How Do Video Lottery Terminals Work?

There is a conflict of definitions on the Internet for the phrase "video lottery terminal". Before you can understand how a video lottery terminal works, you have to know what someone means when they say "video lottery terminal". This confusion arises for a variety of reasons but mostly regional differences in idiom, the way people choose to use their words.

In Canada, the phrase "video lottery terminal" is used to describe what look like video slot machines to people in the United States. But wait, in Oregon the official state lottery game Website uses "video lottery terminal" to describe what look like popular video slot machine games, including the well known "Davinci Diamonds". And yet if you look for articles that explain the differences between video lottery machines and slot machines, you'll find explanations of machines that don't look anything like slot machines.

Or do they?

Let's take a look the semantics before we get into the mechanics.

What Is a Lottery?

A lottery is a game where the players pool their wagers together and draw winners of different prizes. There is usually a grand prize followed by smaller prizes. Of course, marketing campaigns lead to the use of various names for the top prize amount. And legislation has changed how grand prizes are awarded so that more people have a chance of winning the top, final, largest prize in the pool.

The word "lottery" finds its roots in an ancient Germanic word *khlutom, meaning "to cast lots". The casting of lots, however, was a very ancient custom used in many areas for religious, spiritual, or social purposes. The practice usually consisted of everyone placing a token inside a container and then an official pulling one token from the container. The token might represent a person or a choice.

From the casting of lots to decide who should get a certain piece of land or who should represent a village in a tribal council to who should win a prize is a long lost and well-forgotten path. All we know is that today lotteries are everywhere and they are still used to divide limited resources among many people. Outside of gambling lotteries are used to select people to purchase high-demand tickets for events such as concerts. Lotteries have also been used by television game shows to select contestants who participate in the shows.

Before state governments began legalizing them, gambling lotteries were run by criminals and usually referred to as "numbers". You played the numbers by betting that a certain combination might come up in some specific context. Perhaps your local numbers game was based on scores in popular sporting events. One illegal lottery operation was based on the Biblical verses read on the air by radio station preachers in the south.

When the advent of legalized lottery games state governments work together with licensed gaming companies to create honest, random drawings of numbered balls from isolated, regulated machines. The drawings are televised so that everyone can see what the winning numbers are at the same time, although they are also reported in the news media within 24 hours.

Whereas the criminals running the games set the prizes based on what they could afford to pay out before legalized lotteries came along, modern legal lottery gaming prizes are determined by the amount of money that has been pooled together by the players. Unclaimed prizes are either rolled over into the pool for the next drawing or eventually retired and paid to the state governments to fund programs to benefit their citizens.

The argument for state-run lotteries is that everyone benefits from the lottery regardless of who wins the prizes. Although this is a more figurative reality than fact, it at least spreads the lottery wealth farther than if the games were owned and operated by individuals or groups, such as criminal gangs or corporations.

What Is a Terminal?

In computer technology, a terminal is a machine used to connect to a computer in a remote location. The terminal contains only as much technology as is required to make the connection and provide a means of communication with the computer. The programming and data were stored and managed by the computer, not by the terminal.

The first terminals were teletype machines. They looked like typewriters but they were feed rolls of paper rather than individual sheets of paper. The personal operating the terminal typed messages to the computer. The computer responded by typing its own messages on the same terminal. The typed output was referred to as a log of the session.

It was not long after teletype terminals were introduced that programmers began to design interactive games for their computer systems. These early games included chess, checkers, and logical puzzles. The games were only intended for fun and in some cases were used to teach programming students how to write sets of instructions ("programs") for computers.

A few years after teletype terminals were introduced the first video terminals were added to the world of computers. Now the humans and computers could type their messages to each other one a single screen. The screen might scroll the way a teletype terminal did or it might deliberately position messages at very specific areas of the screen via designated row and column coordinates. The very first visual games were designed around these video terminals. Popular games included chess, blackjack, and poker.

By 1970 computers had enough memory, processing power, and video terminal capability to simulate more complicated games including mechanical slot machines. Although fully animated video graphics terminals were still 12-15 years away, advances in computer engineering for the space program made it possible for game designers to begin integrating computer technology into their products. The first video games appeared in the 1970s.

The old terminals gradually gave way to standalone personal computers and workstations. A workstation had more computing power and video capability than a home-based personal computer but that distinction only lasted about a decade, maybe a little longer. Eventually, personal computers became powerful enough that they could be networked together to perform tasks for each other. The most powerful personal computers might be designated as "servers" intended to perform special tasks for the whole network, such as maintaining shared storage or managing queued jobs for printers and other special peripheral devices.

The terminal became less of a physical device and more of a special program used to interact with a remote computer.

The Classic Video Lottery Terminal Worked as Described

The old standard descriptions of video lottery terminals aptly describe gaming machines that are networked together, where they don't select the winning combinations or prizes for players, but rather merely convey how much the players wager to the central server and report back what the player has won. This technology may still be used for so-called electronic scratch-off games, where players participate in local lottery pools.

