Follow him on Twitter @spmurphy-boston.