The House Doesn't Always Win, I Guess

March 14, 2012 5:00 PM

The Man Who Broke Atlantic City Don Johnson (no, not that one) won nearly $6 million playing blackjack in one night, single-handedly decimating the monthly revenue of Atlantic City’s Tropicana casino. Not long before that, he’d taken the Borgata for $5 million and Caesars for $4 million. Here’s how he did it.
posted by modernnomad (98 comments total)

Related: Foxwoods is somehow managing to lose money, despite being a casino.
posted by gerryblog at 5:22 PM on March 14, 2012 [4 favorites]

This is good to know on my next million dollar gambling trip I can set the rules of the house.
posted by stbalbach at 5:22 PM on March 14, 2012 [1 favorite]

For what doth it profit a man to gain a $20,000 ride on a private jet if he drops $200,000 playing poker? The right “elite player” can lose enough in a weekend to balance a casino’s books for a month.

Memo to journalists: I know all the games with cards and shuffling look the same to you, but please take note that poker is not played against the house.
posted by 0xFCAF at 5:26 PM on March 14, 2012 [17 favorites]

It hurt. Largely as a result of Johnson’s streak, the Trop’s table-game revenues for April 2011 were the second-lowest among the 11 casinos in Atlantic City.

The microscope required to see the violin I'm playing costs eleventy billion dollars.
posted by Awakened at 5:32 PM on March 14, 2012 [56 favorites]

JOHNSON SAYS HIS LIFE hasn’t really changed all that much. He hasn’t bought himself anything big, and still lives in the same house in Bensalem. But in the past year, he has hung out with Jon Bon Jovi and Charlie Sheen, sprayed the world’s most expensive bottle of champagne on a crowd of clubgoers in London, and hosted a Las Vegas birthday bash for Pamela Anderson.

More proof that money cannot buy taste.
posted by googly at 5:36 PM on March 14, 2012 [50 favorites]

Memo to journalists: I know all the games with cards and shuffling look the same to you, but please take note that poker is not played against the house.

No, but the house does take a rake of every hand, and a bad player who bets a lot will generate a lot of money in the rake. But, yes, poker was a bad example of this.
posted by codacorolla at 5:36 PM on March 14, 2012 [3 favorites]

The signs of a five-year slump are evident all over Atlantic City, in rundown façades, empty parking lots, and the faded glitz of its casinos’ garish interiors.

Yah, I mean, have you ever been to Atlantic City? That describes its heyday, too.
posted by entropone at 5:37 PM on March 14, 2012 [27 favorites]

I belive herrdoktor's advice goes equally well for Atlantic City as it does for Vegas.
posted by radwolf76 at 5:45 PM on March 14, 2012 [8 favorites]

Man if I were that guy I'd explain that my winnings were all due to finding a "secret level" in the casino, "only accessible via a sewage pipe below some fanged verdure."

Also, the rapid growth of the gambling "industry" in this country is another mile marker on the highway to the Pit of Mediocrity.
posted by serif at 5:45 PM on March 14, 2012 [5 favorites]

So, here's my question about the house's models that determine how much free crap they can offer to high rollers while still ensuring that they'll profit:

aren't they based on assumptions - basically guesses - about the player's performance? you take a guess and run it through a bunch of statistics, you still wind up with a guess, as far as i'm concerned.

thoughts, mefi?
posted by entropone at 5:51 PM on March 14, 2012

...and all the New Jersey MeFites stumble all over themselves to point out the bit about Atlantic City's rundown facades being supposedly caused by the recent economic downturn.

It's the norm there, people...
posted by girl Mark at 5:55 PM on March 14, 2012

A little disappointing, actually... he played perfect strategy, but lots of people can and do learn to play that. He negotiated the rules, as a desirable high-stakes player, to almost, but not quite, a 0% house edge. Technically, the house still had a very slight advantage.

That means he basically got lucky on a a bunch of coin tosses. Well, yawn me a cloud: rich guy gets richer by being fortunate enough to have a massive winning streak in the casinos. I mean, it's a hell of a streak, yeah. Remarkable. But he didn't beat the system, like a skilled counting team can just barely manage; he just got damn lucky.
posted by gilrain at 5:57 PM on March 14, 2012 [10 favorites]

Survivorship bias.
posted by wuwei at 6:02 PM on March 14, 2012 [1 favorite]

gilrain, the article implied there was more to it that he did not reveal.
posted by stbalbach at 6:03 PM on March 14, 2012

Also, the rapid growth of the gambling "industry" in this country is another mile marker on the highway to the Pit of Mediocrity.

do elaborate please
posted by This, of course, alludes to you at 6:03 PM on March 14, 2012

Same question here, do they assume anyone worth calling a high roller blackjack player will atempt to play optimally? Do they build a statistical model based on a particular players hands played?

It should be simple for the casino to run asimulation based on random sampling with the correct constraints( a six deck shoe and soft 17) and know what their edge is. The problem is that while in a simulation of millions of hands the results will Even out, actual play may only be hundreds of hands and the results will be all over the map. That is why it is important to keep people playing.
posted by Ad hominem at 6:05 PM on March 14, 2012

stbalbach: gilrain, the article implied there was more to it that he did not reveal.

There really can't be more to it... right?

Where did it imply that? The article was very coy at the start, but by the end it seemed clear he'd just waited until the casinos wanted his business enough to offer him excellent odds (the article clarifies that, after all the math, the house still had a sliver of an edge). Unless you suspect he cheated (under huge amounts of scrutiny), then there really can't be more to the story.

