Progressive Jackpots: How They Work and How They Are Paid

Progressive jackpots have become an essential part of the casino gaming experience, both online and in land-based establishments. These exciting games offer players the chance to win money, often reaching into the millions of dollars. This article delves into the world of progressive jackpots, exploring how they work, the different types available, and how they are paid out to lucky winners.

What Are Progressive Jackpots?

Progressive jackpots are amounts offered as the top payouts for particular casino games that continue climbing until a player wins. They are available on a wide range of games, but the most common ones are tied to slot machines. Progressive jackpot games are available at online casinos as well as in land-based casinos.

The appeal of progressive jackpots lies in their ever-growing prize pool. As players place bets on these games, a small portion of each wager is added to the jackpot, causing it to increase until someone eventually wins. This dynamic aspect of progressive jackpots has made them incredibly popular among casino enthusiasts.

How Progressive Jackpots Work

Progressive jackpots build over time until a player wins them, then they reset to a predetermined level and start building again. The way they build is by taking a percentage of every bet made on the game the progressive jackpot is associated with and adding it to the jackpot amount.

Here's a fictitious example so you can see exactly how a progressive jackpot works. The example uses numbers that are easy to compute for the purpose of this discussion. These numbers are not necessarily representative of a real-life progressive game but are an accurate representation of the mechanics.

We'll use a slot machine with an attached progressive jackpot as an example. The slot machine takes 10% of every wager and places it in the progressive jackpot amount. After the jackpot is won, the amount is reset to £100,000. The reset amount is generally accumulated from the contributions to the overall progressive jackpot.

In this example, 1% is used to fund the next reset amount and 9% goes straight to the progressive amount until £100,000 is accumulated in the reset account. Once the £100,000 is accumulated, the entire 10% is used for the climbing jackpot. Another way this can be handled is the casino or software provider, whoever is running the progressive, fronts the £100,000 and the 10% goes toward that until it is taken care of.

Then the progressive will continue growing. There are a few other ways the reset amount can be handled, but the important thing to know is the seed amount is taken from the wagers on the game just like the progressive amount.

Betting Requirements for Progressive Jackpots

Most progressive jackpot games require maximum wagers to be eligible for the jackpot amount. So if you hit whatever the required combination or hand is to win the progressive but haven't wagered the correct amount, you won't win the progressive.

This would have to be one of the absolute worst feelings in the world, so make sure you both understand the minimum wagering requirements to be eligible for the progressive and are always betting at that level or higher when you play on a progressive game.

The most common example of this is a video poker game with a progressive jackpot. On most machines, you have to wager five coins to unlock the top payouts. So if you are playing a quarter video poker machine, the total bet at five coins would be £1.25 per hand.

If you bet less than this and hit the top paying hand, you will only win the amount listed for your number of coins, not the progressive jackpot. If you aren't comfortable betting as much, you should play for a lower amount per coin.

Differences Between Local and Wide Area Progressive Jackpots

From a player's perspective, there really isn't a significant difference between a local progressive jackpot and a wide area progressive jackpot. A wide area progressive jackpot is one shared across games, usually slot machines, across a range of properties. For example, you might find the same progressive slot machine games in numerous land-based casinos or in online casinos running the same software platform. If they are part of a wide area progressive, they each feed into the same jackpot and payout from the same jackpot pool.

When there are hundreds or even thousands of players playing the same machines at the same time, the progressive amount is bound to go up faster than local progressives.

A local progressive jackpot is one that is usually tied to a single game. An example that many players have seen of a local progressive is a progressive game of Caribbean Stud poker. The progressive is usually only tied to the individual game or group of the particular games at the particular casino.

Types of Games with Progressive Jackpots

The most common types of games that have progressive jackpots are slot machines. While the slots that are most likely to have progressives are the newer video slots with multiple pay lines, often with bonus rounds and other features, progressives can be found on all types of machines.

In addition to slots, progressive jackpots can also be found on video poker machines and table games. Common table games with progressive jackpots include Caribbean Stud Poker, roulette, and Let it Ride. Most of the ones that have progressives have them tied to a side bet.

Progressive Jackpots: Online and Land-Based Casinos

You'll find great progressive jackpot games both online and at land-based casinos. Anything the casinos can do to get more people to play they will usually do, and huge progressive jackpots help get players in the door or in the virtual door.

So as long as progressive jackpots continue helping the casino make money, you will continue to find them at all different kinds of casinos.

Popular Progressive Jackpot Games

Here is a table with some of the most popular progressive jackpot games both online and off. The amounts continue to climb and reset, so the popularity of these games goes up and down with the amount of the top payouts.

Should You Play Progressive Jackpot Games?

This is a question that only you can answer. There are progressive jackpots that are life-changing amounts, but the odds of ever winning one are so high that millions of players will never hit one in their life. However, many players view all their gambling as an entertainment expense and don't count on winning anything in the long run.

If you have the money to play with and can view your gambling as an entertainment expense, then, by all means, try to hit a big progressive jackpot. As a side note, there is nothing wrong with either gambling as an entertainment expense or gambling while trying to find an advantage against the casino.

Many casual casino players will play a few casino games instead of going out to eat or taking in a movie. If you were going to spend a couple of hundred on a night out, why not use it instead to take your chances at your favorite slot machine or table game? Even if you play the games with the highest house edge, you will occasionally leave a winner.

How Are Progressive Jackpots Paid?

The process of paying out a progressive jackpot can vary depending on the specific game and casino involved. In the case of wide-area progressives like Megabucks and Wheel of Fortune, it's the slot machine manufacturer, like International Game Technology (IGT), that pays the jackpot.

IGT leases these machines to the casinos, and from the casino lease payments, the percentage of coin-in that goes toward the reset amount and progressive jackpot, and whatever other deals are involved, IGT covers the jackpots, with annuities or lump sums. In a sense, people who play the big progressives also pay the winners.

For local and in-house progressive jackpots, the casino is usually responsible for paying out the jackpot. When a player wins a local or in-house progressive jackpot, the casino will typically verify the win, ensure there were no machine malfunctions, and then pay out the prize.

In some cases, the casino may have to contact the game manufacturer or an insurance company to verify the win and arrange for payment. This process can take several hours or even days, but it ensures that the jackpot is paid out fairly and accurately.

Taxes on Progressive Jackpots

When you win a progressive jackpot, be prepared for taxes to be taken out of your payout. Depending on your location and the specific rules of your country or state, the casino may be required to withhold a certain percentage of your winnings for tax purposes.

For example, in the United States, the casino will withhold roughly a third of any major progressive jackpot for federal taxes. If you live in a country that doesn't tax gambling winnings or has a tax treaty with your home country, you may still have to work with your home country's government to retrieve your funds after the fact.

Conclusion

Progressive jackpots offer the thrill of potentially life-changing winnings, making them an enduringly popular choice among casino players. With a range of different types available, including local, in-house, and wide-area progressives, there's a progressive jackpot game to suit every player's taste and budget.

Whether you're a casual player looking for entertainment or a serious gambler seeking an advantage, understanding how progressive jackpots work and how they are paid can help you make informed decisions about your gameplay. Good luck, and may the odds be ever in your favor!