Someone sent me the below question about slot machines:

I've watched Steve's video on how slot machines work and have a question. The short version is: Assuming a slot machine gets great play (coin-in) over long periods of time, isn't the hold margin on the machine set as a guaranteed margin (that casinos can base budgets and marketing offers on) as opposed to just a suggested hold margin? The long version of the question is: If after a significant amount of play each day, over the course of many months...isn't each slot machine eventually going to hold or show a rationale as to how/why it held or paid out what it did? I recognize that each machine will have times where it's under-extended (paying back less than it's set hold margin) or over-extended (paid out more than it's set hold margin)...and the pure fact of being under/over-extended is random, but after long periods of time won't each machine eventually come back to the pre-determined hold %? And isn't this one of many reasons that regulators test or audit each slot machine from time to time? Thank you for any consideration you can give to my question.

Here is my answer:

Read the following story and it should answer those questions for you - Interview with a Slot Manager - American Casino GuideIt's an old story, but it covers a lot of slot machine basics and I believe it answers your questions.