Ultimate Guide to Slot Machine History

Introduction to Slot Machine History

Let’s highlight developments in these entertainment devices having slots for accepting coins as a sequence of historical events to provide insights into the next technological advancements from slot machines.

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Charles Fey, the “Father of Slot Machines”

The Liberty Bell, arguably the first slot machine for gambling with automatic payouts, was invented in 1887 by Bavarian-born Charles Fey in San Francisco, California. Given a natural disaster, there is some debate about this exact date. This slot machine simulated the card game of poker, having three spinning reels, each with five symbols: diamonds, hearts, horseshoes, spades, and an image of the Liberty Bell.

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It even had the first slot machine payout table. The highest jackpot, fifty cents or ten nickels, occurred when all three reels showed a golden Liberty Bell. It was wildly popular and a massive success. Before Charles Fey’s 1887 invention in San Francisco, there were gambling machines – but they didn’t have slots for coins.

Despite prior technologies, Fey’s coin-operated machine was the first actual “slot machine.” Given the loss of historical records, it’s worth mentioning that the Sittman and Pitt Company of Brooklyn, New York, was developing a coin-operated slot machine around the same time. It was based on five-card poker, as it had five reels.

Fey is generally considered to be the “Father of Slots,” due to his invention and popularizing the game. For example, he didn’t sell his slot machines. Instead, he rented them for a 50% commission of their revenues.

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Fey’s San Francisco workshop is a California Historical Landmark. Many of Charles Fey’s innovations are still common in modern slot machines, including:

• Coin-operated
• Operated by pulling a (small) handle
• Rented, not sold, for a portion of gaming revenue
• Paytable display

Few Liberty Bell slot machines currently exist. About 100 remain of those initially manufactured, the rest lost in the 1906 San Francisco Earthquake.

Bell Fruit Gum Slot Machines

Starting in 1907, Bell Fruit Gum slot machines was manufactured by Industry Novelty Co. They were next manufactured by Mills Novelty Company of Chicago the following year. The reels on these machines included cherry, melon, orange, apple, and bar symbols with non-cash payouts in the form of fruit-flavored gum, allowing machine owners to avoid prosecution under the anti-gambling laws of that time.

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The cherry and bar symbols became traditional to slot machines and are still commonly used today. The Mills slot machine added the photograph of a chewing gum pack and the fruit reel symbols. A stylized bar symbol, the Mills company logo, replaced these images. Pictures of early slot machines are available at Cyprus Casino Consultant and International Arcade Museum.

For more on the shady history between Charles Fey and Herbert Stephen Mills and analysis of these early slot machine photographs, see my post called Why Slot Machines Have a Bar Symbol on Their Reels. Thanks to the efforts of Charles Fey and other early slot manufacturers, by 1910, slot machines could be found world-wide. Europe had mass-produced 30,000 of them. They could be found in most cigar stores, saloons, bowling parlors, brothels, and barber shops in America.

Improvements immediately found in slot machines were:

• Cast iron machines were replaced with wooden cabinets
• Improved mechanicals allowed for back-to-back jackpots, not possible in an earlier design
• A new coin acceptor developed to limit the use of fake coins, i.e., “slugs”
• Quieter machines were designed

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New 1909 laws prohibited slot machines from dispensing cash, resulting in slot machines having non-cash payouts of fruit-flavored gum.

American Prohibition 1920-1933, the “Golden Age of Slots”

From 1920 to 1933, Prohibition existed in America, making the consumption or supply of alcohol illegal. Previously found in bars and saloons, slot machines moved to speakeasies alongside the distribution of alcohol – and returned to offering cash prizes. Slot machine popularity increased even more. 

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The time of Prohibition is also referred to as the “Golden Age of Slots” due to this tremendously increased popularity.

Legalized Gambling

Nevada legalized gambling in 1931, the first state to do so. Despite governmental pressure on the gaming industry, Nevada saw an opportunity with the increased popularity of gambling. In the 1940s, the Flamingo Hotel in Las Vegas installed an early slot machine.

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By doing so, American mobster Bugsy Siegal showed slot machines as a lucrative business opportunity for casinos. After World War II, the prospect of tax revenue drew in municipalities, and exponential growth occurred in the manufacturing and playing of slot machines well into the 1960s.

Decades of Bally Slot Machine Development Efforts

Slot machine development advanced from a fully mechanical machine to an electro-mechanical device in 1963 with the Money Honey slot machine by Bally Technologies, a company formerly limited to the manufacturing of pinball machines. Bally added improved gameplay and flashing lights and sounds, electrical components allowed for multi-coin bets with higher payouts. By 1970, Bally had added more reels and made coin-handling improvements to allow for more coins and higher denominations, resulting in mor enormous jackpots for consumers.

Bally went public in 1975, trading on the New York Stock Exchange as the first gaming company. The first actual electronic slot machine, e.g., the video slot machine, was developed in 1976 in Las Vegas, Nevada. The Hilton Hotel in Las Vegas installed it and received approval from Nevada after further security modifications were made against cheating.

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Atlantic City, New Jersey, legalized gambling in 1978, by which time Bally had cornered 90% of the market for slot machines. Bally continued adding reels, knowingly decreasing the odds of winning but increasing the size of jackpots. Over time, the number of symbols per reel was increased to a maximum of 25, and wagers were raised to $5, $25, and eventually $100.

Bally also hired a computer programmer to increase the size of jackpots without losing profits for the company. This was accomplished by utilizing a random number generator (RNG), resulting in yet another technological revolution in slot machine gaming. For the first patented RNG, see U.S. Patent Number 4,448,419, awarded in 1984 to Igne S. Telnaes, entitled “Electronic gaming device utilizing a random number generator for selecting the reel stop positions.”