I sure he, like every lucky gambler, wants to think it was cunning and hard skill, but I see no way it could be.
posted by gilrain at 6:07 PM on March 14, 2012

...decimating the monthly revenue of Atlantic City’s Tropicana casino

Decimating means reduced by a tenth.

No, but the house does take a rake of every hand, and a bad player who bets a lot will generate a lot of money in the rake.

The rake is the same whether the players are good or bad. If everyone folds quickly there are more hands per hour. If people stay in there is more of a rake per hand, but in the end that hole eats a lot, but the skills of the players have little to do with how much.
posted by cjorgensen at 6:09 PM on March 14, 2012 [2 favorites]

Decimating means reduced by a tenth.


Over 90% of actual usage disagrees.
posted by Glomar response at 6:15 PM on March 14, 2012 [38 favorites]

Rake at high stakes poker is also quite small - at even mid stakes they just charge an hourly rate per seat and it's not very much. In terms of money on the table, the rake is the highest at the lowest stakes.
posted by RustyBrooks at 6:15 PM on March 14, 2012 [2 favorites]

Decimating means reduced by a tenth.

As much as I love the etymology of this word, it really does not mean that anymore. Unless your some kind of seriously hardcore prescriptivist.
posted by malphigian at 6:16 PM on March 14, 2012 [6 favorites]

do elaborate please

well this is all "from the hip" but my impression is that casinos reliably earn money, and that's about all they do. A lot of other business models are highly profitable AND manage to contribute to society. So, comparatively, gambling is a shitty, worthless industry, and a society that goes deep into gambling is probably eating its own hands and feet.
posted by serif at 6:19 PM on March 14, 2012 [16 favorites]

However, seeing as Atlantic City casinos would all be out of business if the writer was using the modern definition of "decimating" literally, the prescriptivists amongst us can simply choose to interpret it archaically and still have it make perfect sense, assuming a literal context: "Wow, casino business is down 10%, eh? That must be tough!" All others can assume the writer is exaggerating. Works fine for everyone!
posted by gilrain at 6:20 PM on March 14, 2012

A little disappointing, actually... he played perfect strategy, but lots of people can and do learn to play that. He negotiated the rules, as a desirable high-stakes player, to almost, but not quite, a 0% house edge. Technically, the house still had a very slight advantage.

He also had the 20 per cent discount on losses, so his upside was significant greater than this downside - assuming that isn't being included in the nearly 0 per cent house edge already. He had an essentially even chance to win $500,000 or lose $400,000. Provided you can afford to lose $400,000, that's a good deal.
posted by kithrater at 6:22 PM on March 14, 2012 [6 favorites]

i would personally interpret casinos as 'entertainment' which kind of muddies the whole "contributing"/"not-contributing" thing
posted by This, of course, alludes to you at 6:23 PM on March 14, 2012 [2 favorites]

The casino's previously offered lifetime discounts to this guy. Basically, if he lost a million, they'd let him slide on $100k. But this was cumulative, so if he won 5M, he'd have to lose 5M before they'd give him the discount again. To lure his business, the casinos changed the rules and offered him a larger discount and would only count the wins/losses for a single day of gambling. On top of that, they lowered their edge by changing a few rules.

From the casinos point of view, the rule change alone would not be an issue, since they still had a slight advantage. If he played perfect, they'd make a little bit of money. If he made mistakes, they'd make a lot of money. However, when they changed the discount rules, they gave him a huge advantage. Let's say he played for $10M worth of hands each day. If the odds were 50/50, on some days he'd break even, on others he'd win, and on others he lose. However, on the days he lost, the casino would forgive 20% of his losses. If he could alternate winning and losing $1M/day, he'd break even a the table but claim 200k in discounts/debt forgiveness on days he lost. That would be the same as winning 100k/day.

If he set a goal of playing each day and quitting when he either wins or loses 5M, he's be earning 500M/day.

The casinos have obviously caught on that he's not just lucky, they stupidly handed him a huge advantage. Hopefully he has the discipline to walk away while he's up and not keep playing now that the house has the advantage again.
posted by Crash at 6:23 PM on March 14, 2012 [10 favorites]

That means he basically got lucky on a a bunch of coin tosses. Well, yawn me a cloud: rich guy gets richer by being fortunate enough to have a massive winning streak in the casinos. I mean, it's a hell of a streak, yeah. Remarkable. But he didn't beat the system, like a skilled counting team can just barely manage; he just got damn lucky.

I think the article does a very poor job of explaining this, but there is more to it than that. I haven't run the numbers, but it looks like he worked out a deal that is statistically advantageous by, essentially, being better at statistics than the casinos (or, perhaps, as the article hints, considering the whole picture better when the casinos rely on their computer models).

The significant factor is that he has two advantages: 1) The very close to even odds (49.75% over the long run) and 2) the 20% loss discount over $500,000 per trip. Neither will do much for you by itself, but together it looks like they give him the edge. Essentially, if he shows up and bets big, he'll lose a bunch of money sometimes and win a bunch sometimes (losing slightly more than he wins). However, since he can cash out of the losing situations paying only 80% of the total loss, when he wins big, the win will more than offset the loss. Obviously, this is risky and requires a lot of capital to smooth out the wins and losses. I suspect he ended up making a few losing trips, which the article doesn't mention, but perhaps he was lucky too and happened to win big three times at the three casinos.
posted by ssg at 6:23 PM on March 14, 2012 [8 favorites]

please take note that poker is not played against the house.

