Igt Megabucks
- Appendices
- Slots Analysis
- Miscellaneous
This is where it all started. Megabucks paved the way for life-changing jackpots. I Want to See More. IGT’s Megabucks slots game is famous for paying the casino industry’s largest slots jackpots. In Nevada, the game’s jackpot meter re-sets at $10 million, the largest base progressive amount of any slots game in the U.S. This jackpot amount then grows as more people throughout the State play the game. Megabucks, created by International Game Technology (IGT), may well be the most famous slot machine in the world today. This progressive slot machine can be found throughout International Game Technology (IGT) casinos in Las Vegas and other locations in Nevada, with smaller versions of the same jackpot being offered in other jurisdictions.
Introduction
This page investigates the odds of the progressive jackpot slot machine, Megabucks, including the average jackpot and breakeven point.
For now, let's ignore the fact that a jackpot is paid by installments over 25 years and that the jackpot would be subject to income tax.
I don't know exactly how Megabucks is programmed. However, there is some information that is public knowledge. If we fit the pieces together, we can make a pretty good estimate of the point at which the return is 100%, known as the 'breakeven point.' Here is what we do know:
- According to John Robison, the probability of hitting the jackpot is 1 in 49,836,032. This figure comes from an article titled Megabucks closes in on record jackpot from the Las Vegas Sun, Dec. 24, 1999. That probability comes to (1/368)3, implying each reel has a 1 in 368 chance of stopping on the jackpot symbol.
- The Nevada Gaming Control Board indicates that the profit of Megabucks on both a percentage and dollar basis. The following is a summary for 1994 to 2009.
Megabucks Win — 1994 to 2009
Year Win ($) Win (%) 2009 53,352,000 10.43% 2008 83,981,000 11.85% 2007 88,858,000 12.72% 2006 100,923,000 12.39% 2005 100,923,000 12.39% 2004 67,326,000 10.54% 2003 83,069,000 10.41% 2002 76,842,000 11.98% 2001 69,821,000 11.50% 2000 69,103,000 9.75% 1999 74,921,000 12.28% 1998 134,943,000 12.25% 1997 66,166,000 12.18% 1996 57,619,000 10.03% 1995 65,223,000 10.48% 1994 46,760,000 9.44% total 1,239,830,000 11.39% The key piece of information from this table is that the overall profit of the game has been 11.39%. In other words, 88.61% is returned to the players.
- According to defunct source, starting in September 2005, Megabucks was reset to a jackpot of $10 million. Before that, the reset value was $7 million.
- According to a2zlasvegas.com, there have been 11 jackpots hit between September 2005 and the date of the last jackpot (Feb. 21, 2010). That same website shows a jackpot was hit on September 15, 2005. The number of days between then and the time of this writing is 1,619 days. We also see from that website that the total of the last 11 jackpots was $167,367,727. Of that, $110,000,000 was from the reset amounts and $57,367,727 was from the progressive contribution.
The portion of money returned to players in form of jackpots is thus $167,367,727/$1,644,589,056 = 10.18%. From the Nevada Gaming reports, we know a total of 88.61% is returned to players. That means that the portion returned to players in non-jackpots is 88.61% - 10.18% = 78.44% (The 0.01% apparent difference is due to rounding).
Igt Megabucks Slot Machine
If there were no small wins, and no progressive contribution, then the return of the game would be $10 million/(3×(1/368)3) = 6.69%. As already shown, the total return from jackpots is 10.18%, leaving 3.49% coming from the jackpot meter. Here is a summary of where each $1 bet on Megabucks goes:
Megabucks Breakdown
| Item | Cents |
|---|---|
| Fixed wins | 78.44¢ |
| Meter reset | 6.69¢ |
| Progressive contribution | 3.49¢ |
| Profit | 11.39¢ |
| Total | 100.00¢ |
The average point at which the jackpot will hit is 10 million + [$3 × 0.0349 / (1/368)3] = $15,215,248. In 2006, when the jackpot was almost $16 million, IGT, Megabuck's creator, purchased ads in the local media stating that the jackpot was 'overdue' to hit. I'm quoted in a Las Vegas Sun article about it, titled 'Pennies ready to pop'. This would seem to indicate my $15.2 million figure is not far off.
If j is the jackpot at which the game becomes a fair bet, with a 100% return, then we can solve for j as follows:
1 = 0.7844 + j × (1/368)3/3
j × (1/368)3/3 = 1 - 0.7844
j = 3 × (1 - 0.7844) / (1/368)3
j = $32,238,319.