The Computer Microchip Revolution

In the 1980s, computer microchips allowed a leap forward in slot machine technological advances, including video slots, online slots, and linked machines for progressive slots. In Las Vegas in 2003, a connected slot machine with a shared jackpot reached an immense size before being won: nearly $40 million. One of the first slot machines with video reels was the Fortune Coin by Walt Fraley. Slot manufacturer IGT purchased its patent from Fortune Coin, then developed it further to overcome an initial distrust of this new technology by slot machine players and improve its overall technical operation.

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Video poker machines weren’t considered fair and trustworthy until the application of targeted marketing techniques, overcoming initial skepticism over how honest the video slot machines would be and building a public perception of trust.

The Arrival of the Internet and Better Computers

In the 1990s, the advent of the internet and increasingly fast and powerful computers allowed for the first electro-mechanical slot machines with bonus games, multiple lines, and the modern version of online slots. With today’s ready online access, casinos have established a broad base of slot players, while online game developers are mostly only limited by their imagination. The first video slot machine with two screens was created in Australia in 1994, followed by America in 1996. 

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A second screen provided players with a different environment for bonus games.

Online Slots and Involvement with Governments

Online slots began in 1994 with the Free Trade and Processing Act by Antigua and Barbuda in the Caribbean, allowing global companies to open online casinos legally. Microgaming first developed online gaming software. The first online casino, Internet Gaming Inc. (ICI), was launched in 1995, and InterCasino began the following year.

The online gambling industry grew prodigiously in the following years following with available software companies, online casinos, and games. The Canadian Kahnawake Gaming Commission was established in 1996 to protect and support online players. But brick-and-mortar casinos were financially threatened by the sudden influx of online casinos, where players were depositing money to make wagers and playing various games of chance online.

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In 2006, market competition between land and online casinos had become intermittent when the U.S. Senate passed the Unlawful Internet Gaming Enforcement Act (UIGEA), which, in part, banned wire money transactions to and from the accounts of online gambling companies. Further, it prohibits, amongst other things, a casino operator from accepting a bet through the internet when it’s already banned where the bet is initiated or made. Such transactions have potentially severe criminal and civil sanctions attached, as imposed by the UIGEA, upon both the casino operator and financial institutions involved in the wager.

However, it allows for wagers placed within a single state where the method for placing and receiving the bet is authorized by that state’s law, provided that the intermediate transmission routing does not extend outside of the state. In the U.S., only state-sanctioned casinos could legally have physical slot machines. By 2013, some local-level governments within Illinois have allowed bars and restaurants in their jurisdictions to offer slot machines and other electronic gaming machines.

The First Rewards Clubs

The airline industry introduced the first customer loyalty programs in the early 1980s. Since that introduction, they have grown significantly in the tourism and hospitality industries, among many others. These loyalty programs often take an industry-wide adoption approach of “follow the leader,” where competitors quickly adopt a loyalty program if their competitors have done so. Customer loyalty programs have always existed in the gaming industry, especially by casinos employing hosts to create personal relationships with their premium players by providing complimentary rewards.

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More recently, along with technological sophistication came casino customer slot clubs for all casino patrons, which casino operators attempt to use to create a competitive advantage. Casinos offer players club rewards based on the amount of play. Tracking how much each player spends gambling allows a casino to value the complimentary gifts they give to these players. Previously, it was left up to casino operators and managers to determine whether a player would be offered a free dinner, a hotel room, a cruise, or other “comp” based on their relationship.

Given the relatively overwhelming number of people frequenting casinos, it became ineffective for casinos to depend on employees judging players’ performance. In essence, introducing players’ clubs allowed a finer control over company costs, thereby improving casino profits. Becoming a member was also to the advantage of most players concerning being relatively fair in the distribution of complimentary gifts. Players club systems are described in my post, 7 Advantages of Rewards Clubs for Playing Slots along with tips on how to capitalize on their complimentary gifts.

Computer Networks: Progressive Slot Machines and More

In the early 2010s, slot machine manufacturers introduced another revolutionary technological change: computer network connectivity. The most obvious difference of this feature to slot machine appearance was replacing LED signs having single-color displays to multi-color LCD touch screens for the player reward system. With these touch screens, and the associated connectivity to the casino’s computer network, players order drinks whenever desired without waiting for an attendant to appear nearby.

As a result, this connectivity allowed casinos somewhat to reduce their labor force of waiters and waitresses, again resulting in a corresponding increase in company profits. Another technological change introduced recently has been the player’s ability to choose the value of each credit from a limited number of possible values. While this is a minor feature, it provides evidence of the slot machine gambling/gaming industry providing convenience to their customers and increasing company profits.

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This higher level of connectivity of slot machines again reduced the labor force of slot technicians. Doing so allowed casinos eliminate one role of their slot machine attendants – the relatively time-consuming task of physically updating the payout odds on individual machines. Technicians still service slot machines for planned and unplanned maintenance, but each machine’s network connection to a computer hub now finely controls the payout odds of slot machines. But finely controlled payout odds result in players taking advantage of their casino, as discussed in my posts on winning slots strategies.

In them, I explain how to “beat” the casino algorithm. In other words, this latest technological innovation has turned slot machine gambling from a mostly luck-based game-of-chance to a skill-based game.

Summary of Slot Machine History

Coin-operated slot machines have had a rich 130-plus-year history. Understanding how they have developed over time is helpful to both you and me, and we gain valuable insights into what may happen next. Or, at the least, we will be less surprised by what will become, eventually, yet more slot machine history.

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Related Articles from Professor Slots

• Where Were Slot Machines Invented, Historically?
• Why Slot Machines Have a Bar Symbol on Their Reels

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