A Quadratic Model for Optimizing Slot Win Revenue: Theory and an Empirical Test

Abstract

This study proposes a quadratic model that may lead to optimal slot win revenue at a certain hold, based on the relationship between slot win and its two determinants, coin-in and hold. The model was tested with aggregate data of quarter and dollar slots from the Las Vegas Strip and downtown Las Vegas, Nevada. The test results validate the proposed model. The findings indicate that the average holds of the two types of slots on the Strip were lower than the optimal levels. While the hold of the quarter slots in downtown Las Vegas was nearly optimal, the hold of dollar slots could be lowered further to maximize win revenues.

Keywords

win hold coin-in quadratic function optimization

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