━History of Slot Machines━

Introduction

　Gambling is one of the oldest human activities in the world history. Ancient Egyptian artifacts from 2000 BC show gambling as a sport. Moreover, it is found that other old cultures such as India, Greece and Native Americans also had their own gambling cultures. Gambling has a long history and it has been innovated for thousands years. One of the most important innovations in the gambling history is the introduction of mechanical games --- slot machines. This research paper introduces you the 100-year history of slot machines, which is relatively short but contains abundant stories.

Importance of slot machines for casinos

　Slot machines play the important rolls in today's casinos in two means. First, Slot machine areas are major part of gaming floor in most casinos. According to Nevada Gaming Almanac 2001 Edition, 60.4% of casino area in Caesars Palace is slot area. Also, 66.8% in the Bellagio, 71.4% in the Excalibur, 70.2% in Mirage is used as a slot area. Secondly, the departmental profit margins for the slot are just as impressive. Again, according to Nevada Gaming Almanac 2001 Edition, in Las Vegas Strip properties almost half of the total gaming revenue comes from slot department. This trait is boosted up in local casinos. 75% of casino revenue in Las Vegas downtown properties, 84.3% in Laughlin's properties, and 86.6% of Boulder Strip properties come from slot revenue. Slot machine is very important in terms of square footage and revenue in casinos. (Nevada Gaming Almanac 2001 Edition)

First Coin-operated Machine

　The first coin-operated machines were invented in the late 1880's in the East, and became popular in San Francisco. The first model of machines was not reel slot we see now. It was more like poker machine. The each reel had cards instead of cherries and bells. "Most of the early models, called drop card machines, employed fifty cards on five drums, tow cards short of a complete deck. Usually, the two cards missing were the jack of hearts and ten of spades cutting the possibility of a Royal Flush in half." (Marshall Fey, page 13) Those machines were placed in saloons or cigar shops. Player won cigar or drinks as a prize if they hit the poker hands on the machine. They spread into the city of San Francisco rapidly. By 1890, the city had 3,117 licensed establishments.

Charles Fey; Father of reel slots

　The first slot machines that looked like the one we know now was invented in San Francisco in 1899. The inventor was the Bavarian immigrant named Charles Fey. He named the machine as "Liberty Bell". Liberty Bell shaped just like current slots. It had three reels, a pay-out schedule, and a coin acceptor and a large handle on the right side of the machine. "Charles Fey placed his first Liberty Bell in a San Francisco saloon to test its worth. It was such an instant success that the quit his job to devote all his time into building more of these little money makers." (Marshall Fey, page 22) Fey monopolized slot machine market, and made a big success.
　 Fay was born in Vohringen, Bavaria on February 2, 1862. He was 16th and last child in the family. He immigrated to San Francisco in 1885 when he was 23 years old and started working as a machinist. He was employed at the California Electric Works since 1887, and met Theodore Holtez, who became a future partner for his business. Fey and Holtez quit their jobs with California Electric Works in 1894, and start their company, Holtz and Fey Electric Works. In 1895, Holtz and Fey Electric Works released their first coin-operated machine, 4-11-44. The 4-11-44 machine was the gaming machine that had three numbered dials one behind the other. The 4-11-44 made a smash hit, and they kept improving their products. In 1899, their masterpiece and the first reel slot, Liberty Bell, was released. Liberty Bell got popularity rapidly and Holtz and Fey Electric Works grow as the giant in the slot machine manufacturing.
　 However, their monopoly of the bell slot machine could not last forever. "Early on the morning of April 18, 1906, the city of San Francisco was rudely awakened by the violent shakes of a tremendous earthquake." (Marshall Fey, page 23) Fey lost his major factory with this earthquake, and suddenly lost his domination in the market.
　 The second important person in the slot machine history is Herbert Stephen Mill from Chicago. In 1909, Mill modified the Fay's machine. He added ten more symbols to each reel, and make it more mobile and space saving. The new machine was named as Mills' Liberty Bell. "The tremendous success of Fey's Liberty Bell was no secret of Mills and it was not long before the mass manufacture of Mills' Liberty Bells began." (Marshall Fey, page 23) Mill's Liberty Bell began to grow their share in the slot machine market after Fey's Liberty Bell went down.

