ahiromu
ahiromu
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April 12th, 2010 at 3:12:34 PM permalink
First bullet point, article is spelled as artitle.

Great page!
Its - Possessive; It's - "It is" / "It has"; There - Location; Their - Possessive; They're - "They are"
Wizard
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Wizard
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April 12th, 2010 at 3:16:27 PM permalink
Quote: AZDuffman

I for one like it. I was wondering what formula you used for the annuity? I had to learn that back in Finance 101 and am just curious if the "pros" use the same formulas or something more complex.




The formula is V = P * [(1-(1/(1+i)^n)]/i, where

V = value of annuity
P = individual payment amount
i = interest rate
n = number of payments

If you're doing a monthly annuity, which we're not here, remember to divide the interest rate by 12.

Let's say the jackpot was 15M. Using i = 4.66%, and n=25, the fair payment to keep up with inflation would be $1,028,311. You would actually get 15M/25 = $600,000. Actual payment/fair payment = 58.35%.
It's not whether you win or lose; it's whether or not you had a good bet.
Nareed
Nareed
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April 12th, 2010 at 3:28:06 PM permalink
Quote: Wizard

You can see I didn't even fuss with the state tax issue.



It can get more, or perhaps less, complicated if a foreign national wins a jackpot, right?

I wonder how hard it is to set up an account in a tax heaven in the caribbean....
You can visit my blog Kathy's Cooking Corner at kathyscookingcorner.blogspot.mx ... .... When someone offers you friendship with one hand and stabs you in the back with the other, you tend to notice the knife a little bit more.
Wizard
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Wizard
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April 13th, 2010 at 8:55:20 AM permalink
Quote: boymimbo

Mike,

Link here
History of Megabucks Jackpots
(Latest first)

Date Place Amount won
02/21/10Reno Airport, Reno, NV$ 10,422,754.08
12/28/09Bellagio's Resort & Casino, Las Vegas$ 12,262,968.60
07/29/09Casino Royale, Las Vegas$ 12,236,709.00
04/12/09Terrible's Rail City Casino, Sparks, NV $ 33,000,563.00
05/07/08The Palms $ 21,030,657.77
05/19/07Fremont $ 10,762,066.40
02/05/07Orleans $ 12,076,530.00
09/02/06Wynn Las Vegas $ 10,828,990.00
07/28/06Wynn Las Vegas $ 12,317,717.96
06/05/06Cannery $ 20,519,025.00
10/16/05Aladdin $ 11,909,745.00
10/16/05Cannery $ 21,147,947.00



Using the statewide revenue from non restricted sites, from February 2007 to February 2010, I get the following data (in thousands)

Total amount wagered: $1,893,366 = 100%
Total Won: $1,582,459 = 83.586%
Jackpots: $ 89,293 = 4.72%
Reseeds: $ 60,000 = 3.17%

So, for me, your table would look like the following:

Fixed Wins: 83.58
Meter Reset: 3.17
Progressive: 1.55
Profit: 11.70

Since your data set is greater than mine, I would agree with your figures except I think the fixed wins are higher because gaming shows an average monthly profit when there is no jackpot of 12.87%.

On the other hand, in months when there is a win, the profit does not go down by the jackpot value given out for the month, meaning that there is some weird formula being used to accrue the payout, but the profit does go down in months when jackpots are won, just not be the corresponding amount...



I see your point. My first post in this thread questioned why the Gaming reports didn't seem to jive with the posted list of jackpots. I decided to use the Gaming data as little as possible, relying only on the percentage return. For one thing, who knows how they are calculating the win. Do they count the entire jackpot amount in the year it was paid, or only the payments made on all jackpots in that year? I sent a letter to Nevada Gaming about it, but their answer didn't help much.
It's not whether you win or lose; it's whether or not you had a good bet.
thlf
thlf
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April 13th, 2010 at 9:16:20 AM permalink
Quote: Wizard

I'm almost ready to announce my new page on Megabucks on my "Odds" site. However, I'd be interested in any initial comments or questions on it. Just click on the link above to see a rough draft.



