Video lottery terminal
A VLT is similar to a slot machine, in that each terminal is a stand-alone device containing a random-number generator. Each terminal is connected to a centralized computer system that allows the lottery jurisdiction to monitor game play and collect its share of revenue.
The outcome of each wager on a VLT is random. VLT operators are not able to program the total amount wagered, or payouts, through the central computer system. A minimum percentage payout usually is written into that jurisdiction's law. That percentage is realized not by manipulation of the game, but by adjusting the expected overall payout.
Some lottery devices that appear to be VLTs actually are computerized scratch-off lottery tickets, as the terminal does not contain a random number generator (RNG); the results that are displayed are controlled by the central computer. These devices display results from a fixed pool.
New Brunswick was the first province to introduce VLTs. They were introduced in the early 1990s, and as of 2005 all provinces, except British Columbia and Ontario, permit VLTs due to the massive revenues they generate. Ontario has recently passed legislation that could allow VLTs in the near future. VLTs are located in licenced establishments that are not accessible to minors.
The prevalence of VLTs in Canada has prompted criticism both domestically and abroad. Some critics contend that the massive social costs brought on by VLTs actually cause the provinces to lose a greater sum than is generated by the machines. VLTs are accepted by the majority of the Canadian population however because any harm associated with VLTs is theoretically isolated with the abuser.
The payouts offered by VLTs are invariably poor. For example, in Las Vegas some high denomination slot machines offer a theoretical payout of approximately 98 cents for every dollar they take in (98%) with 75% returns found on penny and nickel machines in areas of no competition. By contrast, Canadian VLTs pay out 74% of their intake, on average. In Saskatchewan, the VLTs pay out 93% of total cash in.
United States 
Lotteries in the U.S. were considering VLTs as early as 1981, when a planned experiment with 20 machines by the New York State Lottery was scrapped, after the Attorney General determined they would be illegal. A similar plan by the New Jersey Lottery died in 1983 after ties between state officials and VLT manufacturers raised conflict of interest concerns.
The first VLTs in the country were installed in late 1983 by Bellevue, Nebraska as part of its municipal lottery. Eleven other local lotteries in Nebraska followed suit, until the state banned the devices, effective 1985.
South Dakota became, on October 16, 1989, the first state to adopt VLTs. In a unique arrangement with private industry, the machines are owned by private companies but monitored by the South Dakota Lottery via a centralized computer system that assures the integrity of the games. South Dakota imposes a substantial tax on the net income (gross income minus player winnings) of the games. Beginning in 1992, four attempts were made to repeal South Dakota's video lottery; all were widely rejected by public votes. Most recently, in May 2006, petitions were filed containing over 21,000 signatures in order to place the issue on the November ballot; voters again agreed to keep video lottery, by a 66%-34% margin.
Other US jurisdictions which have had legal video lottery include Oregon, South Carolina (formerly), Rhode Island, Delaware, New York, Ohio, West Virginia, Louisiana, Maryland, and Montana. Of these, Delaware, Rhode Island, and West Virginia formerly participated in a shared VLT game, Cashola.
The U.S. Virgin Islands also has a legalized video lottery, managed by Southland Gaming of the Virgin Islands. The local governments in St. Thomas and St. John use the funds generated by the video lottery to fund various government programs on the islands; primarily focusing on educational efforts.
Class II Gaming (Racinos) 
Racinos differ from traditional VLTs in that all video lottery games are played on a Class II gaming machine. Class II games are played in a traditional Bingo format.
In Montana, VLT-type poker, keno and bingo machines are legal to operate in the private sector. Since the 1970s, Montana was the first state, other than Nevada and New Jersey, to legalize machine gaming.
Keno and Bingo machines were first introduced in Montana in 1975. Although subject to legal challenge, these machines were deemed legal in 1976 after the Montana Supreme Court ruled in favor of Treasure State Games, a private company that brought the first games of this type to the state. (See Justia.com - Treasure State Games v. State of Montana)
Unlike in other States, the gaming devices are not under the jurisdiction of the State lottery. In 2011 the State legislature added another class of games, so-called "line games", to the list of approved games.
All establishments licensed for the on-premise consumption of alcohol within the State of Montana are allowed to operate such machines provided they have the correct permits. In addition, there are some Montana establishments (such as some truck stops) that do not possess "on-sale" licenses but hold "grandfather" licenses allowing them to operate gaming machines.
The maximum prize awarded on these machines is $800, with a maximum bet of $2 per hand. The legal age to gamble in Montana is 18, although people under the age of 21 cannot gamble in bars.
As in Louisiana, the games in Montana are not technically part of its lottery.
Class III Video Lottery 
Currently, only Oregon and South Dakota employ Class III gaming technology into their VLT games. The devices operated in Montana are also Class III machines, but as they are not connected to the Montana Lottery are technically not "video LOTTERY terminals". This means that unlike any of the Class II states, Oregon and South Dakota lottery players compete against a house edge rather than other lottery players. This is the same type of gaming offered in Nevada, Connecticut and Atlantic City as well as in the majority of tribal casinos. Currently, the state of Oregon offers its players a 91-95% payout on each of its games. South Dakota and Montana law specifies that payouts must be greater than 80%, although in reality actual payouts in these two jurisdictions are around 88 - 92%.
Most US jurisdictions do not allow VLTs and those that do have attracted the same criticism the Canadian provinces have. However, some non-players have expressed tolerance for the machines.
Other terminology 
In certain jurisdictions, VLTs are known as Video Gaming Devices (VGD) or Video Slot Machines along with "Video Gaming Terminal (VGT)". Most VLTs are multi-game devices, allowing the players to select, from an on-screen menu, the game(s) they wish to play. They are also known as poker machines and fruit machines in some areas.
See also 
- "Video lottery plan scrapped". New York Times (via LexisNexis). September 11, 1981. p. B6. Retrieved 2012-06-02. (subscription required)
- Asher, James (March 6, 1983). "Bets are off: Many say politics killed New Jersey's high hopes for video lottery". Philadelphia Inquirer (via NewsBank). Retrieved 2012-06-02. (subscription required)
- Sutton Jr., William W. (March 17, 1985). "A bet on video games pays off for one town". Philadelphia Inquirer (via NewsBank). Retrieved 2012-06-02. (subscription required)
- Video lottery information page
- VLTs: Nova Scotia's Billion Dollar Gamble An investigative website on VLTs in the Canadian province of Nova Scotia prepared by University of King's College students.