The history of slot machines divides into three eras:
mechanical machines, electromechanical machines, and computerized machines which make use of a random number generator.
Prototypes of slot machines had been around since the 1870's, but it was Charles August Fey, an immigrant from Vohringen, Bavaria who is regarded as the god and father of the industry. Born on February 2, 1862, the youngest of 16 children, he discovered his passion for all things mechanical while working in a farm tool factory in Munich and then he endured a number of biographical vicissitudes which culminated in his immigrating to New Jersey.
He moved to California, came down with tuberculosis and a doctor gave him one year to live. Mother Nature vetoed the doctor's opinion and at the age of 25 Fey was hired by the California Electric Company. In San Francisco, Fey observed many nickel-in-the-slot machines and in 1894 undertook to make his own, a three wheel affair. He built more and began placing them on location on a 50% rental basis.
Quitting the California Electric Company and moving to Berkeley in 1895, Fey built a second model of slot machine in his basement, the 4-11-44. The 4-11-44 had three concentric numbered dials and was set on a long, narrow cabinet. This slot game was based on the popular lottery game Policy, in which 4-11-44 was the highest-paying combination.
In 1896, Fey opened a slot manufacturing factory on San Francisco's Market Street. Here he produced the cast-iron Liberty Bell slot machine which used three independently operating reels holding ten symbols each. Beyond playing-card imagery, the reels had bells, horseshoes and a star. To win the jackpot, players had to have three like symbols on the payline. The chances of winning the jackpot were one in one-thousand, which can be calculated thusly: 10 X 10 X 10.
Fey's factory produced other slots, among which were the Three Spinde, Draw Power and the Klondike; none had quite the fame and widespread use as the Liberty Bell. As the public placements of slot machines grew, government meddled in the freedom of its citizens and made the slots illegal. Fey himself was actually fined and on occasion arrested. People circumvented the anti-gambling laws by calling the slots vending machines. They were designed to dispense candy, gum and coupons to be redeemed for cigars. The expression "Close, but no cigar" comes from this era of slot machine use.
If you don't like tobacco, and even if you do, you might wonder who would have preferred winning a cigar over money, especially when cigars were available for purchase in the very same locations which had the "vending" machines. The way this worked, actually, was that a winning player would present his claim for however many cigars he had won. The store owner would give him his cigars, and then the winner would sell the cigars back to the store owner for cash.
Though everybody knows the term "One Armed Bandit," history tells us that the bandits were not necessarily the slot machines themselves. The early machines, designed with pulleys and gears, could be beaten with relative ease by crafty thieves who knew how to manipulate the handles. The slots of this era, however, did really earn the moniker of one armed bandit by keeping between 25% and 50% of the money played in them. If in a casino in 2005 there were a slot machine that only returned 50%, it would sit forlorn, until a fool came to put money in it.
Fey diversified his products; for example, in 1901 he invented the first draw poker machine.
1906 was not the happiest year in slot history. The great San Francisco earthquake and fire reduced Fey's factory to rubble; of all the Liberty Bell machines produced, Fey only managed to salvage one, which today can be seen in the Liberty Belle Saloon and Restaurant in Reno, Nevada, maintained by Fey's descendents.
Rebounding from calamity, in 1907 Fey joined forces with the Mills Novelty Company to produce the Mills Liberty Bell. In 1910, Mills varied the Liberty Bell by equipping it with a gooseneck coin entry and introduced the fruit symbols now so automatically associated with slots. These cast iron babies weighed about 100 pounds and were not cheap to produce; Mills therefore switched to less expensive wood cabinetry in 1915. Charles Fey remained active in the business until close to the time of his death in 1944, though he never again achieved the dominance in the field which he enjoyed in his earlier days. Nevertheless, there is one memorial plaque in his honor on the site of his Market Street factory and another in his native town of Vohringen, Germany.
Continuing now with the history of the Mills Novelty Company: lower production costs were not the only consideration which lead to innovations in slots. First, in the 1930's, Mills aimed to make a quieter machine, referred to as the "Silent Bell." Subsequently, double jackpots were introduced, making it possible to win twice in rapid succession. Then came a series of distinctive cabinets; the Lion Head in early 1931, the War Eagle and the Roman Head in late 1931 and the Castle Front in 1933. The Castle Front machine replaced the gooseneck coin taker with one that showed the coins played moving individually across the top of the machine, giving players' eyes more to watch and operators the chance to check if slugs were being fed into the machine.
The name Bugsy Siegel looms large in the further history of slots. The mobster wasn't anybody you'd want to meet in a dark alley but he did put slots in his Flamingo Hilton hotel in Las Vegas in the 1940's. While their popularity grew and grew, Bugsy made some enemies in the mob and was shot to death through the window in his girlfriend's living room.
Electromechanical machines dominated the middle of the 20th century; none were more famous than "Big Bertha." She was designed to take in half dollars and dollars and paid back about 80% of what she took in. Big Bertha was superceded by "Super Big Bertha," which cost more than $150,000 to produce. Her 20" wide chain driven wheels had to be powered by a five horsepower electric motor. She had 8 reels with 20 symbols each, meaning that the odds for hitting the jackpot were 1 in 25.6 billion.
In 1973 at Harold's Club in Reno, a player won $65,093 on a one-dollar progressive slots pull. The record stood for some time but has since been bested. In 2001, for example, a player in a casino in Ontario won over $1,000,000 from a progressive machine that was $100 a pull.
The rise of computer culture led to a revolution in the design of slots. While the old machines had actual reels which spun to determine the outcome, the computerized machines can have any number of symbols on any number of reels; which symbols are displayed is determined by a random number generator which is constantly selecting number series that correspond to the different symbols on the various reels. When a player pulls the handle, the random number generator tells the computer program which symbols should appear. The visible spinning of the reels has entertainment value but has nothing to do with which symbols will appear.
Among contemporary slot machines there are two basic types; flat tops and progressives. They differ in how they pay out; a flat top slot has the predetermined payouts for given combinations printed somewhere on the machine while progressive slots feature a jackpot which grows by a percentage of each coin played. Frequently, a number of progressive slots feed into a single jackpot where any slot in the group can win. Progressive slots often have digital readouts advertising the current jackpot total.
Quarter and dollar machines are the most popular though nickel machines do exist and can be found in some casinos, just as some casinos have VIP rooms with $5, $25 and $100 machines. There are, furthermore, slot machines which accept more than one coin at a time and pay out better than single coin machines as well as slots with multiple paylines. In North America today there are an estimated 580,000 slot machines.