Progressive Jackpot is a jackpot (highest payoff) for a gaming machine, where the value of the jackpot increases a small amount for every game played. Often, a set of gaming machines is linked to one progressive jackpot.

Progressive Jackpot Meter

The amount of the jackpot is shown on a meter as a money value. Usually, the jackpot can only be won by winning the combination with the highest payoff, e.g. a royal flush at a video poker game or five of the most valuable symbols (lemons, cherries, alligators, it could be anything) on a slot machine. Once a player wins the jackpot, the jackpot resets to a preset minimum level.

The amount on the jackpot progresses (increases) a small amount for every play on a connected machine. The amount that the jackpot advances by is set by the casino or other machine owner ("the house"). For example, on a machine whose house edge is 5%, a generous jackpot contribution might be 1% (one fifth of the expected profit). The house is prepared to contribute some of the profit of a jackpt linked machine because players are attracted by the:

1. relative novelty of progressive jackpots (generally, only a small fraction of the house's gaming machines will be connected to a progressive jackpot)
2. the constantly changing meter, often displayed on large, fancy LED displays
3. eventually, the large amount of the jackpot will induce more players to play the game.

Qualifying

Usually, only players playing maximum credits per play will qualify for winning the jackpot. All players (regardless of the number of credits per play) will contribute to the jackpot. As a result, a game that requires 10 credits to qualify for the progressive jackpot will tend to have the progressive jackpot rise to higher levels (relative to its break-even level) than a game that requires only 5 credits per play to qualify. For example, many players who find themselves playing three credits per play might reason that five credits per play is not much more than three, so why not play five and qualify for the much higher jackpot payoff. However, there is a much bigger gap between 3 and 10 credits per play, so at a game where 10 credits per play are required for qualification, more players will stick with 3 credits per play, and contribute to the progressive jackpot without ever winning it.

The break-even point

In some games such as video poker, it is possible to compute an optimal play stragegy, and hence the frequency for each payoff, including the frequency of a jackpot. From these the break-even point can be computed. At reset and when the progressive jackpot is less than the break-even point, there is a negative expected value (house edge) for all players. When the progressive jackpot is at the break-even point, the game is fair. (If the qualifying player were to play an infinite number of games, s/he would break even). When the jackpot is above the break-even point, then the game has a positive expected value for the qualifying player. In other words, if the player were to play a very large number of plays (several tens of thousands for a typical game), it would become more and more likely that s/he would make a profit. Whether a profit is realised or not is of course a matter of chance, but the more plays made while the progressive jackpot is higher than the break-even point, the more likely it is that the player will end up ahead.

Player advantage

Unusually, a player that chooses only to play when the progressive jackpot is higher than the break-even point, is still making money for the casino, and so is welcomed and may earn complimentary gifts. Consider a game with a 5% house edge, and a 1% progressive jackpot contribution. This game is 4% in favour of the house. What happens is that the one percent jackpot contribution is "saved up" in a sort of account, to be won by a lucky or skillful player. The mechanics of the jackpot ensure that while some jackpot winners will be taking home more than they put into the machines, any amount that they win over an above a four percent loss is made up from the jackpot "account".

An example may make this clearer. Suppose the game has percentages as above and the jackpot resets to $5000. Each credit is $1, and five credits are required to qualify for the jackpot. That means $5 per play to qualify for the jackpot. From the house's point of view, 4%*$5 = 20c is profit, and 1%*$5 = 5c is contributed to the jackpot. Let's say the frequency of the jackpot with perfect strategy decisions is 1 in 50,000. That means that the player will bet 5*50,000 = $250,000 on an average game cycle. Because the base game has a 5% house edge, the player will get 95% of that back, or $237,500, in payoffs ranging from nothing to getting his/her money back to the $5000 minimum jackpot payoff. A further $0.05 * 50,000 = $2,500 is contributed towards the jackpot. The average cost of buying a jackpot is $250,000 - $237,500 or $12,500. Hence the break even point for this game is $12,500 + $5000 = $17,500. Note that without the final jackpot payoff, the return is worse, such that you'd expect to be $17,500 behind (down 7%) when you won the $5000, to be $12,500 behind at the end (down 5%). If the jackpot is $17,500 on a perfectly average cycle, you would expect to be $17,500 down just before hitting the jackpot, and you would break even after the jackpot. If the jackpot was say $23,000, then you'd expect to be ahead by $23,000 - $17,500 after an average cycle, or $5500 ahead, for a $5500/$17500*100% = 31.4% return on your expected $17,500 investment. Of course, it might take 2 or 3 or 5 times as long as average to win a jackpot (costing the player a lot of money); that's why it's called gambling. There is also a chance that the player will win the jackpot in fewer than the expected number of plays ("it might come early").

Let's take the $23,000 winner case. Joe makes his $5500 and is happy with the month's work. But Joe only played 50,000 games, contributing only 1% * $5 = $0.05 per game. That's a total of $2500. In order for the jackpot to progress by $12,500, other players must have played games totalling $12,500 - $2500 = $10,000. Most likely, it wasn't 200,000 plays at $5 per play, because on average the jackpot goes off every 50,000 plays. More likely, there were almost a million plays by people playing mostly $1 per game, contributing their cent each to the jackpot, but not able to win it. Let's say it was a million plays at $1 each. Of that million plays, about 20 received the highest payoff (say $800 for a royal flush), but even with all those payouts, the house still got its 4% edge (5% for the base game, less 1% for the progressive jackpot). So the way to look at it is this: the house still made $10,000 off Joe ($12,500 less Joe's own jackpot contribution of $2500), made $50,000 from the other players, but kept $10,000 of that in the jackpot "account" for Joe to win. So while the house made $12,500 from Joe and $40,000 from other players, Joe made $5500, because he had the $5000 reset jackpot amount (part of the house 5%), plus the $10,000 from the other players, and the $2500 of his own jackpot contributions, to offset the "cost of buting the jackpot" ($12,500), for an overall profit of $5500. When you think about it, the house is organising for other players to pay Joe, via the jackpot "account".

Savvy gamblers are aware of this, and sometimes organise groups of players to play machines where the progressive jackpots are favourable. Such teams can sometimes displace ordinary players, making the machines unavailable jusst when they are at their most interesting. As a result, some casinos have a policy of "no team play", and will eject players suspected of playing in such teams.