Rake certainly is a factor, especially in casino poker. Money put on the table tends to go drift toward the tube into the house's coffers. Many, many competent players would be winners if not for the rake.

Even in poker, the house always wins.
posted by Yakuman at 6:25 PM on March 14, 2012 [1 favorite]

i would personally interpret casinos as 'entertainment' which kind of muddies the whole "contributing"/"not-contributing" thing

If people could get addicted to DVDs i might agree, but putting casinos in the same category as entertaining media elides how hard casinos can liquidate a vulnerable person, and there are a lot of these people.

maybe I'm wrong, maybe casinos are just as progressive as software or heavy industry, but I know for sure I'd rather live in palo alto or seattle (or even raleigh) than atlantic city or vegas. It's just correlation, but places known for gambling are known for little else.
posted by serif at 6:37 PM on March 14, 2012 [1 favorite]

poker is not played against the house.

Casinos like poker, because *they cannot lose*. They rent you a table, and they make a decent bit of money off that.

That means he basically got lucky on a a bunch of coin tosses.

Oh no, it's far better than that. He got a bunch of $1 coin tosses where he lost $.80 if he lost, but won $1 if he won.

The casinos gave him a break, figuring he couldn't play well enough to take advantage of it. Unfortunately for them, he could play basically perfect blackjack, and spotting him a soft 17 was far too much with a 20% loss rebate in play -- esp. game to game.

So, basically, he fucked the casinos, they begged for his business anyway, he set incredibly stupid terms, and the casinos were stupid enough to say yes.

And he raked damn close to 15 million from three casinos before they bought a clue.

My hat's off to him. He found an edge in a casino and took them to the cleaners. Well done, sir.
posted by eriko at 6:44 PM on March 14, 2012 [25 favorites]

Decimating means reduced by a tenth.

***

Over 90% of actual usage disagrees.

How... ironic.
posted by entropone at 6:45 PM on March 14, 2012 [4 favorites]

At the height of his 12-hour blitz of the Tropicana casino in Atlantic City, New Jersey, last April, he was playing a hand of blackjack nearly every minute.

This is actually a heck of a lot slower than I would've guessed based on those winnings.
posted by inigo2 at 6:47 PM on March 14, 2012

My hat's off to him. He found an edge in a casino and took them to the cleaners. Well done, sir.

I believe the "bunch of coin tosses" angle is still valid. Despite all the set up, it was just as likely this could instead have been the story of "rich person loses $12 million in crazy casino scheme gone awry", at least if Johnson hadn't stuck to his implied $400,000 loss limit. ("If you got to [$500,000 in losses], you would stop and take your 20 percent discount. You’d owe them only $400,000.”)

I imagine Johnson had originally intended to play conservatively and grind out $500,000 profit per day for a few weeks (as per Crash's post) until the casinos caught on, but instead got a series of lucky streaks and decided to go all in ("So my philosophy at that point was that I can afford to take an additional risk here, because I’m battling with their money, using their discount against them.”).

So, a bit of both. Rich guy convinces casinos to do something stupid, and then rich guy makes a series of fantastic coin tosses.
posted by kithrater at 6:56 PM on March 14, 2012 [4 favorites]

Certainly, the cart of discounts and conditions he scored himself, way out of the ability of poor players to negotiate, were a huge role in his streak, which means this is less about the little guy beating the casino as much as a stinking rich guy bilks an even richer company that was trying to bilk him. Although the way he did it might be interesting technically, the story of his triumph is pretty meh.

I am not a gambler, but I have my own suspicions about his streak. A little-known fact about cards is that most people don't shuffle them nearly enough to obtain good randomness. When you play Dominion a bit, a game in which each player's cards are shuffled many timed in a single game, this begins to become evident, although other games will illustrate it too. Particularly Ticket to Ride is vulnerable to improper shuffling; its cards are collected and sorted by the players during play, discarded in sets, and going through the draw deck twice during play isn't uncommon. (I've become paranoid about this enough that I'm kind of infamous with my friends over shuffling in TtR.)

When I saw that he specified a hand-shuffled shoe as one of his requirements, I came to guess that he's probably been observing casino shuffling policies through the window of observing the cards dealt in games. There could well be some other factor at work, since he wouldn't elaborate upon all the advantages he'd negotiated, but that may be part of it. When you've shaved the house advantage really thin, all you need is a tiny advantage to come out ahead.
posted by JHarris at 6:56 PM on March 14, 2012 [5 favorites]

gilrain: "He negotiated the rules, as a desirable high-stakes player, to almost, but not quite, a 0% house edge. Technically, the house still had a very slight advantage.

That means he basically got lucky on a a bunch of coin tosses."

Yes and No. Mostly No.

He also negotiated a deal where if he lost up to $500k he would get back 20%. This reduction in risk combined with the razor thin house edge he negotiated gave him the (slight) advantage. But indeed, he did have a good streak going.
posted by Bonzai at 7:12 PM on March 14, 2012 [1 favorite]

"As much as I love the etymology of this word, it really does not mean that anymore. Unless your some kind of seriously hardcore prescriptivist."

I see what you did there, and it makes you a terrible terrible person.

