Payouts in progressive slots are generated from a shared jackpot pool, funded by a percentage of each player's wager. As players bet, the jackpot grows and can be linked across multiple machines and casinos, leading to larger potential payouts. When a player wins, the payout comes from this collective pool while the casino retains a portion as profit. This system fosters competition for significant prizes and enhances player engagement, making progressive slots an exciting option for gamblers.