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Theoretical Interpretations of Empirical Observations

In This Chapter
Importance of theoretical interpretations
How to interpret correctly
Casino goals and the ways to achieve them
Interpretations of the observations
 “Inertia” in hot and cold machines


Empirical observations are usually a starting point of any science, theory or method. With the exception of purely abstract intellectual areas represented by idealistic, mystical, religious or metaphysical philosophical systems and also theories of higher mathematics, empirical observations are a first step of a “journey of a thousand miles”. Why only a first step? Because the knowledge these observations contain belongs only to the category of “what”.

It’s good to know what phenomena you might encounter. However, if we want to elevate our knowledge to a higher degree, we also have to know “why” observed facts happen. For ex, we know that, for our body to have energy and maintain a necessary temperature, it has to consume food. We go deeper, when we answer the question “why?” and say that this energy is the energy of chemical compounds in our food that is released when those compounds are broken down by our stomach’s acid.

We observe flowers and find them to be beautiful. If we know why – because their proportions satisfy to an amazing degree the Golden Ratio (1.612) – then we make a qualitative jump in our understanding of that particular observed fact. We can go even further and answer another “why?” – why Golden Ratio? Because the presence of that ratio is found everywhere in Nature. We can see it in the patterns of the stars in the sky, in construction of our own body, in a pattern of our own heartbeat, in the shapes of the mountains and small pebbles on the beach and, practically, in all shapes and forms found in organic and non-organic world. Man was surrounded by that ratio since primordial times. A habit of seeing it all the time led to his ability to enjoy it. Genes and inheritance factor make sure that a statistically average modern man is born with love for everything that represents that ratio. He simply has no choice but to enjoy the presence of flowers. As this example shows, we have to go through a lot of “why?” from our first “what?” if we want our knowledge to mature to any degree. Theoretical analysis and interpretation of observed  “what” delivers us the answers to “why?” Any answered “why?” moves us one step away from our Darwinian ancestors and one step closer to a rational intelligence.

If we don’t want to play slots  like primates, but rather like rational human beings, we have to give theoretical interpretations to observed empirical facts outlined in the previous chapter. In order to interpret slots facts correctly, we, obviously, have to look at them as casinos’ tools or weapons for achieving their goals. Casino’s goal is the only one – to strip us off all our earthly possessions. High number of bankruptcies filled annually due to gambling is the proof of how successful casinos are in reaching their goals. Slots produce the biggest portion of casinos’ annual income (65% or so). Why they are so effective? As we know from the Chapters 1 and 3, RNG-based design of modern slots and their attractiveness for gaming public are behind that effectiveness. Thus, to interpret correctly slots-related empirical observations, we have to do it from the point of view of RNG, overall slots design and casinos’ goals in general.

RNG is a part of a computer program that governs all slot machines’ functions. That part is a specific mathematical algorithm. According to it, every time a player pulls a handle, a set of numbers from a big range of numbers (4 billion or so) is chosen at random. There is a correspondence set up by the program between the numbers and symbols and, in result, every chosen group of numbers produces a specific winning or losing combination of the symbols, which you see on a machine’s screen.

Let’s go through all observations and try to interpret them.

Why machines run in streaks? Previous experts mentioned that fact, but did not bother or simply failed to answer “why?” question and explain the fact of streaks in slots. Since to know only “what?” is not enough for us, we can’t just  “forget” that question.

Let’s look at a machine’s design. In order to start, a player has to invest a coin. He can invest a few coins or a maximum bet. In that case, he’ll be paid more, but a proportional relationship will stay the same. For ex, if he invests one coin and wins an uneven bars combination, he gets 5 coins back. If he plays two coins, he wins in the same example 10 coins, but a proportional relationship of 5 to 1 is still the same.  That’s why in our current analysis and always in the future, unless a problem in question warrants it, we always assume for the sake of simplicity that a player plays one coin or one bet.

Now, let’s look at a machine’s pay table. We see that in response to a player’s one coin, it can pay many coins back and sometimes a huge, in comparison with a player’s bet size, quantity of coins. Slot machine has to be designed this way because that’s where the strongest attraction for a slot player is. A never-ending hope to hit a big combination keeps burying millions of playing suckers around the clock. Nobody will play a machine that can pay back only an amount equal to a bet size – that will be a losing proposition obvious to anybody.

Suppose, a player gets lucky and machine, for ex, spits out 100 coins to a player. In this case, a machine, in order to satisfy a casino goal, has a double problem. Not only, ideally, it has to take all player’s money, it also has to take that 100 coins back. However, a machine can take it, due to its design, only one coin at a time. It will take a “long” time to do it. What that means? That means that a machine has to be “cold” and take regularly more than it gives back for a long time.  According to our general definition of a streak, a machine has no choice but to go through a “cold streak”. RNG makes it possible by putting a majority of numbers from its 4 billion numbers range in correspondence with an “empty space” symbol on a reel and other symbols, which can produce only minimal payoffs.