Our Idea of Video Lottery Terminals Has Changed

In a purely technical sense, video lottery terminals today are the machines that local lottery vendors use to sell and register tickets with state lottery systems. These machines use graphical video displays to help the operators (cashiers) select the games being played and what options are selected per ticket. These machines can also scan printed tickets and check their numbers against the central lottery system's computers to determine if the tickets are winners.

In some state lottery games there is an instant win option where in addition to the numbers chosen for the main lottery the player can pay an extra fee for the lottery terminal to randomly select numbers against the numbers. These in-ticket games pay smaller prizes. If you buy a ticket for the lottery numbers 12, 17, 25, 31, 44, 53 and pay for the extra option the machine may generate 3-6 numbers from the same pool of numbers used for the lottery game. If you match any numbers from the second set against the first set you win a small prize.

Beyond State Lottery Games, Video Lottery Terminals Can Be Almost Anything

If you browse YouTube or other video services for clips showing video lottery terminals you'll find a confusing array of casino gambling machines. Some of these games look like slot machines and some of them look like video poker. Worse, looking for explanations of video lottery terminals on Bing or Google brings back a mix of descriptions of slot machines, video poker games, and lottery games you can't find anyway.

The history of video gaming is complicated and video lottery machines have been introduced and pulled from various markets over the past several decades. It's a true lottery machine if it allows the player to contribute to a shared pool of money and selects a winner from the pool of players. Otherwise, the terminology is being loosely adapted to how video gambling machines of various classes work.

Class II gambling machines include bingo games and scratch off games. Class III gambling machines include video slot machines. Video poker machines may be designated Class II or Class III depending on how they work or where they are licensed and regulated.

Although it may seem confusing, even misleading to call a slot machine a video lottery terminal, it really does make sense when you think about where the money goes in a slot game. Today's video slot machine games are programmed to pay a certain percentage "return to player". In other words, out of 100% of all the money wagered on slot machines anywhere from 80% to 98% should be paid back to players over time, according to the various laws authorizing the use of slot machine games.

In a traditional state lottery, the money flows in a similar way. Most of the money is paid back to lottery players in the form of small and large prizes. Your probabilities of winning a huge jackpot in a lottery are the same as for winning the base jackpot: 1-in-X-million, depending on how many possible permutations or combinations of lottery numbers there are in the game. Your chances of winning a screen full of top-value symbols in a slot machine game work the same way regardless of how much you wager.

Today's video slot machines operate in one of two different ways. In Europe, the machine generates a random number and on the basis of that number creates a screen filled with symbols that match some preconfigured result table. In North America, the slot machines use a small group of numbers to select positions (slots) in virtual reels (tables of symbols) stored in their memories. The virtual reels are designed the same way the old mechanical reels were but they may contain more slots and produce more possible combinations ranging into the millions than mechanical slot machines were capable of producing. These larger sets of possible combinations make it possible to award much larger prizes because they are much less likely to be won.

And yet slot machine games may also pay "progressive" jackpots. These jackpots are secondary games and in many cases are paid from pools of funds contributed by many slot machines. Progressive jackpots can run into the millions of dollars and the chances of winning one of those jackpots are similar to the chances of winning a state-run lottery. However, to be eligible to win a progressive jackpot you may be required to make a minimum bet above the smallest available bet on a slot machine. Some progressive jackpots are only paid to players who make maximum bets.

Whereas you have to stretch your imagination to see how a normal slot machine sort of acts like a random draw lottery, it's easier to see how the progressive jackpots are awarded on a random draw basis.

The classic distinction that older gambling articles make between slot machines and video lottery machines is usually based on where the random numbers are generated. If the random numbers are generated on a remote machine, or if the prize is awarded from a shared pool, the game acts more like a state-run lottery. If the gaming machine is generating its own random numbers and paying prizes from the money players pay into it, it's less like a true lottery and "just a slot machine".

Video poker and video blackjack games depend more on player knowledge of sets of rules and skills in making good choices but they also use random numbers to determine some factors in the games.

Other electronic games, like keno and bingo, are more like traditional lottery games than the slot machines and video poker or blackjack machines.

The Phrase Video Lottery Terminal Has Become Almost Synonymous with Video Gambling

Whatever dignity of distinctiveness the phrase "video lottery machine" once held has been almost completely subverted by widespread access to articles, legislation, and videos that use the phrase in multiple ways. But the prevalence of "video lottery terminal" when used to describe what are essentially slot machine games on the Internet suggests that the traditional distinctions have been lost, probably for good, except in the special jargon used to manage relationships between lottery retailers and state lottery computers.


The randomness of the game and the player's lack of control or influence over the outcome appears to be the deciding factor in why a state or provincial government uses the phrase "video lottery terminal" to describe what the common folk across America call a slot machine. In that much slot machine games work just like lottery games: you pays your money and you casts your lot and hope your number comes up, even if it's just a random number that tells the computer which pretty pictures to display on the screen for you.