/Hamburger
posted by Blasdelb at 7:16 PM on March 14, 2012 [4 favorites]

Unless your some kind of seriously hardcore prescriptivist.

Or a disgraced Roman Legionary.
posted by ovvl at 8:05 PM on March 14, 2012 [5 favorites]

He arranged for himself the world's highest ever denomination 2 for 1 for a blackjack coupon.
posted by localroger at 8:06 PM on March 14, 2012 [1 favorite]

Blasdelb: Sadly, the your/you're mix up was just a run of the mill shameful typo. Even I am not that much of a descriptivist.
posted by malphigian at 8:06 PM on March 14, 2012

Can someone explain to me how card counting can be against the rules? That seems to this non-card player like you've declared "thinking" against the rules. I've never been able to wrap my head around that one. "You can play, as long as you promise not to think. And if we catch you thinking, we kick you out."
posted by neuromodulator at 8:08 PM on March 14, 2012 [5 favorites]

Why did he call the dealer instead of getting an extra card on each of his four winning hands? The article says that Johnson had four hands: two were eight and three, two were eight and two. So he could have drawn a card on each of them without any risk, while the dealer had 15 and was at risk of going over. What advantage was there in calling?
posted by Joe in Australia at 8:10 PM on March 14, 2012

Also PS it makes me sad that my dinner tonight was rice and salt, so that I can save money to pay off a debt that is a fraction of what this guy is better per hand. Fucking christ I miss going out to eat. I don't want a private jet trip or to party with Bon Jovi. I just want some goddamn baked tortellini without feeling guilty about the money spent.
posted by neuromodulator at 8:16 PM on March 14, 2012 [4 favorites]

and maybe a yacht
posted by neuromodulator at 8:17 PM on March 14, 2012 [6 favorites]

neuromodulator: Can someone explain to me how card counting can be against the rules?

It's not against the rules. However, since they can throw out anyone they want, they choose to throw out (successful) counters rather than consistently lose money to them. I mean, otherwise it'd become a reasonable career choice.

However, most "counters" are just people who read a news story, practiced a bit at home, and now think they're going to win a bunch of money. And casinos love these people. The few who actually succeed, assemble a team, etc.? They get banned when caught. The rest just get their money happily taken.
posted by gilrain at 8:23 PM on March 14, 2012 [4 favorites]

It's just correlation, but places known for gambling are known for little else.
posted by serif

This isn't true. They are also known for rampant drug and alcohol abuse, prostitution, money-laundering, and organized crime.
posted by PareidoliaticBoy at 8:40 PM on March 14, 2012 [2 favorites]

Why did he call the dealer instead of getting an extra card on each of his four winning hands? The article says that Johnson had four hands: two were eight and three, two were eight and two. So he could have drawn a card on each of them without any risk, while the dealer had 15 and was at risk of going over. What advantage was there in calling?

I suspect the author has no idea how blackjack works and described what occurred quite poorly. Johnson essentially split his way to four 8's on the table, then landed a 2 or 3 on each of them. In each case he didn't "call" (that doesn't mean anything in blackjack terminology) or more aptly stay. What he did was double down, which means doubling the wager in exchange for receiving one and only one additional card. So he effectively got a single hit of one card on all four and the dealer busted. It doesn't matter in this case what that third card was for each of the 4 hands because the dealer busted. Doubling down in this situation is essentially a blackjack no brainer that puts you at a big statistical advantage over the house for that hand.
posted by drpynchon at 8:41 PM on March 14, 2012 [1 favorite]

Bad poker players tend to be gamblers... and gamblers will always seek out good poker players to gamble against. They understand the poker superstars play the odds, they understand they're putting their money on foolish hands. They're there to gamble, to test their luck against skill.

So Casinos will comp good poker players rooms and meals and more, because of the rich idiots who want to play against them. I know of one art-history major who made major cash and gave all of his friends comped suites at the CT casinos simply because he could do stats and probs on the fly in his head. The casinos knew he was doing the poker equivalent of counting cards... but because they took a rake rather than an opposing bet, they were happy to have him around.
posted by Slap*Happy at 8:56 PM on March 14, 2012

I ran a Monte Carlo simulation where each hand has a 49.75% chance of winning and assuming he either stops at losing $400k or the casino stops him at winning $4M, $5M, or $6M (depending on the casino) his odds of coming out ahead were 8.9%, 7%, and 5.6% respectively. Assuming he has no unreported losses, the probability of this happening is .03%.
posted by jewzilla at 8:59 PM on March 14, 2012 [8 favorites]

Right. This particular story is more about a streak and the law of large numbers than it is about the favorable rules he negotiated for. His winnings cannot be accounted for by what the article describes. However, over time playing as he was, he'd have done well for the reasons explained in the article and by others above.

"Decimating means reduced by a tenth."

Which, as far as I can tell, is probably not far from what actually happened. I was surprised to see that total revenues for AC casinos is only on the order of 250M a month.
posted by Ivan Fyodorovich at 9:39 PM on March 14, 2012 [1 favorite]

(that's all AC casinos together)
posted by Ivan Fyodorovich at 9:39 PM on March 14, 2012 [1 favorite]

He split 8's? That doesn't sound like perfect play to me.
posted by bardic at 9:56 PM on March 14, 2012

What? Do you play blackjack? Always split 8s. Always.
posted by Justinian at 9:59 PM on March 14, 2012 [5 favorites]

"Decimating means reduced by a tenth."

