A slug is a counterfeit coin that is used to make illegal purchases from a coin-operated device, such as a vending machine, payphone, parking meter, transit farebox, copy machine, coin laundry, gaming machine, or arcade game. By resembling various features of a genuine coin, including the weight, size, and shape, a slug is designed to trick the machine into accepting it like a real coin.
Though slug usage is a violation of the law, prosecution for slug usage is rare due to the low value of the theft and the difficulty in identifying the offender. Offenders in casinos are most likely to be prosecuted, as casinos have high levels of video surveillance and other security measures, and are more proactive in enforcement.
Losses caused to vendors by slug usage may be the result of the loss of sales, the absence of revenue following the distribution of merchandise that was obtained at the vendor's expense, or the loss of cash that is distributed by the machine for overpayment with slugs. Honest customers may also suffer losses when change returned to an honest customer for overpayment is in the form of a slug rather than a genuine coin.
In some cases, a slug can be a genuine coin used in another country, with or without knowledge of the user. One example was the interchangeable use of Australian and New Zealand 5c, 10c and 20c pieces in both countries, from 1967 until 2006 (when New Zealand coins were redesigned). These coins were of the same material and size with near identical obverses, so could circulate outside their home country for some time, although the New Zealand coins were worth about 20% less, potentially resulting in a small gain (to those passing them) in Australia and a similar loss in New Zealand. The Canadian quarter was also accepted by at least some US vending machines interchangeably with the US quarter until at least the start of the new millennium. The usefulness of this to offenders varied greatly over time; during the 1970s and 1980s, the Canadian and US quarters were very similar in value, but in the 1990s the Canadian quarter was worth as little as 16 US cents.
In the UK, during the late 1990s some coin operated slot machines would accept two Austrian Schillings glued together as if they were a £1.00 coin. Seeing as the two original coins had a net value of under £0.10 at the then-current exchange rate, this "trick" could net a profit when playing as the cost to play the machine had been reduced by over 90%. It did not take long for industry to reprogram the coin detectors to detect and reject the "Austrian Schilling trick". Not long after it was possible to buy on the internet a bag of 100 washers for under £20 that had been deliberately made to fool the machines into thinking they were £1 coins. Again profits could be made, and again the industry reacted and coin detection devices were replaced with improved ones.
Many coin operated machines in Germany would accept the 1992, 1993 and 1995 stampings of the cupronickel Estonian 1 kroon coin as a German 1 mark coin. This was profitable for users of the Estonian coins as the kroon was pegged to the mark at a fixed rate of 8:1. All cupronickel 1 kroon coins were demonetized in May 1998 and the replacement aluminium-bronze Estonian 1 kroon coin was not interchangeable with the German mark in coin operated machines.
Slugs are usually made from metals differing from those of real coins. While genuine coins in the United States currency are made from various alloys of copper, nickel, and zinc, Canadian coins are made mostly from steel with some copper and nickel, and euro coins are made from steel, nickel, and brass, slugs are frequently made from differing metals and alloys that are cheaper to obtain and mold, such as aluminum, tin, and lead.
Slugs may or may not have the face details of real coins. Some slugs that are made to match the face details may not be immediately recognizable as such to handlers, and may enter circulation.
Older, cheaper, and other low-tech machines that have fewer security measures are more likely to be defrauded by slug users. As an example, the full-mechanical machines still used today in candy machines can be fooled by a cardboard coin. Many newer machines, especially those found in casinos, have additional detection that can identify more details of coins and detect those that do not resemble real coins.