The probability of any given jackpot growing this big is 1.41%. At the current rate of play, a jackpot should get this big once every 29 years, on average.
At any given time the return can be estimated as 78.44% + 0.6689%×m, where m is the number in millions of the current jackpot. For example, at a jackpot of $15 million, the return would be 78.44% + 0.006689×15 = 88.47%.
Everything in this page should be taken as a ballpark estimate. Various factors could cause it to be off, including players not betting the full $3 and the fact that while 11 jackpots were hit in the study period, the expected number could be higher or lower.
It also bears repeating that the above does not factor in the annuity or taxes. Let's look at what happens if we do consider those factors. For the time value of money, let's use the return on long-term Treasury Bills. Megabucks jackpots are paid in a 25-year annuity. At the time of this writing a 20-year T-Bill paid 4.58% interest, and a 30-year one paid 4.74%. Let's split the difference at 4.66%. Using some actuarial math I won't get into, the value of the annuity is worth 61.07% of face value, based on that interest rate, and 25 annual installments, at the beginning of each year.
For taxes, let's assume close to the expected jackpot of $15 million. Under 2010 income tax rates, assuming the winner is filing jointly, and all other income exactly equals deductions, the taxes due will be 30.05% for 2010. Assuming no change in the tax law, that will drop over time, because the tax brackets will be adjusted upward, but the winning payments won't be. I tend to think the recent passage of health care will increase tax rates, especially on large incomes. Let's just assume those factors cancel each other out, to keep it simple.
So to keep things in round numbers, the winner will keep 61% after the annuity, and 70% of that after taxes. So the jackpot winner will see about 61% × 70% = 42.7% of his winnings in current dollars. Factoring the annuity and taxes, the breakeven point becomes $75.5 million. The probability of any given jackpot growing that big is about 1 in 283,000, and will happen once every 114,000 years. Again, I'm making lots of assumptions, so these estimates should be considered very rough.
After publishing this article, a reader quoted a page at slot-machine-resource.com, which states that after the first installment is made, the player is given the option to get 60% of the rest immediately, or stick with the installment plan. Tax implications aside, which favor the annuity, the interest rate at which the two options are equal is 4.581%.
External Links
- Megabucks Closes in on Record Jackpot from the Las Vegas Sun, Dec. 24, 1999.
- Nevada Gaming Control Board
- Slots Payout percentage, from Cassaon Casino.
- History of Megabucks Jackpots, from a2zlasvegas.com.
- Pennies Ready to Pop, from the Aug. 9, 2006 Las Vegas Sun.
- Megabucks, from slot-machine-resource.com.
Igt Megabucks Jackpot Payout
Written by: Michael ShacklefordThe Curse of Megabucks Progressive Slot Machine
Megabucks is a Nevada state-wide slot jackpot network that is owned and run by the slot machine company, International Game Technology (IGT). Considered Nevada’s state lottery, Megabucks is extremely popular and has created quite a few millionaires in its 19-year history. Thanks to excellent PR hype, Megabucks continues to spur hysteria every time the jackpot reaches ‘megabuck’ proportions. It is also a slot machine that generates an incredible amount of gossip and legends surrounding the game and its winners. However, if we look at the real truth behind IGT’s Megabucks – even with all the myths and legends dispelled - we will see that this progressive slot is simply a bad game to play.
How does Megabucks Work?
IGT’s Megabucks is a dollar coin slot machine that requires 3 coins ($3.00) to hit the jackpot. The jackpot is reset to a specific amount after every grand win. While the present reset amount is $10-million, there is talk that this will soon rise to $11-million. Megabucks is part of the company’s MegaJackpot slot system that connects about 750 machines in 136 Nevada casinos to one primary jackpot that builds from the base jackpot amount. International Game Technology owns the Megabucks machines and the casino gets a cut of the money that each machine wins from the players. It is common knowledge that IGT created Megabucks to compete with state lotteries.
Where can Megabucks be Played?
The State of Nevada is the true home of Megabucks and can be found in most popular casinos on the strip. Unlike multi-state lotteries, this game does not cross state lines. IGT runs Megabucks jackpots in the states of California, New Jersey and Mississippi, as well as some Indian reservations. However, these don’t encompass as many venues as the Nevada edition and their jackpots are traditionally much smaller. Each state that offers Megabucks has a separate jackpot system with separate meters and winners. If a jackpot is won in one state, it does not affect the progressive jackpot in another.