Which, as far as I can tell, is probably not far from what actually happened. I was surprised to see that total revenues for AC casinos is only on the order of 250M a month.

Well, the article said that this sort of thing could wreck a whole month's worth of earning. 1/12th is pretty close to 1/10th.

So, I guess we should say dodecimating.
posted by This_Will_Be_Good at 10:05 PM on March 14, 2012 [5 favorites]

Love Mark Bowden's stuff... didn't realize it was him 'till the end, but that was a really fun read. Thanks for posting it!
posted by ph00dz at 10:16 PM on March 14, 2012

He split 8's? That doesn't sound like perfect play to me.

You're doing it wrong.
posted by drpynchon at 10:29 PM on March 14, 2012 [7 favorites]

OK, so is this what happened:
Johnson is dealt two 8s. He splits and is dealt two more cards, both 8s.
He splits each hand again and is dealt four more cards: 2, 3, 2, 3. His hands are now 8 & 2, 8 &3, 8 &2, 8&3.
He doubles each hand and gets four more cards. We don't know what they are and in this case it doesn't matter, because the dealer busted - but in theory the dealer's hand would have been matched against each of those three-card hands.
posted by Joe in Australia at 10:41 PM on March 14, 2012

At the Crown Casino in Melbourne I put a $5 chip I found on red on the spinning wheel thing. The thing came up red, so I won $10. I then put $10 on black and lost $10. Some have called me a dilettante, others a miscreant. Still others have spoken about me in hushed tones in oak-panelled rooms. Me? I just know when to call it a day, and where the chips have fallen. And as I pocketed all the complementary drinks coasters, some of them wet, my lips involuntarily threw forth a jaunty tune, and with head held high I sauntered without a care into their luxuriously-appointed gent's room, where I relieved myself voluminously and a bit of it splashed back onto my shoes. A James Bond for the modern age, but better than the Daniel Craig one? Perhaps. That isn't for me to decide.
posted by tumid dahlia at 10:42 PM on March 14, 2012 [13 favorites]

He split 8's? That doesn't sound like perfect play to me.

I know, right? 16 is a killer hand.
posted by hwyengr at 10:44 PM on March 14, 2012 [5 favorites]

I am not much of a gambler, so how exactly does betting work when you double down?

Does the initial bet work for both hands? Can you split your initial bet unevenly between the hands? Do you have to bet the same thing again on the second hand? Can you bet less?
posted by This_Will_Be_Good at 10:45 PM on March 14, 2012

What? Do you play blackjack? Always split 8s. Always.

No. It depends on the number of decks your're playing with, and whether the dealer is showing a face card/ace.
posted by karathrace at 10:50 PM on March 14, 2012 [3 favorites]

I am not much of a gambler, so how exactly does betting work when you double down?

Does the initial bet work for both hands? Can you split your initial bet unevenly between the hands? Do you have to bet the same thing again on the second hand? Can you bet less?

No, no, no. Doubling down just means you double your bet and get one more card in your current hand - generally you do this if the odds heavily favor you winning, like if you have a 10 or 11 with your original two cards. Splitting is what you're referring to, and I think you do have to bet again, at least the table minimum for the second hand.
posted by LionIndex at 10:53 PM on March 14, 2012

Fascinating. I'll accept the claim he isn't card counting at face value. But how in the world do the casinos know he isn't counting cards? Do card counters exhibit an anomalous betting strategy that results in large unexpected wins? Or something else? Curious.
posted by Xoebe at 12:23 AM on March 15, 2012

No. It depends on the number of decks your're playing with, and whether the dealer is showing a face card/ace.

No it doesn't; not unless the casino is offering a rules variant where surrender is allowed. Without surrender, you split 8s no matter how many decks are being used and whether or not the dealer is showing an ace.

How many places still offer surrender at all their tables? I've seen some but usually only at tables where the rules are changed in other ways to compensate to the point where you are much better off at a standard no-surrender table.
posted by Justinian at 12:34 AM on March 15, 2012

But how in the world do the casinos know he isn't counting cards? Do card counters exhibit an anomalous betting strategy that results in large unexpected wins?

There are a lot of different card counting systems but the one thing they have in common is that you generally need to vary your bets a great deal. You want to bet very low amounts when the deck is unfavorable and very high amounts when the deck is favorable. So the house gets very suspicious if you are, like, betting $100 a hand for a while and then jacking up your bet to $5,000 a hand for a while and then going back to $100 a hand when the decks are shuffled. And so on.

You have to do this because even if you count cards perfectly and never make an error, the edge you get against a multi-deck shoe is very small. So if you are always betting the same $$$ the number of hands you have to play to make any sort of money is very, very high. The only way around that is to vary your bet so that your average bet on a loss is lower than your average bet on a win.

That's why you hear about successful card counting rings. Because you don't have one person hugely varying bets. You have people at tables betting low amounts until the deck is favorable then signaling a compatriot who sits down and bets a much higher amount. That's a simplistic form, anyway. I'm sure there are all kinds of other details they throw in. But at base it's just a way to bet low amounts when the shoe is full of little cards and high amounts when the shoe is full of high cards.
posted by Justinian at 12:43 AM on March 15, 2012 [10 favorites]

neuromodulator: Can someone explain to me how card counting can be against the rules?

gilrain: It's not against the rules. However, since they can throw out anyone they want, they choose to throw out (successful) counters rather than consistently lose money to them. I mean, otherwise it'd become a reasonable career choice.

