Introduction to Slot Machine History
As of 2018, the first coin-operated slot machine was invented just over 131 years ago. That’s a lot of slot machine history. However, understanding it provides insight into the next technological advancements to expect from this entertainment machine.
In a hopefully fun and interesting way, I’ll highlight developments in gaming machines having slots for accepting coins as a sequence of events. Several significant areas of slot machine history includes:
- Government Regulations
As you’ll learn, slot machine popularity waxed and waned alongside the governmental responses to this type of gambling. The first coin-operated slot machines were invented in or around 1887.
Nowadays, we have modern day penny slots and networked progressive slot machines. Gaming machines show no signs of doing anything other than just keep on developing and improving, likely for another 130 years and beyond.
This post has the following sections:
- Introduction to Slot Machine History
- Charles Fey, the “Father of Slot Machines”
- Bell Fruit Gum Slot Machines
- American Prohibition 1920-1933, the “Golden Age of Slots”
- Nevada Legalized Gambling in 1931
- Decades of Bally Slot Machine Development Efforts
- The Computer Microchip Revolution of the 1980s
- Arrival of the Internet and Better Computers in the 1990s
- Online Slots and Involvement with Governments
- The First Rewards Clubs
- Computer Networks: Progressive Slot Machines and More
- Summary of Slot Machine History
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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 I’ll mention momentarily, there is some debate as to this exact date.
This slot machine simulated the card game of poker, having 3 spinning reels each with 5 symbols: diamonds, hearts, horseshoes, spades, and an image of the Liberty Bell.
It even had the first slot machine payout table. The highest jackpot, fifty cents or 10 nickels, occurred when all three reels showed a golden Liberty Bell. It was wildly popular and a massive success.
Prior to Charles Fey’s 1887 invention in San Francisco, there were gambling machines – but they didn’t have slots for coins. Therefore, despite prior technologies being used in that device, Fey’s coin-operated machine is generally considered to be the first true “slot machine”.
Given the aforementioned 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 at 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”, both due to his invention but also because he popularized the game. For example, he didn’t sell his slot machines. Instead, he rented them for a 50% commission of their revenues.
Fey’s San Francisco workshop is a California Historical Landmark. Many of Charles Fey’s innovations are still common in modern slot machines, including:
- Operated by pulling a (small) handle.
- Rented, not sold, for a portion of gaming revenue.
- Pay table display.
Few Liberty Bell slot machines currently exist. About 100 of them remain of those originally manufactured by Charles Fey in San Francisco, as most were lost in the 1906 San Francisco Earthquake.
According to Marshall Fey’s fascinating book Slot Machines: A Pictorial Guide to the First 100 Years, fires created by the earthquake
“…that day eventually consuming all of the city’s slot machine factories, including their tooling and inventory.”p. 47, Slot Machines: A Pictorial Guide to the First 100 Years by Marshall Fey
and, further, the fires
“…hit most of the city’s 2,000 businesses which had slot locations, destroying thousands of machines and the coins which they contained.”p. 47, Slot Machines: A Pictorial Guide to the First 100 Years by Marshall Fey
Bell Fruit Gum Slot Machines
Starting in 1907, Bell Fruit Gum slot machines was manufactured by Industry Novelty Co. This was quickly followed the next year by Mills Novelty Company of Chicago, which had been inherited by Herbert Stephen Mills.
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.
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 along with the fruit reel symbols. Soon after these photographs were replaced with a stylized bar symbol, the Mills company logo.
For more on the rather interesting if somewhat shady history between Charles Fey and Herbert Stephen Mills, as well as a analysis of these early slot machine photographs, see my post called Why Do Slot Machines Say Bar on their Reel Symbols?
Thanks to the efforts of Charles Fey and other early slots manufacturers, by 1910 slot machines could be found world-wide. Europe had mass produced 30,000 of them. In America, they could be found in most cigar stores, saloons, bowling parlors, brothels and barber shops.
Improvements immediately found in slot machines were:
- Cast iron machines replaced with wooden cabinets.
- Improved mechanicals allowed for back-to-back jackpots, not possible in earlier designs.
- New coin acceptor developed to limit the use of fake coins, i.e., “slugs”.
- Machines were designed to be quieter.
In 1909, new laws began to be introduced prohibiting slot machines from dispensing cash, with the results of slot machines having the aforementioned non-cash payouts of fruit-flavored gum.
American Prohibition 1920-1933, the “Golden Age of Slots”
From 1920 to 1933 is when Prohibition existed in America, making the consumption or supply of alcohol illegal.
Since slot machines were mainly found in bars and saloons, they moved to speakeasies alongside the distribution of alcohol – and returned to offering cash prizes.
Slot machine popularity increased even more. The time of Prohibition is also referred to as the “Golden Age of Slots” due to this tremendously increased popularity.
Nevada Legalized Gambling in 1931
Gambling was legalized in the state of Nevada in 1931, the first state to do so. This was done due to the increasing popularity of gambling despite governmental pressure on the gaming industry.
In the 1940s, an early slot machine was installed in the Flamingo Hotel in Las Vegas. By doing so, American mobster Bugsy Siegal showed slot machines to be a lucrative business opportunity for casinos.
After World War II, municipalities were drawn by the prospect of tax revenue, 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.
Besides improving game play and all manner of 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 larger jackpots for consumers. Bally went public in 1975, trading on the New York Stock Exchange as the first gaming company.