Each Megabucks machine has its own RNG (random number generator) and chooses its own outcomes. These outcomes are reported to a central station. When the jackpot is hit on one machine, the central station sends out a message to the other machines to reset their meters.
What are the Odds of Winning Megabucks?
Statistics regarding the true odds of winning the Megabucks jackpot remain sketchy. Some put the odds down to about one in 50-million, while others, such as the Las Vegas Sun, put it as ‘low’ as 1 in 17-million. It is certainly understandable why the betting surrounding Megabucks sometimes reaches hysteric proportions and has people crossing over the state line to have a shot at winning so many millions. But do winners really get what they are promised? Let’s take the example of a $35-million win. Initially, for that amount of money, winners get a check of $1.4 million. They then have between sixty and ninety days to decide whether they want to take their money in annual installments over twenty-five years or a lump sum of 60% of the money. For a $35-million win, that would result in $21-million before taxes. Needless to say, most winners choose the former option.
Whichever option the winner chooses, he or she is still needs to take into account the taxes payable to the IRS. They are subject to the maximum tax rate of nearly 40%, with state taxes also needed to be taken into account. When all is said and done, the prize money dwindles somewhat miserably after Uncle Sam takes a bite.
The Curse of Megabucks
No gambling machine in the history of Vegas has had so many urban legends, myths and stories surrounding the game of Megabucks. Usually these stories center around the tragic fate of Megabucks winners – leading many to believe that winning the multi-million dollar jackpot will result in an untimely death. While almost all these stories have proven to be false, Megabucks still has the obstinate reputation of being cursed.
Many believe that the hotbed of rumors surrounding Megabucks is based on the true but tragic story of a 37 year-old cocktail waitress named Cynthia Jay-Brennan. In 2000, Jay-Brennan, was the lucky winner of $34.9-million Megabucks jackpot, played in the Desert Inn Casino in Vegas. Only six weeks after her win, Jay-Brennan was tragically involved in an automobile crash. Her sister was killed instantly and she, herself, was left a quadriplegic. The driver of the car that hit the pair was under the influence of alcohol and was subsequently put away for 28 years; however, this did not stop rumors flying that Megabucks was a cursed game to win.
The truth is that Jay-Brennan’s accident was not the start of these rumors, as they existed well before the year 2000. However, since this event, many stories continue to surface regarding the tragic fate of every winner of subsequent Megajackpot wins. When a 25 year-old won the jackpot in 2003, stories spread like wild-fire of his untimely ‘death’ through various ways, including a fatal drug overdose in a casino hotel and in a gang fight as far away as Los Angeles. All these stories have, thus far, proven to be false and while the winner chose to remain anonymous, IGT has assured the public time and time again that the lucky young man is alive and well, and enjoying his riches.
Other urban legends related to Megabucks tell stories of underage players who could not claim their winnings, employers of a casino who played Megabucks and couldn’t claim their prize because of a law forbidding workers to gamble at their places of work and other tales along the same vein. To date, none of these stories have come up as true.
A rumor, which has not yet been dispelled, is one regarding the change in the Megabucks programming system. Some claim that IGT changed the programming of the system to make the jackpot hit less frequently but for more money. While IGT claims that they did not do anything of the sort, there are many experts in the gambling field who feel that some sort of change was made in the past.
Finally, a minor rumor that can be dispelled is one that says that the central station to which each jackpot machine reports chooses the winner. IGT assures its gambling public that each machine has its own RNG and thus every machine chooses its own outcome.
Conclusion: Megabucks is Megajunk
So, while we understand that most stories flying around the industry regarding the curse of Megabucks are false, we cannot ignore the fact that this is simply a bad slot game to play for 2 reasons. First is the house 'hold'. Megabucks holds between 10% - 15% of every dollar played. Many slot machines in Nevada hold as little as 2% or 3%. The second reason that makes Megabucks a terrible play for the serious gambler is that you only receive 60% of your jackpot. There are many other progressive slots in your casino that pay big jackpots, but give you the whole thing.
When we strip Megabucks from all the pomp and glam that surrounds it, we find a mediocre progressive slot game that doesn’t give you much for your money. And even if you do win, you don’t exactly get the flashy numbers promised to you – you will have to settle for a sum that is much more modest in nature, paid off to you over a period of 25 years. Final conclusion? Megabucks is megajunk. There are lots more fish in the proverbial gambling sea.