How 'Advantage Players' Game the Casinos
nytimes.com
nytimes.com
Eventually, the casinos wised up and changed it so the wagering had to be done on slots, which have terrible odds. However, we figured out early on (I was in an advantage gambler forum) that there were "double or nothing" games in the slot machine, that let you go double-or-nothing between 5 and 10 times. These counted towards wagering, and were essentially perfect 50/50 odds (no house edge) - so by always going double or nothing until the end, you could rack up most of your wagers at 50/50 even though the initial slot roll was at a much higher house edge.
I think I started with $100 deposit into a casino and probably made > $50k in the two years after that. About $40k of that went to bills and $10k became my initial poker bankroll while I taught myself to play poker professionally, which I did for the rest of grad school after the casino bonus gambling winded down (they eventually wised up to the slot machine thing too) -- and if you player poker at a high enough level and you use judicious table selection, you can always advantage gamble (because you are gambling with each other, not the house, though the house gets their cut with the rake -- so you have to win at a high enough level that you know you are beating the rake)
I was a "small time" person, just doing it on the side to earn spending money -- there were certainly other people who had many many computers, VPNs, shill addresses, etc who took those casinos for hundreds of thousands a year for those couple years.
I learned a lot about probability theory, estimated value, and the mathematics of gambling in general, gained the emotional strength to deal with high variance (the best description of playing poker professionally that I ever heard was that it was like playing a game of chess for $1, then flipping a coin for $100. In the long run that chess game is the only thing that matters, but in the short run those coin flips can be brutal). Good times.
It does sound like the site was "broken" like a fox...
Ponzi scam is akin to the "pyramid scam" -- paying early investors with the money from later generations of investors.
What the parent described is a "gather the money and go" operation.
Great quote! What books or online resources would you recommend for getting better at poker? Not looking to play professional but do enjoy the game and always looking to improve.
David Sklanksy and Harrington and Ed Miller's books are probably the best around still in terms of a comprehensive overview of the various games, especially Hold Em and Stud, the games of course change as people change styles, but the basics are there.
If you are mathematically minded or just interested in a whirlwind tour through game theory and gambling theory, I highly recommend The Mathematics of Poker by Chen and Ankenman -- but it's a pretty heavy lift https://www.amazon.com/Mathematics-Poker-Bill-Chen/dp/188607...
I've also heard good things about Applications of No-Limit Holdem by Matthew Janda but it came out after I pretty much quit playing regularly so I haven't read it.
If watching people play is more your thing there are tons of good sites out there now were good players record themselves playing and give a running commentary on their thought process as they play. It can be quite an eye opener to listen to what a good player thinks about when they make their decisions.
[1] https://www.upswingpoker.com/ [2] https://www.twitch.tv/upswingpoker
I should have done more casino whoring in the beginning, it was just free money.
I kept it pretty low-key--maxed out at $200 SNGs, but I maintained a 59.something% winrate, which was as good as anybody.
I wish it would come back, but I'm not hopeful we'll ever see what we had before.
I went a different route, though. I did the math and realized that even at a very good hourly take, I would never make very much money, and that by going up to higher stakes tables if anything I would do worse. I didn't have much hope for tournaments either.
A few years before this I had worked at a day trading firm. I don't recommend technical trading (I never could find an edge there), but then it finally "clicked" and I realized the obvious connection between the stock market and poker: you are trying to find mismatched bets where the odds are tilted in your favor.
Once I made this connection I promptly switched to the stock market and never looked back (this was over 12 years ago). It took me a while to figure out a "system" (what kind of bets to look for, how do you figure "odds" with stocks, etc.) but it has been quite profitable, even counting the Great Recession, and now I do it full-time.
So anyways, if you think you really "get" poker and are willing to put in the time it takes to get good, you may be better off switching to a game that pays much better, assuming you have an interest in business.
I know a lot of people that went the poker - day trading route, some who love it and make money. I'm not much interested in business enough to learn anything beyond P/E, and I'm still not 100% convinced that people who make money trading are doing anything but ending up on the good side of the random walk, but I accept that it's possible ;)
I also know some people that went from poker -> day trading -> fantasy sports because there's a lot more casual sports fan playing fantasy sports and making bad bets than there are traders making bad bets.
I would not recommend day trading either. A long time ago you could find arbitrage opportunities, but those have been essentially squashed out for quite some time. I have seen technical traders who claim to have a read on things, but to be honest I don't see it. (There are a number of long-term successful commodity traders, but there are not many day traders in stocks who last)
I actually do longer-term fundamental-based investing (my average holding period is probably around 2-3 years). Initially it was way less money than poker, but had the huge advantage that it scales up pretty well (at least to numbers people actually care about) versus poker where I would've been stuck making the same amount. It also has the advantage that I can do it anywhere.