I like the info, but do you think you should add as a credit at the bottom: Photography by the guy who destroyed me in liars poker last weekend?
boymimbo
boymimbo
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April 13th, 2010 at 1:18:42 PM permalink
I don't know the answer to those questions based on the data either. For example, when the jackpot is won close to the end of the month, it seems that the revenue dips the following month. Let me put on my accountant hat.

When the jackpot is funded:

DR Slot Revenue 10,000,000
CR Slot Liability 10,000,000

As the game is played (for each $3)

DR Cash .45
CR Slot Revenue -.40
CR Slot Liiability -.05

When the jackpot is won

CR Cash Jackpot
DR Slot Liability Jackpot

So I don't think that the slot revenue is hit when the jackpot hits. But that's on an aggregate, Nevada wide.

My actual feeling is that different casinos probably account differently based on the expected return, depending on how their auditors feel.

For example, some casinos might elect to fund the liability over time rather than take the full 10 million hit when the jackpot is seeded. Maybe with an expectation that 2.3 jackpots are to be won every year they fund the liability that way. My general feeling is that because the revenue dips when the jackpot is won (or just after), there is some accounting that we don't see.
----- You want the truth! You can't handle the truth!
Wizard
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Wizard
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April 13th, 2010 at 1:41:15 PM permalink
Quote: thlf


I like the info, but do you think you should add as a credit at the bottom: Photography by the guy who destroyed me in liars poker last weekend?





How about, "Photography by the guy who chopped off my foot"?

Quote: boymimbo

I don't know the answer to those questions based on the data either. For example, when the jackpot is won close to the end of the month, it seems that the revenue dips the following month. Let me put on my accountant hat.



As I mentioned earlier, I wrote to Nevada Gaming about it. Here is a scan of their reply.



It says the win amount "reflects the amount won and paid in that month." The way I would think of it is if I won $15M, and got paid $600K for my first payment, then the amount won is 15M, and the amount paid is 600K for the year the jackpot was won. So I'm not sure what to make of the reply. Any thoughts?
It's not whether you win or lose; it's whether or not you had a good bet.
thecesspit
thecesspit
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April 19th, 2010 at 11:11:32 AM permalink
Is the fact that the megabucks is annuity displayed on the machine itself? I've always thought it was a bit of a cheat to make the jackpot paid over 25 years, especially as the gaming company gets use of the funds over that period (e.g. interest) rather than the winner. I assume that company has the cash for the entire jackpot on hand?

I guess i should stop putting in my daily $20 into the machine when I visit Vegas...
"Then you can admire the real gambler, who has neither eaten, slept, thought nor lived, he has so smarted under the scourge of his martingale, so suffered on the rack of his desire for a coup at trente-et-quarante" - Honore de Balzac, 1829
Wizard
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April 19th, 2010 at 12:41:48 PM permalink
I'm pretty sure the machines do say that...in small print.
It's not whether you win or lose; it's whether or not you had a good bet.
boymimbo
boymimbo
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April 19th, 2010 at 1:34:13 PM permalink
I think I am starting to understand. When the winner wins, they have a choice to get paid over 25 years or receive the annuity, and the jackpot resets to 10,000,000.

The actual win on the meter is not what is paid, and it is not financially reported as such. If it was, you would see the win on the revenue reports for Megabucks dip much more than it actually does in a win month. What is paid initially is the initial 1/25th of the total amount (less taxes of course). Winners then have 60 to 90 days to decide whether they want to get paid a lump sum of 60% of the remainder or have it paid in an annuity over the remaining 24 years. In the case of the lump sum, the win would be reduced by the payout. In the case of the annuity, what is paid is the present value of the annuity (Mike, you know all about this).

In the case of a $25,000,000 jackpot, if you deposit the amount into an annuity earning 5%, the casinos would only have to deposit $13,798,642 to fund the remaining 24 payments. (Or the player could take the $14,000,000 as a lump sum). So the amount on the jackpot is never what costs the casino... it is substantially less. But this transaction does not get recognized until the player makes his decision. This is why I believe the slot win sometimes goes down in the following month for the megabucks win.

In any case, the casinos probably only end up paying about 60% of the stated jackpot amount.
----- You want the truth! You can't handle the truth!

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