The King of Online Gambling

> Walsh says this is incorrect because they do not get rebates in most of the gambling they undertake.

> And even when they do, the “profitability of our system is statistically significant in their absence”.

http://www.afr.com/p/national/no_humbling_great_gambler_1Rah...

It is a great system, although the smartest aspect of it was not the maths or computers. It was the psychology.

As former card-counting blackjack players, Walsh and Ranogajec knew the house will always seek to maintain its advantage.

In its crudest form, this involves barring those who become too successful. And so over the longer term, being able to stay in the game becomes almost as important as winning. For the syndicate, that meant being “with” the house rather than against it. In both Keno and “parimutuel betting” via the TAB, the house can’t lose, as it takes a fixed percentage of the overall pool.

And so by pumping huge amounts of money through Keno and the TAB, the syndicate was inflating the profits of the house rather than taking money from it.

It was a symbiotic relationship, but one that neither side wished to publicise as it was ordinary punters who lost out. For Walsh and Ranogajec, their Keno exploits in Tasmania were hugely ironic.

In other words:

1) Pick a game where the jackpot accumulates, for example, the "Jackpot growth pool" in Keno, and the house takes a fixed percentage of turnover.

2) Cut a deal with the house for a rebate that swings the total odds (including the accumulated jackpot) in your favour.

3) Gamble as much money as possible, so you have a significant chance of capturing the accumulated jackpot before anyone else, thus reducing the odds of an average punter winning an accumulated jackpot.

4) Effectively, you will be acting a a proxy for the house, allowing it to reclaim jackpots (via their percentage on your turnover), that would otherwise go to the average punter, and collecting your own percentage for your trouble.

The house makes a profit on the additional turnover that you generate. You make a profit by collecting jackpots at odds+rebate that guarantee a net payout. The average punter loses as they are unlikely to win the jackpot before you do, so their average payout is reduced.