The first true electronic slot machine, e.g., the video slot machine, was developed in 1976 in Las Vegas, Nevada. It was placed in the Hilton Hotel in Las Vegas and, after further security modifications were made against cheating, received approval from the state of Nevada.
Atlantic City, New Jersey legalized gambling in 1978, by which time Bally had cornered 90% of the market for slot machines. Bally continued to add reels, knowingly decreasing the odds of winning but also increasing the size of jackpots.
Over time, the number of symbols per reel were 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, which 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 of the 1980s
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 linked slot machine with a shared jackpot reached an extremely large size before it was 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 as well as improving its overall technical operation.
Due to the application of targeted marketing techniques, video poker machines were found to be fair and could be trusted, thereby overcoming people’s initial skepticism over how fair the video slot machines would be, and building a public perception of trust.
Arrival of the Internet and Better Computers in the 1990s
In the 1990s, the advent of the internet and increasingly fast and powerful computers allowed for the first electromechanical slot machines with bonus games, multiple lines, and the modern version of online slots.
With today’s ready online access, casinos have established a wide 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. The second screen was used to provide the player with a different environment in which bonuses could be played.
Online Slots and Involvement with Governments
Online slots began in 1994 with the passing of the Free Trade and Processing Act by Antigua and Barbuda in the Caribbean, allowing companies from all over the world to open online casinos legally. Online gaming software was first developed by Microgaming.
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 years following with the number of available software companies, online casinos, and games.
To protect and support online players, the Canadian Kahnawake Gaming Commission was established in 1996.
What followed was a period in which brick-and-mortar casinos were financially threatened by the sudden influx of online casinos, where players were depositing money to make wagers and played various games of chance online.
In 2006, market competition between land casinos 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 by means of the internet, when it’s already prohibited 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 on financial institutions involved in the wager.
However, it does allow 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 routing of the transmission 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 the state of Illinois have allowed bars and restaurants in their jurisdictions to offer slot machines and other electronic gaming machines.
The First Rewards Clubs
Going back to the early 1980s, the airline industry introduced the first customer loyalty programs. Since that introduction, they have shown significant growth 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.
More recently, along with technological sophistication came casino customer slots clubs for all casino patrons, which casino operators attempt to use in order to create a competitive advantage.
Casinos offer players club rewards based on amount of play. Being able to track how much each player spent 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 offer a free dinner, a hotel room, cruise, or other “comp” based on their relationship.
Given the relatively overwhelming number people frequenting casinos, it became ineffective for casinos to depend on employees judging the performance of players. In essence, the introduction of players clubs allowed a finer control over company costs, thereby improving casino profits.
Becoming a member was also to the advantage of most players with regards to being relatively fair in the distribution of complimentary gifts. Players club systems were described in my blog post Seven Advantages Of Players Clubs for Playing Slots, along with tips on how to capitalize on the complimentary gifts received through them.
Computer Networks: Progressive Slot Machines and More
In the early 2010s, slot machine manufacturers introduced yet another revolutionary technological change: computer network connectivity. The most obvious change 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 are able to order drinks whenever desired without waiting for an attendant to appear nearby.
As a result, this connectivity allowed casinos to somewhat 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 ability of the player to choose the value of each credit from a limited number of possible values. While this is a somewhat minor feature, it provides evidence of the slot machine gambling/gaming industry providing convenience to their customers as well as increasing company profits.
The labor force of slot technicians was reduced again, as this higher level of connectivity to slot machines allowed casinos fully eliminate one role of their slot machine attendants – the relatively time-consuming task of physically updating the payout odds on each and every individual machine.
Technicians still service slot machines for both planned and unplanned maintenance, but each machine’s network connection to a computer hub now finely controls the payout odds of slot machines.
The consequences of this change in payout odds being finely controlled by the casino are, in general, discussed in my posts on winning slots strategies.
In them, I explain how to “beat” the algorithm used to improve playing odds from below the typical payout return percentage of 90-98%, i.e., losing money, to have effective odds over 100%, i.e., making money over time.
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
In summary, coin-operated slot machines have had a rich 130-plus year history. Understanding how they have developed over time is useful to both you and I, and we gain useful insights into what may very well happen next. Or, at the least, we will be less surprised by what will become, eventually, yet more slot machine history.
Areas of existing slot machine history includes the key elements of technology, popularity, and the regulatory responses of state and federal governments.
The post began with Charles Fey in 1887, considered the “Father of Slots” for his innovations and popularization efforts. Herbert Stephen Mills, known as the “Henry Ford of Slot Machines,” quickly followed with his mass production efforts of early coin-operated slot machines.
This was followed by World War I, a time when slot machines began being mass produced around the world. This was shortly followed by American Prohibition, the “Golden Age of Slots.” from 1920 to 1933 alongside Nevada legalizing gambling in 1931.
For decades afterwards, slot machine technologies were primarily developed by Bally Technologies, much later purchased by Scientific Games Corporation. These commonly known technologies include the random number generator as well as multiple pay lines and denominations.
This post concludes with the introduction of the computer microchips, the internet, off-shore online gaming, federal laws to protect players, rewards clubs, and the recent innovation of centralized computers being used to control slot machine odds in casinos.
Related Articles from Professor Slots
- Why Do Slot Machines Use Fruit Reel Symbols?
- Where Were Slot Machines Invented, Historically?
- Why Do Slot Machines Say Bar on Their Reels?
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