Anti-gambling Movement

　The difficult era for slot machines started at the beginning of 1900's. The anti-gambling movement emerged. In 1909, San Francisco outlawed slot machines. A year later, Nevada did. Then in 1911, the rest of California followed San Francisco and prohibit slot machines in 1911. During the era, people in the slot industry saw the hard time. For the appeal of anti-gambling movement, many slot machines were smashed with hammer, burned and dumped to the sea. In 1934, New York's Mayor, La Guardia made a big political appeal of anti-gambling. The picture that shows Mayor with broken slot machines at that time is shown in the book, Slot Machines --- A Pictorial History of the First 100 Years. The author, Marshall Fey, commented on that picture as following. In 1934 New York's Mayor La Guardia posed for the press on a barge full of machines destined to be buried at sea. Besides destroying a Mills Poinsettia, numerous Fey 3 JACKS, and a claw machine which may be played for amusement, the overzealous mayor is also dooming innocent games such as a chocolate vender, and Old Mill candy vender, and a gumball machine --- none of which could ever be used as a gambling device. (Page 111) That was the definitely hardest period for many slot machine manufacturers.

Electronic Age

　One of the biggest innovations on slot machine is the birth of electronic machines. Before electronic age, slot machines were all mechanical. In that era, all slot machines had a big handle, players have to pull the handle to play the game, and reels started spinning mechanically. However those machines had many problems especially from the security standpoint. It was very easy to cheat on those machines. However, slot machines began to adopt electronic microprocessors in it as the computerization in the society went on. According to Slot Machines---A Pictorial History of the First 100 Years, "The age of electronic casino games was inaugurated in 1964 with the Nevada Electronics solid state twenty-one machines. These sit-down slots were built in both two- and four-player configurations." (Marshall Fey, page 213)
　 Electronic slots has two advantage compared with mechanical slots. First advantage is that they were more secure than mechanical slots. Mechanical slots were operated mechanically. Players could cheat on them easily. However, electronic slots solved that problem. Second advantage was operators could offer bigger prize on electronic machines. Mechanical slots had the limitation on their prize, because they had physical limitation to make stops on the reels. However, on electronic slots, operators could make stops as much as they want. As the result of the technology, operators came to be able to give large prize to players.

MEGABUCKS
　
　 The machine that makes the best use of the advantage is MEGABUCKS from International Game Technology. On March 6, 1986 MEGABUCKS started with 125 machines in nine casinos around Nevada. MEGABUCKS was the 3-coin dollar progressive slot. The trait of MEGABUCKS was all MEGABUCKS machines were linked together and kept same progressive meters. Because of that, player could expect to have bigger prizes. Three years later after they were introduced, "carousels were located in over 100 casinos and had paid off many jackpots between 2.2 and 6.8 million plus more than 600 Mega Mini jackpots which have reached over $12,000. IGT owns the slots and pays the large wins with an annuity spreads over 20 years" (Slot Machines---A Pictorial History of the First 100 Years, Marshall Fey, page 213)

William "Si" Redd and IGT

　 IGT, International Game Technology, was founded in 1975 by William "Si" Redd. He got his start in the coin machine industry back in Mississippi during the 1930's, when he purchased, at age 18, a Bally pinball machine for $16. He spent 35 years in the amusement machine field. In 1967, after having success fully established himself as a distributor for several companies, Redd met Bill O'Donnell, the president of Bally Manufacturing Corp. He moved to Nevada from Mississippi and became a distributor for the Bally slot machine. Redd was known as the person with the customer service mind. That was the reason why he made a big success as a distributor. His service philosophy was

