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The term "Slot Machine" originally applied to automatic vending machines as well as gambling devices. In the 20th century, the term became restricted to the latter. The first such gambling devices in the United States were mere novelties that did not return coins but presented gambling opportunities, such as two toy horses that would race after a coin was inserted. Such devices set on a bar in a saloon attracted wagering between patrons.

Charles Fay built the first actual slot machines in 1887 in a shop in San Francisco. He built nickel slot machines by hand and rented them to the local gambling halls. His first machine was not cruder and bulkier than modern slot machines, nor did its reels carry the fruit symbols commonly used today. His original slot machine, called the Liberty Bell, was somewhat smaller than modern machines, and operated in a similar way.

Fay's slot machines were a huge success, and he couldn't build them fast enough in his small shop. Many larger gambling supply manufacturers tried to buy the manufacturing and distribution rights, but Fay refused. However, in 1907, Herbert Stephen Mills, a Chicago manufacturer of arcade-like machines, began production of a machine very similar to Fay's Liberty Bell. The machine Mills produced was called the Operator Bell. By 1910, slot machines were much more common.

Forces of morality, and then of law, opposed the operation of slot machines. Throughout the 1920s, slot machines were popular in many of the United States, especially in resort areas, and they continued to be popular into the Great Depression years of the '30s. In the late 40's, Bugsy Siegel added slot machines to his Flamingo Hilton hotel in Las Vegas. Originally, the slot machines were used as a way to entertain the wives and girlfriends of high rollers, but revenue from the slot machines soon began supplanting that of the table games. In the mid 1980's the popularity of slot machines and table games were on par with each other, but by the 90's slot machines had taken over and now account for over two-thirds of casino revenue in the US.