That particular example leads to a following explanation of the inevitability of one of the machine’s conditions. Occasionally occurring big and small machine’s payoffs, which are many times more than a player’s bet size, are an objective cause for a machine’s condition defined as a “cold streak”.

How about “hot streaks”? Is there any theoretical explanation why “hot” streaks should happen at least with some regularity? Slot machines are required to pay back by law and by necessity to attract players. Thus, the question about “hot” streaks presence comes down to the new questions. Should the machine’s payoffs come in bunches of winning combinations and create a hot streak in the process? Or, these combinations can be spread apart from each other in any period of slots play and come in singles or in very small groups that can’t be classified as streaks? Or, may be it’s a mixed scenario – winning combinations come combined into hot streaks and also separately from each other?

Let’s think from a casino viewpoint. What scenario is more desirable for a casino? If the winning combinations can be produced in series, then it will immediately create a concept of “hot machines” in the head of the gaming public. That concept would be a great slot-marketing plot and extremely attractive magnet for the players hoping to find a hot machine and grab a bundle. It looks like it makes sense for RNG to have that capability and be able to produce a payoff in arbitrary moments in time in a form of hot streaks. However, all that is just a speculation on my part based on a common sense and simple logic. If RNG program is not written to deliver payoffs in a form of the streaks, then the fact of the occasional hot streaks still remains. Only in that case an appearance of hot streaks, unlike a presence of cold streaks, is purely accidental (or random). Accidental scenario has one argument for it – RNG wants to be as random as possible. Producing winning combinations in sequences will put a blemish on that randomness within a sequence. On the other hand, an overall randomness will be affected to a very small degree for two reasons. A particular type of a winning combination, still, for any practical purpose, will be chosen at random. An appearance of a streak as a whole will also be an unpredictable event in time.

I would love to take a peek at mathematical algorithm of RNG program. Until then I can’t give with a 100% certainty a final theoretical outlook on the nature of the existence of the hot streaks and to determine it to be accidental or caused by the specifics of RNG program. Whatever the nature of the origin of the streaks is – accidental or “cause and effect” type - the hot streaks remain the fact of slots life supported by a collective experience of millions of players. That’s the only thing that counts for us players. As long as the hot streaks are out there, we’ll try to recognize and catch them.

It is clear now why “cold” streaks are comparatively long and uneventful ones and “hot” streaks are “short” and “violent”. The reason is that a slot machine takes bet by bet from a player but pays back through “big”, “mid” and “small” size combinations in bunches of bets.

RNG explains why occasional “choppy” moments are short-term deviations from a machine’s normal streak-based behavior. “Choppy” means that a machine gives and takes back in turns. Choppiness introduces a “pattern”, which is an opposite to RNG’s goal of almost perfect randomness. Pattern type behavior is the one that can be easily figured out and capitalized on by the players and, as such, it would be opposite to casino’s interests.

It is obvious why the machines are not always cold or hot and shift their “temperature” from one extreme to another. Any specific machine has to take money from the players and has to give it back (less than it takes, of course). In result, it has to go through appropriate modes (temperatures) to perform both tasks.

Why streaks are not “uniform” in nature? Casinos want to rob players. Players are not completely dumb. If a cold streak does nothing for a player but chips away bet by bet, then even a good ol’ grandma from Jonesboro, Arkansas will wise up fast and jump off the hook.  In order to keep her on the hook for a long time, a “hot” but short splash revives her hope and she stays to lose more. A “hot” streak needs a cold splash to spook grandma, so she would not squeeze the last drop of honey from that streak. Thus, the splashes would be very useful for casino purposes. Are they intentional or accidental in nature depends on a set up of RNG program. It would make sense to create them intentionally to keep setting up players for wrong decisions and make them a part of RNG program. Even if they are accidental, they remain to be the fact of slots reality, which will be addressed by the Theory and the Method.

We tried above to give theoretical interpretations and explanations to all observed empirical facts that describe a slot machine behavior from a slot player’s perspective. They were made from the viewpoint of RNG’s program, slots’ design and casino goals in general. In result, empirical facts acquired their meaning and the all-important questions “why” were answered to the best of my ability.

All the empirical facts above were also proved by statistical data collected and analyzed over a period of almost three years. That data covered different slots in many casinos predominantly in Las Vegas and California Indian Reservations. Since IGT, Bally and a handful of smaller companies produce almost all machines, we may conclude that the machines are basically the same everywhere. That means that the conclusions from our statistics apply virtually to any casino in the world.

Not only general facts interpreted above were confirmed. Statistics went further and put under the microscope the sequences of hits and misses (winning and losing combinations) and payoffs for winning combinations. That analysis led to the development of Streaks Recognition Theory and Streaks Method in all their complexity and specificity.


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