I looked into fundamental investing for a while but came away with the impression that you're trying to guess what the consensus of the market will be rather than finding some "right" answer. ie you can think the price should be x but if nobody else will buy/sell at x then you're wrong.
I've instead been subscribing to the notion that price movement can be thought of as random and selling option premium accordingly (the whole tastytrade mantra) but haven't been super successful and would be interested in hearing other approaches.
My starting point is what I call the Fundamental Theory of Value Investing, the well-known belief that price eventually reflects value. Or, rather, they tend to move in tandem. You can't really prove this, but it has been observed empirically. Really internalizing this is important for sleeping well during volatile times. :)
So that means you need to find places where price doesn't currently reflect value. There's the usual list of places to look where the big players can't go, including micro and nano cap companies, low-priced companies, companies not followed by analysts, troubled companies, 52-week low companies, spin-offs, etc.
As far as fundamentals, I like reliable FCF, or better yet, what Buffett calls "owner's earnings" (slight difference from FCF). "Reliable" being a key word, and where experience and clear thinking are important. I spend 90% of my research time looking for things that will threaten cash flows.
I stay away from growth companies. The market just bids them up way too high. FB may be a wonderful company, but the current price is priced for perfection; any slip-up and down it'll go. Everybody is chasing growth, and institutional investors want to tell their LPs that they are in on the hot thing, so they buy in at any price.
You can't know the exact probabilities and odds, so the most reliable way to make money is to buy good earnings for cheap, check your downside very carefully, and let the upside take care of itself. Obviously there's a million variations on this, but they all generally require going against some consensus, which can require testicular/ovarian fortitude. For me, the most common thesis is of the form, "this too shall pass". Some sort of temporary disruption that doesn't permanently harm the business. Sometimes the dust settles in a quarter, sometimes 3 years. If I start getting a clue that I was wrong in my analysis, I get out.
I can go in more detail if you want but maybe should take it offline as people here to read about casino betting may not want their thread cluttered with this stuff. :)
Do you primarily manage your own money?
How difficult is it to achieve long term advantages over indexing?
http://www.ebay.com/itm/Beyond-Counting-Exploiting-Casino-Ga...
Here's a link to his Beyond Numbers blog:
If money is the end goal, wouldn't there be a bigger opportunity in pursuing investment strategy ideas (i.e. market inefficiencies), or working on making some process more efficient that could disrupt some industry (i.e. spam/phishing detection, or deep learning) and have better chance of long term gains. I'd think casino strategies once discovered can be mitigated over time so all that hard work will payoff temporarily?
I'd be a little careful with terminology there. Gambling addiction can be a very serious problem, while a passion/love for gambling can be fine even if you're a losing player.
On the other hand, everyone has a calling or personal interests. These may be formed under any number of formative life experiences which shape an individual's personal bias.
Perhaps in the case of this guy, it's less about the money and more about the "game". The game being the cat and mouse chase of outsmarting the casinos, winning when the odds are stacked against you.
Could this person be doing something that is better value for time for himself or society? Probably, but maybe he'd never fulfill his full potential without the right motivation/inspiration...
So it isn't just the money that motivates people like Grosjean to personally show up to dark casinos, often in the middle of nowhere, to take on the house. As you said, his earning potential would be far greater in other venues. I've met a few of these people, and while some just like "easy" money, many of them view casinos as thieving, malevolent enemies that need to be beaten by someone. The fact that they can make money at it is almost secondary.
He gets what they call RFB (room, food, and beverage) out the wazoo. He's drank more expensive wine that most sommeliers. At one point it was hard to find an expensive restaurant in Vegas I hadn't eaten at, and I only saw him a tiny fraction of the time.
He gets his plane trips to basically anywhere with a casino paid for, often in a chartered jet. A guy with a sign with his name meets him at the airport.
In most parts of the country, if you ask enough girls if they want to go with you on a private jet to a luxury suite at the Wynn, one will say yes. Not a direct perk, of course, but an attractive indirect one for a single guy.
The value of the perks is substantial. You could buy them, but it would cost a lot.
Sorry, but I don't believe you. Either your friend has a chronic gambling addiction and is filthy rich and the casinos love him as he's a walking ATM, or he or you is talking nonsense.
Because there are inefficiencies in how the casinos comp players just as there are inefficiencies in the games themselves?
Example from another industry:
In the 1990s, I flew cross country many times and racked up 5000 air miles round trip each time. Every 15 round trips, I'd cash in my air miles for a free international flight. The airlines loved me as walking ATM and were rewarding a big spender like me. Makes sense?
But guess what: All of my flight were the absolute cheapest economy class flights I could get. I had the luxury of booking my flights well in advance, and I'd tolerate bad connections to get the lowest price. A business class passenger would have paid 10 times what I paid, yet he and I would both get the same 5000 air miles.