However, most "counters" are just people who read a news story, practiced a bit at home, and now think they're going to win a bunch of money. And casinos love these people. The few who actually succeed, assemble a team, etc.? They get banned when caught. The rest just get their money happily taken.

Yeah, it really irked me in the article where it all but implied "He wasn't card counting, he was winning legitimately" which... card counting is totally legitimate.

To expand on gilrain's point that further, card counting sounds great in the movies- 21, Rainman, etc- but in practice it's at best a wage job even for those who are really good at it. Back in the days of a single-deck shoe, or a multi-deck shoe that isn't continuously shuffled... you could grind out $10-20/hour by counting cards and being stunningly good at it, unless you had a big bankroll to get started at a higher limit table. Card counting basically can turn the most advantageous blackjack table (where all the rules are in your favor) from about a 1% house edge to a 1% player edge, which over hundreds of hands pays out... a liveable but unspectacular wage. Unless you have the cash to card count all but unerringly at a very high limit table, even a $100 limit table would only net you $50/hour, and require a bankroll of thousands of dollars to buffer against occasional losing streaks. And honestly, if you were that good at card counting, had that kind of laser-like focus... shit, learn to be a programmer and make as much or more!

So card counting is not and has never been illegal provided you aren't being assisted by other people or by electronic devices. But as far as I am aware, card counting now is all but ended for anyone other than those tricked by a Hollywood movie to think they're going to win big, since anything beyond a $5 table is going to have multiple decks, continuous shuffling machines, and even computer betting analysis that can out-count better than any player and thus determine when a human is adjusting their bets akin to a card counter.

On preview:

Xoebe: Do card counters exhibit an anomalous betting strategy that results in large unexpected wins? Or something else? Curious.

That is exactly what they do. A computer/cameras scan the table, tracking the cards, bets, and results on every hand. When a player starts increasing/decreasing the size of their bets in accordance with card counting strategy, the computer can notify a casino employee/pit boss that the person is likely counting cards. The pit boss can then make a judgment call to end the player's game, and tell them to cash out and leave.

The nature of card counting is simple: the biggest advantage the player has is that dealer has to hit on certain card values, and thus when there are a lot of high cards left in the deck, the dealer's odds of busting go up. Card counters track how many low cards (2s through 6s) versus how many high cards they've seen (10s, Aces, and face cards), to get a number like +7 or -5, which gives them a sense of the way the remaining deck is leaning. When the count goes in the player's favor, he starts increasing his bet from the table minimum bet to some multiple of that value, usually depending on how steep the count is.

Since the computer is "playing along", any player who is even moderately correlating to a "perfect" card counters strategy is likely counting cards. Which again, is totally legal, but they'll ask you to leave if you're doing so successfully and at a higher limit table.
posted by hincandenza at 12:44 AM on March 15, 2012 [7 favorites]

And after I last previewed, I see Justinian slipped in and answered Xoebe's question, so I'll add this: the "compatriot" strategy is probably no more illegal but is definitely heavily, heavily discouraged over the lone wolf card counter... but when I'd go to Vegas I used to employ the "unknowing compatriot" strategy, of looking around and seeing a bunch of players get up from a table with a look of disgust from a recently shuffled CSM, because hey- hot table! :)

And even with this move, and playing near-flawless basic strategy... I'd probably put 20-30 hours of blackjack in over the weekend and be up a whopping ~$200 total for the weekend playing at $15/20 tables.
posted by hincandenza at 12:52 AM on March 15, 2012 [4 favorites]

I've read that successful card counting is actually very difficult; the edge is so thin that a single mistake per hour can wipe out all of the player's winnings. Players who have a wildly incorrect count and bet high at the wrong moment actually lose more than players who aren't trying to count at all.

It's fairly easy to tell when a gambler is following a system, but casinos actually encourage the ones who aren't good at it because they generate more profits for the house. Only the ones who demonstrate that they can maintain the system for hours without mistakes get asked to leave.
posted by ceribus peribus at 1:07 AM on March 15, 2012

As someone who is knowlegable about certain kinds of games, but generally clueless about others, I have to say how much I love threads like this, and the contributions of people like hincandenza in them. Yay!
posted by JHarris at 1:30 AM on March 15, 2012

I think the nest T-shirt should be "Come for the gambling, stay for the discussions of probability and grammar!"
posted by GenjiandProust at 1:51 AM on March 15, 2012 [4 favorites]

"How many places still offer surrender at all their tables?"

The one I play blackjack at, but more often Holdem.
posted by bardic at 2:25 AM on March 15, 2012

So what does 'literally decimated' mean'?
posted by Segundus at 2:33 AM on March 15, 2012

So what does 'literally decimated' mean'?

Good question. I'm thinking, having sex with ten people?
posted by criticalbill at 3:16 AM on March 15, 2012 [1 favorite]

Great thread btw

Worth comparing with the one beneath the original story
posted by criticalbill at 3:17 AM on March 15, 2012

Well, he obviously loves gambling, and the casinos probably won't be stupid enough to make the same mistakes again, so he'll probably lose all his money in the end anyway.
posted by delmoi at 3:33 AM on March 15, 2012

Well, he obviously loves gambling, and the casinos probably won't be stupid enough to make the same mistakes again, so he'll probably lose all his money in the end anyway.

