Gambling device operated by dropping one or more coins or tokens into a slot and pulling a handle or pushing a button to activate one to three or more reels marked into horizontal segments by varying symbols. The machine pays off by dropping into a cup or trough from two to all the coins in the machine, depending on how and how many of the symbols line up when the rotating reels come to rest. Symbols traditionally used include stars, card suits, bars, numbers (7 is a favourite), various pictured fruits—cherries, plums, oranges, lemons, and watermelons—and the words jackpot and bar.
The term slot machine (short for nickel-in-the-slot machine) was originally also used for automatic vending machines but in the 20th century came to refer almost exclusively to gambling devices. The first coin-operated gambling devices in the United States date to the 1880s, although they were actually mere novelties—such as two toy horses that would race after a coin was inserted in the machine—rather than direct gambling machines. Set on a bar in a saloon or similar establishment, such devices attracted wagering between patrons.
With most machines, however, the proprietor paid off winning customers in drinks or cigars or sometimes in the form of trade checks (specially minted metal tokens) that could be exchanged for refreshments. By 1888 machines that paid off in coins were in existence. In the first ones, inserted coins fell onto an internal balance scale, where they might cause it to tip and spill other coins out; among later devices were ones with a circular display and a spinning indicator that came to rest on or pointed to a number, a colour, or a picture.
The first slot machines in the modern sense were invented by Bavarian-born American inventor Charles August Fey, at the time a mechanic in San Francisco, who built his first coin-operated gambling machine in 1894. The following year Fey built the 4-11-44 in his basement; it proved so successful at a local saloon that he soon quit his job and opened a factory to produce more units. In 1898 Fey built the Card Bell, the first three-reel slot machine with automatic cash payouts.
The Card Bell had a handle that set the reels in motion when it was pushed down and playing card suitmarks that lined up to form poker hands. His next slot machine, the Liberty Bell, was built in 1899 and used horseshoes and bells as well as playing card suitmarks on the reels. Three bells lined up in a row meant the top payout. Chiefly because of the 1906 San Francisco earthquake, only 4 of more than 100 Liberty Bell machines built by Fey survive. The Liberty Bell proved immensely popular among saloon patrons in San Francisco and was quickly copied by Fey’s competitors, such as the Mills Novelty Company of Chicago.
Forces of morality and the clergy, and then of law, frequently opposed the operation of slot machines. By the time San Francisco banned them in 1909, there were some 3,300 slot machines in the city. In order to circumvent the law, Fey and his competitors built machines with no coin slots in which purchase and payout (perhaps in drinks and cigars) occurred surreptitiously across a saloon counter. Soon most slot-machine factories relocated, especially to Chicago.
The ubiquitous reel symbols of various fruits were first used in 1909 by the Industry Novelty Company. In an effort to circumvent legal restrictions on slot machines, the company called its machines chewing gum dispensers, replaced suitmarks on the reels with fruit symbols that suggested various flavours of chewing gum, and built a few machines that really did dispense gum. The idea was copied in the following year by the Mills Novelty Company, which added on their reels a picture of a chewing gum pack (soon stylized as the well-known “bar” symbol). The Mills Novelty Company also invented the “jackpot” in 1916, whereby certain combinations of symbols on the reels regurgitated all the coins in the machine.
During the 1920s the machines were popular throughout much of the United States, especially in resort areas, and they continued to be popular into the Great Depression years of the ’30s. But knowledge that the distribution of slot machines was often controlled by organized crime led to increasing legislation restricting their sale and transportation as well as their use except in private social clubs. Prohibition outside Nevada, which had relegalized gambling in 1931, was virtually total by 1951, although illegal operation, especially in private clubs, was widely ignored.
After World War II the machines came into worldwide use as governments were drawn by the prospect of tax revenue. (In 1988 slot machines were permitted in French casinos, ending a 50-year ban.) In the 1950s electromechanical slot machines allowed many new payout schemes, such as 3- and 5-coin multipliers, where the sizes of the payouts are proportional to the number of coins inserted before the handle is pulled. Video slot machines, which simulate reels on a monitor, were introduced in Las Vegas in 1975.
Such machines have had limited success; for the slot-machine addict, the action of pulling the handle, the sound of the reels falling into line, and most of all the jangle of cascading coins are essential parts of the attraction. In 1986 electronic systems were introduced to link numerous slot machines in different locations and thereby allow a fraction of each inserted coin to go into a shared “super jackpot,” which may reach an extremely large size before it is won; for example, in 2003 a Las Vegas slot machine paid out nearly $40 million.
Modern slot machines contain solid-state electronics that can be set for any desired frequency of payouts. Thus, the house advantage varies widely between about 1 and 50 percent depending on circumstances, such as legal requirements and competition from other casinos. Slot machines are by far the largest profit generator for nearly every casino, averaging 30 to 50 percent or even more of total revenue. Nevada alone has roughly 200,000 slot machines.
As gambling laws were relaxed at the end of the 20th century to allow legal gambling on Native American reservations and to expand the revenue-generating options of many U.S. states, the number of electronic gaming machines (which came to include video poker machines as well as modern slot machines) grew significantly. By the end of the first decade of the 21st century, more than 830,000 electronic gaming machines were operating in the United States, and the capital generated from these devices rose from 40 percent of total casino revenues in 1970 to approximately 70 percent in 2010.
In the early 21st century, casino operators feared that the popularity of physical slot machines in brick-and-mortar casinos would be threatened by the sudden rise of online casinos, in which customers deposited money to make wagers and played various games of chance using personal computers. Competition from online sites, however, had been intermittent since the advent of the Unlawful Internet Gambling Enforcement Act of 2006, which prohibited U.S. banks and financial institutions from doing business with online gambling companies. While physical slot machines had been legal only in state-sanctioned casinos, by 2013 some local governments within the state of Illinois had allowed bars and restaurants within their jurisdictions to offer slot machines and other electronic gaming machines to their patrons.