Slot machines are the most popular form of gambling in the world. Considered by "serious" gamblers to be casino gambling "junk food", the popularity and profitability of the slots is undeniably a gambling phenomenon.
A slot machine is basically a vending machine form of gambling. You
insert coins and get a chance to win a jackpot. Like almost all other
casino gambling games, slot machines have a built-in advantage for the
house. This is because the chance of hitting a jackpot is always less
than the payout odds offered by that jackpot. And this is true of all
slot machines, regardless of whether or not they're mechanic devices
powered by reels, or video slot machines powered by a random number
generator.
Slot Machine History
The phrase "slot machine" is actually an abbreviated form of the device's original name, "nickel-in-the-slot-machine". These machines were originally set up using a deck of playing cards spread across 5 spindles. Since there are 52 cards in a deck, the creators of the machine took 2 cards out of the deck so there would be an even 50 cards. And the payouts were based on poker hands. These early slot machines were actually a rudimentary, mechanical form of video poker, and the games were popular in California in the 1890's.
These early "nickel-in-the-slot-machine" games were "rigged" in the sense that all 52 cards weren't included in the game, so it was incredibly unlikely to win a big hand. (The cards that were left out were naturally high suited cards, which cut the chances of hitting a royal flush in half.)
The prizes won on these machines consisted mostly of drinks and cigars initially, but eventually the inventors and entrepreneurs of the time started developing machines that paid actual money.
Charles Fey and the Liberty Bell
In 1899, the first "real" or "modern" version of the slot machine was invented by a California inventor named Charles Fey. It was called the Liberty Bell. This machine consisted of 3 spinning reels, each of which was decorated with symbols like horseshoes, bells, and card suits. The spinning of the reels was initiated by the pull of a lever (the "arm" in "one-armed bandit". If the symbols matched up, the machine paid out a prize.
The Liberty Bell became the model for all future slot machines. Even today, video slot machines powered by random number generators have a lever on the side that you can pull, even though you can initiate the virtual spinning of the reels by just pushing a button on the front of the machine too.
Herbert Mills and the Mills Liberty Bell
Charles Fey refused to sell or lease his Liberty Bell slot machine to anyone, but in 1905, someone stole a slot machine from a San Francisco saloon. A year later, in 1906, Herbert Mills was producing a new version of the Liberty Bell called the Mills Liberty Bell. There were other slot machines appearing now too, but none of them saw the success that Herbert Mills saw. Mills used assembly-line techniques for building slot machines, and eventually became known as the "Henry Ford of slot machines".
By 1909, slot machines were everywhere. But by that point, the government had stepped in and said that gambling was a bad thing, and the machines could no longer be used to dispense cash. Slot machine manufacturers and saloon owners coped with the new laws by giving away packs of gum and other prizes for lining up certain symbols on the machines. This was the catalyst for the new fruit and bar symbols which are still present on the slot machines of today; the bars represent packs of gum, and the fruit symbols indicated what kind of candy was won.
And just like today, with a little bit of a wink and a handshake, a bartender would sometimes hand some cash over to a patron who won a whole of chewing gum or candy. But at that time, even little kids could play these machines.
Prohibition and Slot Machines
In 1919, drinking alcohol became illegal, and it was enforced. Since most of the slot machines of the time were in bars and saloons, they were moved into the "speakeasies" that sprung up all over the place. Since these bars were illegal anyway, they went ahead and made slot machines into real gambling machines with real cash to be won again. After all, they were already serving drinks illegally.
Nevada Legalizes Gambling in 1931
When Nevada made gambling legal in 1931, slot machines became even more popular. Several companies sprung up to manufacture slot machines and sell them to the new casinos in Nevada. And illegal slot machines were still very popular in the states where gambling still wasn't legal. Growth in the manufacture and play of slot machines continued at a dizzying rate into the 1960's.
Bally Re-Invents the Slot Machine
In 1964, Bally (the pinball machine manufacturer) rolled out a new slot machine called Money Honey. This was a new multi-coin machine with new sound effects beyond dinging a bell, and it was more than just a simple spring-loaded machine; it was actually powered by electricity. This was the first slot machine to have what's called a "hopper", which is what holds the coins that get paid out.
Throughout the 1960's, Bally continued to innovate. They added games with more reels, more coins, and bigger hoppers. By the 1970's Bally invented a slot machine with a hopper big enough to hold dollars, which made the game even more attractive because of the larger jackpots that could be won. By 1978, Bally controlled about 90% of the slot machine market, which was good positioning when Atlantic City legalized gambling.
Bigger Jackpots
Bally continued to think of ways to offer bigger jackpots to slot players. Adding more reels was one way to decrease the odds of winning and thus increase the amount of the jackpots. (5 reels was the maximum that would fit in a box though.) They also added more symbols to each individual reel. (The maximum number of symbols eventually became 25 symbols per reel.) But the most important thing they did was raise the size of the wagering amounts, so there were now $5 games, $25 games, and even $100 games.
Inge Telnaus
Inge Telnaus was a computer programmer who had been hired by Bally to make the jackpots for the slot machine games even bigger without losing profits. Making longer reels wasn't practical, so Telnaus decided he could make imaginary reels with a computer program, and use a random number generator that would cycle through the numbers on each imaginary reel. These virtual reels revolutionized slot machine games by radically changing the amounts that could be won.
The random number generator was what made slot machines into the cultural phenomenon that they've now become.
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