A Comprehensive History of Slot Machines in the United States

Slot machines have come a long way since their invention more than 130 years ago. They are now at the heart of the US gambling industry and have become almost ubiquitous.

Even though slot machines are synonymous with brick-and-mortar casinos, they can also be found aplenty in online casinos, airports, bus stations, bowling alleys, strip malls, barber shops, hotel lobbies and many other places.

According to Weekly Slots News, there are over 900,000 slot machines across America. If you have a soft spot for gambling, the chances are good that you have tried your luck with spinning a slot machine at some point.

Like the intriguing device itself, the history of slot machines is quite colorful and fascinating.

What Are Slot Machines?

A slot machine is a gambling device that is operated by inserting tokens, coins or an electronic card. It features characteristic reels that spin when activated to deliver an outcome. Online casinos come with a huge variety of video versions of the physical slot machines.

Over the years, slot machines have become a gambling staple.  They are loved by people from all walks of life and across the globe.

Did you know that the phrase “slot machine” is short for nickel-in-the-slot machine? Originally, the term referred to any kind of coin-operated or automatic vending machine.  It wasn’t until the turn of the 20th century that it referred strictly to gambling devices.

Across the pond, the British refer to a slot machine as a fruit machine, while Scots and Australians call it a puggy or poker machine, respectively. One-armed bandit is another very popular nickname for slot machines, especially here in the United States.

The Birth of Slot Machines - Charles Fey Era

Charles August Fey, a Bavarian-born mechanic, invented the modern slot machine in San Francisco sometime between 1887 and 1895 (the exact date is still subject to debate). He called his creation Liberty Bell.

Liberty Bell borrowed a big leaf from the game of card-draw poker. It had 3 spinning wheels and used five symbols: a cracked picture of the Liberty Bell, spades, horseshoes, hearts, and diamonds.

The original 10-card draw poker game was complex, and it was hard to devise a slot machine that would deliver all possible winning combinations. By reducing the cards from 10 to 3, and using three spinning reels instead of 5 drums, Fey made it easy for players to read the outcome. If a spin resulted in 3 Liberty bells forming a row, the spinner will get the largest payout of ten nickels or fifty cents.

Liberty Bell was a massive hit, and kicked off an onslaught of slot machine manufacturers. Even though gambling machines were banned in California in 1909, Fey's slot machines continued to gain immense popularity elsewhere. Indeed they were so popular that his factory couldn’t keep up with demand from other states. Most of the early slot device makers copied Liberty Bell.

In 1907, the Chicago industrialist Herbert Mills began producing a slot machine similar to Liberty Bell known as the Operator Bell. Interestingly, bell slot machines were often stationed in just about any barbershop, brothel, bowling alley, saloon and even cigar stores by 1908.

Charles Fey didn’t stop with Liberty Bell. In 1895, he developed another slot machine called 4-11-44. This one was even more successful, especially at local saloons.  With the popularity of this machine Fey called quits to his mechanic job in order to start factory production of his gambling machines. Instead of selling them, Fey opted to rent the machines to saloons and other establishments with the profits being split 50:50.

In 1898, Fey developed the Card Bell, the first 3-reel slot machine to ever payout in cash coins. Other machines developed by Fey include the Klondike, Three Spindle, and Draw Poker. He was also responsible for inventing the trade check separator.

Today, the term “the godfather of slots” is credited to Charles August Fey not only for inventing the slot machine but also for popularizing the game itself.

Unfortunately, most of Fey's original slot machines were lost during the Great San Francisco Earthquake of 1906. The original Liberty Bell machine survived and is now part of the Fey Collection on permanent exhibit at the Nevada State Museum.

The Rise of Fruit Slot Machines

Industry Novelty Co. started producing Bell Fruit Gum in 1907, creating a new era of slot machines. In the following year, Herbert Mills capitalized on the popularity of those machines by producing the so-called “bell” fruit slot machines through his Mills Novelty Company of Chicago.

The characteristic symbols of the fruit gum machines included bars, apples, oranges, melons, and cherries. To go around anti-gambling device laws, these slot machines didn’t give cash as payouts; they instead paid our fruit-based gums.

If you love seeing those colorful bars and cherry symbols on slot machines, you can thank the likes of Herbert Mills for popularizing them. Originally, the industrialist included the image of a stick of chewing gum alongside the fruit symbols. The gum pack photo was soon replaced by a stylized Mills company logo.

The jackpot concept was created around 1916 by the Mills Novelty Company of Chicago. This is the condition when the combination of certain symbols forced the slot machine to regurgitate all the coins inside it.

The Golden Age of Slot Machines

During American Prohibition (1920-1933), the bell slot machines were transferred in large numbers to speakeasies where alcohol was illegally peddled.