The airlines certainly knew how much I had paid. Why were they rewarding me the same amount as the far more profitable business class passenger? As far as know, it is an inefficiency in the system (which seems to have been corrected by the airline industry in recent years).
Tbh, I'm pretty sure poker is easier for the individual and investing strategies require the support of an institution willing to stake you 8 figure sums to do so.
The other part is, there is no hiring barrier to winning at poker. Some people are going to be antisocial enough (or come from a background that is disadvantaged) to be unable to gain the kind of access/support that would permit you to play for long term stakes. (i.e. Substantial improvements in spam/phishing detection is a multiyear effort and ultimately an ongoing battle. I'm pretty sure poker is fundamentally quicker than that.)
There's another subset of people who do this who simply enjoy playing games (and poking holes in them). There's not much money in, e.g., writing bots in attempts to find optimal play for board games, but people do it anyways.
But yes, if money were your end goal, someone smart enough to pull that off could probably make more elsewhere.
I'm sure someone has scanned it in PDF form somewhere..
Then one day she noticed there was a scratch ticket where you could put the losing tickets into a raffle being held at the local casino and win a prize but you had to be present at the drawing. Well, she looked in the jar a few days before the drawing and estimated there were only about 50 tickets in the jar so she bought 80 tickets and put the losers in the jar and got her mother to put 20 in... And her mother won a trip to Las Vegas worth around $2000.
Which is the rub because people who look for this kind of thing are people who are serious about gambling and often they lose it back some other way.
I think of the many WSOP winners who immediately lose the money playing craps.
This way it doesn't look suspicious as no one altered their behavior (one early method to detect card counters was to observer changes in bet sizings as the count changes).
Honestly, many blackjack players that I see at the $5/10 tables are playing so badly that the casino wouldn't want them to have to wait for the shuffle to start getting their gamble on.
Casinos now use training and technology to differentiate surprise vs. expected wins. It also becomes fairly obvious to spot once one knows the trick. To obfuscate the technique, some players are called to average tables. As a result, the players don't know whether their table is hot at the time. The overall win percentage is lower, resulting in lower ROI, but it's much more effective.
I assume it's not illegal to count, even if you are alone and use an obvious tactic such as playing $10 for dozens of hands, and play max bets only near the bottom of the shoe?
(Card counting done slightly wrong loses you more money in black jack faster than just following the table of optimal play.)
What? How is that legal?
https://www.prisonlegalnews.org/news/2014/dec/3/debtors-pris...
Unsurprisingly, this is fraught with conflicts of interest, made worse by the fact that Nevada law entitles the DA's office to a percentage of anything it collects on behalf of the casinos. They are effectively a debt collector that can throw you in jail.
But maybe I'm confusing it for: they can't throw you in jail for debts.
I wrote a check, but I was changing direct deposit accounts at my employer to a new account. I transposed my account number, my paycheck didn't get deposited, my check bounced. Oops!
I completely forgot that I wrote a check earlier in the week. I write the second check after looking at my bank account balance which says I should be able to write the second check. The first check then comes through, the second check bounces. Oops!
My landlord usually cashes my rent checks on the 3rd. This month he was out of town so didn't get around to cashing it until the 10th. I checked my balance on the 9th and assuming my rent check had been cashed as usual, that I had enough to write the second check. By the time the second check is cashed, there is no money in my account so it bounces. Oops!
Didn't mean to write a check that would bounce in any of those (imaginary) situations. No intent to write a bad check means no crime of fraud, as fraud requires specific intent to defraud.
What you 'mean' to do doesn't matter. Writing more checks than there are deposits to cover, is bad faith.
I've had my debit card declined because I'd already withdrawn everything and failed to pay attention to the balance. If I'd written a check instead of using the debit card, it would have bounced instead of being declined. That's not bad faith. It's careless and embarrassing, but not bad faith.
http://ypdcrime.com/penal.law/article190.htm
I imagine in some of the nastier states, the law is harsher. IIRC, you can get 10 years in prison.
I bounced a rent check once. I had forgotten another large check I had written 3 weeks prior, and it got to my account before the rent check did. I wrote both checks in good faith, but failed to do the proper accounting in my ledger.
If the only defence against the bad check is "I kind of thought I probably had enough money in the account", then that was bad faith - no reasonable standard was achieved.
One of the reasons why I always eye roll when some sports nerd is passionately arguing about how allowing sports books is some sort of expression of freedom.
I grew up a few miles east of this casino, I wondered where craps went when I ended up there during a bachelor party.
I used to play poker 30 hours a week. If you play optimally, it is extremely boring and fatiguing.
https://www.amazon.com/Scarnes-New-Complete-Guide-Gambling/d...
He has a great story of how gamblers would get casinos to increase betting limits and allow them to successfully use a martingale system. To this day, casino owners still fall for this and lose substantially.