Maths. He loves maths. As discussed in the article, when the odds aren't offered to him he doesn't play for such a long time the casinos start cold calling him.
posted by jaduncan at 3:47 AM on March 15, 2012 [4 favorites]

If he set a goal of playing each day and quitting when he either wins or loses 5M, he's be earning 500M/day.

I started running simulations to find the results of different strategies.

Playing to win/lose $5m a day with $0.1m a hand, and over enough days you end up at a loss of around a bit over $0.5m a day (assuming you'll win 49.75 per cent of hands). However, if you play to win/lose $0.5m a day with $0.1m a hand, over enough days you end up with a win of around $0.35m a day.

For $5m win/loss, you'll play an average of around 2200 hands a day before getting a result. For $0.5m win/loss, you'll only play an average of around 22 hands. You use your advantage, the 20 per cent loss discount, much more often if you only play to $0.5m. Waiting around for a long enough streak of wins or losses to get you to $5m will have you fall victim to the house's miniscule edge.

You get a similar result if you keep it at a $0.5m win/loss, but reduce the hand size to $0.01m - that produces around an average $0.055m loss each day, with around 2200 hands played per day on average.

A good strategy seems to be to play a $0.1m hand and quit at $1m win or $0.5m loss each day. That produces an average $0.39m win a day for an average of 45 hands played.

So it's not just the house edge and loss discount which are important, but the bet limit too.
posted by kithrater at 3:57 AM on March 15, 2012 [2 favorites]

Bleh.

Win of $0.035m a day, win of $0.039m a day.
posted by kithrater at 4:00 AM on March 15, 2012 [1 favorite]

Maths. He loves maths. As discussed in the article, when the odds aren't offered to him he doesn't play for such a long time the casinos start cold calling him.

It doesn't really take much math skill to do what he did. In order for the casinos to even know about him, he must have spent a lot of money at them in order to get the reputation as a whale that they could harpoon. People who really want to make money with math go work at Goldman Sachs.
posted by delmoi at 5:06 AM on March 15, 2012

Over 90% of actual usage disagrees.

Their in car wrecked.
posted by srboisvert at 5:07 AM on March 15, 2012

Very smart guy.

2 observations:

1. Some people have kinda explained it, but what the big coup here was that he negotiated a deal where he could risk 80 cents to win a dollar at even odds. That's a winner.

2. In most places, shills are allowed at poker tables. So you are playing against the house more times than you know.
posted by Benny Andajetz at 6:34 AM on March 15, 2012

Wonder what Nucky Thompson has to say about all this...
posted by VicNebulous at 6:36 AM on March 15, 2012 [1 favorite]

In Poker, there are two kinds of shills who play for the casino: those that play with their own money and those that play with the casino's money. The casino prefers the first kind. In both cases, they get paid an hourly wage by the casino the play. Their main purpose is not to make money directly for the casino. Their main purpose is to keep the table from breaking if there is a temporary lull in the number of players at a table.

Frequently if a poker table gets under six players, some players will leave because the size of pots becomes smaller (particularly at low limits where there are more people in a pot) and they have no idea how to adjust their game for the short-handed table. That quickly causes the table to break and everyone to leave. The purpose of the shill is to keep the game going until another player shows up who can fill the seat. As long as the game is going, there is the rake being dropped in the slot from the pots, which is how the casino makes its money.

Shills have a frustrating existence, because the casino controls what tables they play at and when they need to move another table. So a shill can be at a table playing with their own money, with five people who are just throwing money at her. Another person shows up and the casino moves her to another table where there are five rocks who are there to lose as few dollars as possible and get the free drinks. The casino continues to make money from the rake, while the shill has gone from a very profitable game to one where it is very difficult to make money.
posted by Xoc at 8:47 AM on March 15, 2012 [4 favorites]

Unless you suspect he cheated (under huge amounts of scrutiny), then there really can't be more to the story.

I sure he, like every lucky gambler, wants to think it was cunning and hard skill, but I see no way it could be.

gilrain, you're subtly implying he must have cheated. I agree, although I'm not sure you do! (Cheated, beat the house at its own game; potayto, potahto.)
posted by IAmBroom at 9:36 AM on March 15, 2012

well this is all "from the hip" but my impression is that casinos reliably earn money, and that's about all they do. A lot of other business models are highly profitable AND manage to contribute to society. So, comparatively, gambling is a shitty, worthless industry, and a society that goes deep into gambling is probably eating its own hands and feet.

serif, several previously-impoverished Native American reservations would disagree strongly, and with solid data.
posted by IAmBroom at 9:41 AM on March 15, 2012

Interesting that with the casinos all being on the watch for card-counting, they still have tables that are billed as "single-deck blackjack", which basically just screams "hey! it's easier to count cards at this table!" Is there really any other reason to have that variation?
posted by LionIndex at 10:06 AM on March 15, 2012

Interesting that with the casinos all being on the watch for card-counting, they still have tables that are billed as "single-deck blackjack", which basically just screams "hey! it's easier to count cards at this table!" Is there really any other reason to have that variation?

It's more of an illusion; they have rule changes that negate a lot of that. They take away soft-17, being able to split and split again, etc. They also reshuffle very short into the deck, so counting basically doesn't work.