Against all odds, slot machines actually thrived during this era, with cash coin prizes being introduced. This period is often referred to as the “golden age” of slots.

Nevada Greenlights Gambling

The 1930s was a truly interesting time for the world of gambling. Gambling was becoming increasingly popular despite countrywide ban. In response, the state of Nevada made gambling legal in 1931, the first ever US state to take this bold move.

Suddenly, the slot machine found fertile soil to flourish. The Flamingo Hotel in Las Vegas was the pioneer, installing the first slot machine in the early 1940s. That’s how American mob sensation Bugsy Siegal demonstrated to the casino industry that slot machines can be a truly lucrative business.

In post-WWII America, most local governments, states, and municipalities saw a big tax opportunity: gambling proceeds. With the legalization of some forms of gambling more people indulged in this activity.  By taxing the earnings states could acquire more funds. Accordingly, this led to exponential growth of slot machine manufacturing, followed by increased popularity among players.

Slot Machines in the Age of Electronics (Bally)

Slot machines graduated from fully mechanical devices in 1963 when Bally Technologies produced Money Honey, an electro-mechanical device. Up to this point, Bally was only well-known for producing pinball tables.

Many exciting changes and features came with Honey Money. First, it allowed for automatic payouts and was the first-ever slot machine to feature a no-bottom hopper. It delivered payment of up to 500 coins without the need for a slot machine attendant.

In addition, that machine enabled multi-coin bets with larger payouts accompanied by all kinds of sounds and flashing lights. This was a groundbreaking discovery for gambling operators, which is, coincidentally, the reason why the side lever went the way of the dodo.

Bally soon improved how the machine handled coins and brought in more reels. This allowed players to bet in higher denominations and insert more coins per spin, which essentially translated to bigger jackpots and higher payouts for players.

Riding on the popularity craze of its slot machines, Bally Technologies had an IPO in 1975 and started trading on the NYSE as the first gambling-related listed company.

By the time the state of New Jersey legalized gambling in 1978, Bally had garnered over 90 percent of the slot machine market. They increased the number of symbols in each reel, inadvertently decreasing the odds of winning for the customer. The max bet was raised from $5 to $25, and finally to $100.

To counterbalance traction lost due to decreased odds, Bally commissioned a computer engineer to raise the jackpot size. It’s the same computer programmer who first incorporated the random number generator (RNG), allowing the outcomes to be genuinely random. In 1984, Bally was awarded United States Patent No. 4,448,419 for the RNG concept.

The Emergence of Video Slots

The late 1970s and early 1980s ushered in the use of computer chips in slot machines. In 1976, Fortune Coin Company, then a Las Vegas-based gaming company designed and produced the first-ever true video slot according to OnlineCasinoGems.

The prototype of this video slot machine incorporated a logic computer board and a display made from a modified Sony Trinitron color receiver. The first video slots were installed in the Hilton Hotel in Las Vegas.

The Fortune Coin video slot machine was soon given the green-light by the Nevada State Gaming Commission, finding its way into most casinos in the downtown area and the Strip.

Two years later, International Game Technology (IGT) bought the Fortune Coin Company and its video slot business.

The Influence of the Internet

The early 1990s saw the onset of all kinds of internet activities. People could now send emails, check websites, and even chat. This presented a huge opportunity for the casino industry, especially video slots.

Accordingly, Microgaming developed the first online gambling software in 1994 soon after the Free Trade and Processing Act by Antigua and Barbuda was enacted. This legislation enabled the establishment of online casinos.

Internet Gaming Inc. (ICI), powered by Microgaming, was the first-ever online casino.  It launched in 1995. This was followed by InterCasino in 1996, with more casino sites appearing in the next decade or so. Online slots became some of the most popular games available on these sites.

The popularity of online casinos, and by association online slots, was cut short when the US Senate enacted the Unlawful Internet Gaming Enforcement Act (UIGEA) in 2006. This basically made it illegal for US residents to remit or withdraw money from online gambling sites.

The Future of Slot Machines in the US

As more US states, including Philadelphia and Illinois, continue to pass laws and regulations recognizing online casinos, we are likely to again see slot games gain traction with American players.

In addition, we expect to see a significant increase in slots machines across various public spaces across the US (airports, bars, lounges and more). For example, the city of Chicago recently commissioned a study which concluded that installing slot machines on location could lead to 37 million dollars in additional revenue for the local government. This shows how local municipalities are warming up to the idea of allowing for the gambling industry to strive. 

With disruptive technologies like virtual reality, blockchain, and artificial intelligence (AI) finding their way into the gambling industry, we are poised to see another exciting stage in slot machine history.