Why do we need 'Pokie-Leaks'? We already know how pokies work

A trio of Australian politicians recently called for whistleblowers to reveal secrets about how the gambling industry operates.

While it is up for debate as to whether there are questions to be answered about various industry tactics and links to politicians, what isn’t a secret is how poker machines actually work. This information is publicly available in the player information booklet released by the Gaming Technologies Association, as well as in academic articles.

But how do people interpret such information? And how do myths about pokies develop?

Misconceptions about two basic principles

While poker machines are incredibly complex, they work on two basic principles:

• they produce random outcomes; and

• they have an expected return set somewhere between 85% and 92%, depending on the jurisdiction and choices made by the venue.

However, gamblers often fail to understand these concepts properly. A large component of therapy for problem gamblers, developed at the University of Sydney’s Gambling Treatment Clinic by Fadi Anjoul, is based on tackling these misconceptions and helping them understand how those misconceptions may have been driving their gambling.

Psychologists have long known that most people struggle with understanding randomness. Part of the problem is the way we use the word “random” in everyday speech.

For example, consider the sentences “the weather is random” or “the buses come at random”. Most would understand what these sentences mean: weather and bus schedules are difficult to predict. Despite this, we often make predictions on the weather and on public transport.

So, when we hear “poker machines are random”, we naturally interpret this in the same way: that poker machines follow general patterns, and the longer you go without a win the more likely one is to occur.

This explains why gamblers often spend long hours in front of a poker machine. When players haven’t had a win, they believe one is due, so it makes sense to keep going. Conversely, if they are winning, it means a machine is “paying” – and it makes sense to keep going.

The truth is, however, that pokies do not work the same way as the weather or a bus schedule. They are not difficult to predict: they are impossible to predict.

Pokies contain a random number generator, which produces each outcome shown, completely independent of all the games that have come before and all the games that will come after. There is no pattern to follow and a win is never “due”.

Part of the reason for the persistence of the idea that poker machines are eventually “due” to pay is a misunderstanding of the other principle underlying their operation.

As mentioned above, poker machines in Australia are set with an expected return of between 85% and 92%. This is often phrased as “a machine must pay back around 90%”. In most people’s understanding, this leads to the assumption that if $100 has been put in, at some point $90 must come out.

Thus, people assume if they have put a certain amount in a poker machine and got nothing back, a win is somehow due to come. But the real meaning of this percentage is somewhat different.

While there are many different ways of explaining expected value, the simplest way of thinking about it with gambling is that it is referring to the gap between the probability of a win and the pay you get for it.

If a game “pays back” 90%, this means the payback you receive when you win is 90% of what you should get if it was a fair game – that is, one where you would expect to break even in the long term.

It’s like betting $1 on a coin toss, where you have a one-in-two chance of winning, but only get back $1.80 if you get it right. As it is a random game, you might have wins that put you ahead for a short time, but the longer you play the more likely it is that you will lose more than you win back.

So, saying bets on a poker machine have an expected value of 90% doesn’t mean $90 will eventually come out for every $100 put in. It means the game is unfair, and if you keep playing you’ll eventually lose everything.

Educating gamblers

These general principles underlie all forms of gambling – be it roulette, lotto, horse racing or sports betting.

What is different about pokies, however, is that their workings are hidden. We can see the ball on the roulette wheel or the horses running around the track, but we cannot see the random number generator inside a poker machine.

Thus, it is understandable why there are more misunderstandings about pokies than other forms of gambling. But we do already have the information on how poker machines work for those who care to look.

From this, it could be argued that what is needed to tackle problem gambling in Australia are not leaks of information on how the gambling industry operates, but a focus on education – using the information we already have on how gambling works to correct the understandable misconceptions that exist among gamblers.