The reason there are not a lot of single deck tables is because so much time is taken up shuffling. The faster the house can deal hands, the faster they can make money.
posted by Benny Andajetz at 10:12 AM on March 15, 2012

Well they blew up the Chicken Man in Philly last night
And they blew up his house, too
Down on the boardwalk they're ready for a fight
Gonna see what them racket boys can do

Now there's trouble busin' in from out of state
And the DA can't get no relief
Gonna be a rumble on the promenade
And the gambling commissioner's hanging on by the skin of his teeth

Everything dies, baby that's a fact
But maybe everything that dies someday comes back
Put your makeup on, put your hair up pretty
And meet me tonight in Atlantic City
posted by TheWhiteSkull at 10:21 AM on March 15, 2012 [1 favorite]

Gambling houses are immoral.

I'm not talking about the morality of gaming. I could care less about that. Lose your money the way you want.

No, they are immoral because of the notion that card-counting is cheating. Right there is the rotten moral code at the centre of any gambling establishment. The only thing left to a player is naked ability and persistence. Deciding some specific aspect of that ability is "cheating" shows are corrupt gambling houses really are.
posted by clvrmnky at 7:53 AM on March 16, 2012

When Johnson insisted that he wanted to keep playing, he says, the pit boss pointed out of the high-roller pit to the general betting floor, where the game was governed by normal house rules.

It seems to me that this is where the casino made the biggest blunder. He wants to keep playing, which would likely mean that he would revert to the mean (that is, lose at least some of the money back to the casino), but the casino, in effect, solidifies his winnings. I mean, the casino still has the edge, albeit a small one, and he's not going to just go out and sit down at a low-stakes table and keep playing, so they should have let him keep playing.
posted by Dead Man at 9:54 AM on March 16, 2012

The point is that the casino didn't have the edge under the rules he negotiated.
posted by Justinian at 12:56 PM on March 16, 2012 [1 favorite]

Maths. He loves maths. As discussed in the article, when the odds aren't offered to him he doesn't play for such a long time the casinos start cold calling him.

No, he was a lucky gambler. The casino still had the edge counted hand-for-hand, albeit a very small one. The remaining advantage comes from the 20% loss discount, but for the hands played after he was substantially ahead, the loss discount was of no advantage to him. After he won a million (and probably sooner), he should have left the table and the city, so he could restart at zero and have less to lose until the rebate kicked in. If he had a statistical advantage, it came from doing many many trips to the casino, and he was uite clearly willing to keep playing even when the odds were no longer advantageous.

He got a bunch of $1 coin tosses where he lost $.80 if he lost, but won $1 if he won.

That would have been a huge advantage. But he didn't get the loss discount per hand, but per trip to the casino.

Besides, even if he had a total edge of an astonishing 0.5%, that's $500 per hand. With one hand per minute, he should expect to play 8h/day for five weeks to reach six millions.
posted by springload at 4:58 PM on March 16, 2012

Yeah. It's odd that people aren't seeing this. Dead Man is right—the casino was wrong to cut him off, because he didn't have an advantage that was even remotely likely to account for his winnings and, had he kept playing, his winnings would have reverted to mean.

However, there's a couple of caveats to that. First, we don't know if we've been given all the information about what he negotiated. Second, the casino may have cut him off for other reasons.
posted by Ivan Fyodorovich at 5:19 PM on March 16, 2012

The math is pretty simple; the casino gave him a discount which reset after a relatively short period of play, instead of being applied to his lifetime action. This means that short-term wins were not discounted, but short-term losses were. In a game where the house edge is only 1% or so without the discount structure that is a huge long-term edge if they let you keep doing it. Pretty much the same, as I posted upthread, as an insanely high denomination free bet coupon; you might win or lose any particular one, but if they keep giving you coupons you'll win in the end (and the long run probably isn't even that long in this case).
posted by localroger at 6:12 PM on March 16, 2012

because he didn't have an advantage that was even remotely likely to account for his winnings and, had he kept playing, his winnings would have reverted to mean.

This is, literally, the gambler's fallacy.
posted by Justinian at 7:08 PM on March 16, 2012 [1 favorite]

After he won a million (and probably sooner), he should have left the table and the city, so he could restart at zero and have less to lose until the rebate kicked in.

This, however, is true. Any time he got ahead sizably he should have left the casino so that the 20% discount on losses would kick in again when he returned.
posted by Justinian at 7:11 PM on March 16, 2012

"This is, literally, the gambler's fallacy."

No it isn't. I'm not asserting that the probability of any individual event is changed as a result of his lucky streak. His winnings are cumulative.
posted by Ivan Fyodorovich at 8:57 PM on March 16, 2012

But going forward the mean his winnings would vary around would be his current stake, not his beginning stake. At the roughly 50% odds he negotiated he would be no more likely to lose a bunch of money in short order than he would be to win even more money in short order.

You're saying that because he already won a bunch of money he was more likely to lose a bunch of money soon than to win even more. That's not the case; he was just as likely to keep winning. Hell, if he was smart he'd leave immediately and come back to lock in those winnings and reset the 20% loss covering number.
posted by Justinian at 10:13 PM on March 16, 2012

Decimating means reduced by a tenth.

As much as I love the etymology of this word...
posted by malphigian

Decimation occurred when a group of soldiers performed badly in battle, and as punishment they were commanded to select by lottery one tenth of their comrades, and then kill them. I think that would leave all of the other nine tenths dispirited, or in today's parlance, decimated.
posted by StickyCarpet at 4:47 PM on March 17, 2012