The problem is of course matching the bankroll to the point where you can afford a long losing streak - it's just not practical.
About 10 years ago casinos started offering various hold'em variants played against the house, presumably to cash in on the poker boom that was going on. Most of them try to mimic the flow of a hold'em hand as much as possible. You'll always have to ante something (somewhat analogous to posting a blind, but also just required as a way to force action in a table game), and then generally there's a decision point after getting your hole cards where you can bet more or fold. The more complicated games include additional decision points after seeing the flop and sometimes the turn. There's a lot more details I'm glossing over here about how it works (dealer hand must qualify by being a minimum strength, different payouts for various final hand strengths, different allowable bet sizes, bonus bets, etc.), but that's the basic structure. I recall seeing 3 major variants at the time - from least complicated to most, WPT All-in Hold'em, Texas Hold'em Bonus (I think, whatever the WSOP branded one was that Harrah's had), and Ultimate Texas Hold'em. WPT seems dead, UTH I still see around a bit. Not sure if Harrah's and other places still run Bonus.
The basic strategy for all these games generally involves a simple lookup table for the preflop action - for WPT, the correct play is to max bet for 90+% of your hands [1]- it's a very easy game to play perfectly. For UTH, it's probably closer to 25% [2]. (Aside - ignoring bankroll considerations, it's almost always correct to bet the max on any game that allows a range of bets. Either the bet is +EV or it isn't.)
The easiest advantage you can take is to simply know more cards at the table. Most dealers in my experience will allow you to show cards to your friends, ask for advice, whatever. Knowing more cards lets you make better decisions. Simple example - in WPT 83 offsuit is a very borderline playable hand. If you see another 8 in a player's hand, that may make it unplayable (since you're less likely to make a pair of 8s). Alternatively, if you have a borderline unplayable hand, seeing a pair of high cards in another hand may make the dealer less likely to qualify, which is an advantage for you when you have any bad hand.
In WPT at least, this is an extremely minor advantage - the "strategic frontier" where your decisions may be changed by this knowledge is extremely small. It's theoretically a much larger advantage in UTH, but there the strategy changes you can make with this knowledge encompass such a huge state space that you'll not be able to apply it consistently.
A second advantage is touched on in the article, viewing the dealer's hole cards. This is much harder to do and usually involves finding a dealer with bad form - I believe they're trained to slide the cards right out of the machine along the felt to avoid this, but some dealers lift slightly, so you can catch glimpses if you're in the right seat. Hopefully the playing advantages of knowing the dealer's cards are obvious.
I wouldn't be surprised if shuffle tracking is employed as well, but I'm not really sure what the state of the shuffle machines is these days.
Surprisingly, the biggest advantage I ever saw was to simply understand how to evaluate a hold'em hand. I've played hundreds of thousands of hands (former pro), and I still get it wrong occasionally when I'm not paying attention. When all these games first came out, casinos had to train dealers to do this, many of whom had never played poker. I think I calculated that I'd need to see a mistake rate of something like 1/600 to make the game profitable right out of the gate, ignoring any other advantages, and I was seeing 2-3 mistakes/hr (out of maybe 30-100 hands/hr). Admittedly only about half of the mistakes will be in your favor. It's not quite as easy these days, but for the first year or so it was an absolute gold mine.
Orthogonal to all this, some of these games are pretty easy to play at 98+%. Watching how people play these games, I wouldn't be surprised if the average table hold is upwards of 10%. I don't have any particular proof, but I'm pretty sure I've gotten grossly overcomped for play at these games.
[1] Everything but 82o, 73o-, 63o-, 52o, 43o, 32o. I'm not sure why 53o is playable. [2] Something like Ax+, K5o+, K2s+, Q5s+, Q7o+, J8s+, JTo, 33+. You can find the full table at wizardofodds or similar sites.
What kind of mistakes are you talking about here? Like, the dealer has a full house but mistakenly thinks he has two pair?
Like having 20 in Black Jack and asking for a card, you are almost certainly going out and not going to gain anything, that sort of thing.
That's pretty odd, anyone knows why that is?
If winning is so volatile that you have frequent winning years and significant losing years, then yes it could be a problem since you can't report negative income.
I've only heard of winning players having negative years when accepting risk beyond what their bankroll and access to games year-round can over (for example, high high stakes games are not that common).
When you add in points rewards you can end up doing ok in free steaks and massages. The casino knows he wins and is fine with it. My guess is that they like the fact that he is willing to try and help people learn how to play perfectly (which is not trivial) and that makes the other customers play more and essentially cover the small amount of profit he makes.
http://wizardofodds.com/games/video-poker/tables/deuces-wild...
And machines like that are hard to find.
Having said that, the perception that it's possible probably helps to drive more business.