1. The customer is always right.
2. If the customer is wrong, please refer to Rule 1.
(UNLVwebsite,http://www.unlv.edu/News_Bureau/News_Releases/2001/Oct01/811.html) He was respected as a great businessperson. Also, Redd was known as a philanthropist. He supported numerous charities and women's assistance programs including Temporary Assistance for Domestic Violence. In 1995, Redd and his wife were named "Philanthropists of the Year" at the Fourth Annual National Philanthropist Day conference.
　 The biggest turning point for IGT was in 1978 when IGT purchased Fortune Coin Company, which was the company that introduced the first video slot machine in the industry. "They adapted the latter's machines of a wide rage of video slots by changing the logic assembly and the front door components." (Marshall Fey, page 216) Their sales of its machines grew, and they became the second largest manufacturer in the slot industry through specializing only in video slots. According to the interview that was held in PUBLIC GAMING, March 1982, Redd answered the question,"Did you have any idea back then that it was going to grow into the business it is today?" as following. No, I really didn't. I could see three or four things: First Video slots wouldn't give any service Problems. Second, it would be so much harder to cheat it. (Not that these thieves can't learn anything!) Third, I knew that with a video slot you could do so many things that you couldn't do otherwise・page 45)

Video machines

　The first video slot was introduced 1975 by Walt Fraley in Las Vegas. The first video slot, named Fortune Coin, was very simple machine, which had only three components, such as "a solid state logic assembly, a television set, and a hopper." (Marshall Fey, page 216) By the mid 1970's, electronic video slot machines spread into the industry gradually. However, Even though the new technology was introduced, they were still the minority in casino games for a long time. Video slots were not well accepted in the market. Players doubted if they were able to hit prize truly because they could not see actual spinning reels on the video slots. It was not until 1980's when video poker machines became popular, that those video machines penetrated the market. The first video polar machines were introduced by Dale Electronics in 1970. They simplified the rule of the America's most favorite game and adopt it to the video game. It became prevalent in Nevada casinos, but it was not such a big hit. The turning point was in 1979 when IGT introduced the first well-accepted video poker machine, DRAW POKER. It made a smash hit, and video slots began to penetrate to the market widely as IGT's DRAW POKER spread into the industry. Tex Sheahan described that in the article, The Video Machines, in GAMBLING TIMES, November 1982 as following. The rapid and easily noticeable replacement rate is a clear indicator of the effectiveness of the newer models. Rows of them are appearing like magic, with the poker machines leading the video parade. (Page 39)

Current Event

　The current biggest events in the gaming industry are the growth of the nickel machines and the ticket-in ticket-out system. The nickel machines are the new type of slot machines coming from Australia, which is penetrating American casinos rapidly in latest years. They are all video-based machines that have multi-betting-lines on it. Player can bet multi-coins on each line. They are called "nickel machines" because the denomination is usually five cents, but there were various denominations. The ticket-in ticket-out systems are the latest technology that attracts the tremendous attention from the industry now. This system enables players to move the machines to machines without the heavy bucket filled with coins with using tickets. In addition, it makes it possible for casinos to reduce labor costs and promise more secure slot machine operation. Local casinos in Las Vegas are trying to shift the current coin-in coin-out system to this new technology. Most of Atlantic City's casinos are finished to shift to this system.

Conclusion

　First coin-operated machines were invented in the late 1880's in the East, and they soon became prevalent in California. Slot machines started with mechanical card games and developed to reel slots. Through the century, bunch of new technologies, such as microprocessor and television screen, were adopted to slot machines. Many genius people were involved in the development of slot machine. Charles Fey introduced the first mechanical reel slot, Liberty Bell. Herbert Stephen Mill improved Fey's Liberty Bell and developed Mill's Liberty Bell. Walt Fraley made it video game. Video polar machines introduced by Dale Electronics were propagated by a great distributor, William "Si" Redd. Slot machines have only a hundred-year history. It is relatively short if we compared it with 4000-year history of gaming. However in such a short history, lots of innovations happened, and slot machines play an important part of gaming industry today.

Work Cited

Nevada Gaming Almanac 2001 edition, Casino City Press The Fabulous Slot Machine, Loose Change Fall 1977, page 22-24 Marshall Fey, Slot Machines --- A Pictorial History of the First 100 Years, Liberty Belle Books, Reno NV, 1994 UNLV website, http://www.unlv.edu/News_Bureau/News_Releases/2001/Oct01/811.html Si Redd: Pioneer in The Video Slot Machine Industry, PUBLIC GAMING, March 1982, page 44-46 Video Machine, GAMBLING TIMES, November 1982, page 38-39

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