10 ms·

The Man Who Broke Atlantic City

229 points by mikexstudios 15y ago

po 15y ago
This stuck out to me: Made famous in books and movies, card counting is considered cheating, at least by casinos. In most states (but not New Jersey), known practitioners are banned. The wagering of card counters assumes a clearly recognizable pattern over time, and Johnson was being watched very carefully. The verdict: card counting was not Don Johnson’s game. He had beaten the casinos fair and square. Card counting is not cheating, at least if you can do it without an external device. That's like saying that you can play this game but only if you don't think about it really hard. Even with card counting the casinos have a slight edge against you. They swap the shoe out frequently so that you have to reset your count. The reason it's not illegal in NJ is because someone sued them and won. It should be legal everywhere.
- kiba 15y ago
  The keyword is "at least by" casinos. Nobody else think it's cheating because it's all about using your mind.
  - fredoliveira 15y ago
    Casinos don't consider counting cheating either, but they can (and do) throw people out the door if they actually catch you doing it.
  - po 15y ago
    Yeah, it was the final He had beaten the casinos fair and square quip that annoyed me.
- dantheman 15y ago
  I thought card counting was legal, and according to wikipedia it is(http://en.wikipedia.org/wiki/Card_counting http://en.wikipedia.org/wiki/Card_counting) As of January 2012, there are no federal, state or local laws which prohibit card counting in the United States as long as no external card counting device or person assists the player in counting cards. BUT: In all parts of the United States, with Atlantic City being the sole exception, casinos may ban any player for any reason including card counting as long as the Federal laws against discrimination based on race, creed, sex, national origin, age, or physical disability are not violated. -- I think that a casino should be able to kick out anyone that they want for any reason, including card counting, being extremely lucky, being a jerk, etc...
  - bmelton 15y ago
    Allowing casinos to kick out anybody who shows winning potential is pretty much guaranteeing that the odds are always in their favor. It eliminates the 'jackpot' style story like present here. Also of note though, is that while Atlantic City casinos can't eject people for winning, they can hamstring them in a variety of other ways. Usually they just change the table stakes from "$100,000 max bet" to "$0.25 max bet" on whatever table the winner is on, severely limiting his winning potential.
  - jurre 15y ago
    Yes I think you're right, it is legal but it can hardly be used anymore because most casino's use an automatic shuffling machine where they refill the cards after every deal and that continually shuffles.
- dsrguru 15y ago
  Yeah this article is awfully written. Its portrayal of counting as even possibly unfair ("he had beaten the casinos fair and square [by not counting]") is ridiculous, and it does a horrendous job explaining his method. His method isn't even addressed until half-way through the article, the article is littered with totally unnecessary comments like "He plays perfect cards" (if you're not counting, every hand's decision should be set in stone), and the actual method they describe isn't logically consistent. At first they make it sound like he won by bargaining down special rules to give himself a substantially greater discount than the house's edge, but then they go on to say that he won $2 million later on without the discount (despite the house having a fractional edge), without further explanation. They've already made it clear that this guy plays to win rather than to gamble, so he obviously didn't win it by pure luck. So we're clearly missing something here...
  - cantbecool 15y ago
    You couldn't have written it any better. Mark Bowden, the writer of the article, is superficially looking at the situation and not telling us Don's methods of success. I'm more interested in what tactics Don is doing rather then the romanticized story behind it all. That's just me though.
    - mikeleeorg 15y ago
      I was really hoping to read about Don's tactics too, but when I saw the publication source, I removed those expectations ;)
  - vacri 15y ago
    if the balance is 50/50 (or close enough to), but your losses are 20% less than your wins, then over the long game (which is repeated several times in the article) you will come out ahead. You will have some winning streaks and some losing streaks. But in the long run, that 20% difference at 50/50 win/loss will give you an overall win. He did not just walk into each casino and win those millions in one sitting apiece.
    - 15y ago
- corin_ 15y ago
  It's not illegal, but how do you define cheating - is it by laws, or by rules set by the game runner? For example, in football (soccer) it's cheating to punch the ball into the goal... but the associations that decide on the rules could make this perfectly fair play next year, just by deciding that they no longer define it as cheating.
  - bmelton 15y ago
    There are rules set by the gaming commissions in each state that the casinos are fairly well bound to upholding. In Vegas, the legislation is more in favor of the casinos than in New Jersey, but both are pretty broadly pro-casino. In Vegas, it's worth noting that a casino can eject any player for any reason, whether they are 'cheating' or not. If they are deemed to be actually cheating, they have the potential to sue for recompense, as well as blackball the gambler from that (and other) casinos. Nevada also has state laws that define what cheating is[1] and what recourse the casinos have. Card counting is considered 'illegal' by the casinos, but most legislation only applies to physical tampering, such as marking cards or using illicit devices. That won't stop the casinos from ejecting or blackballing you for counting. In Atlantic City though, they can't eject you for card counting, but they are allowed to change the table stakes on you. If you're at a $10,000 a hand table, and wiping out the casino in a way they don't like, they're perfectly allowed to change the table stakes to 25 cents at any table you sit down at. It's crappy, but you're still welcome to enjoy the gambling experience, just without the potential to win anything significant. [1] - http://www.leg.state.nv.us/NRS/NRS-465.html#NRS465Sec083 http://www.leg.state.nv.us/NRS/NRS-465.html#NRS465Sec083
nostromo 15y ago
The short version: Because of the recession casinos are desperate for high-rollers. To lure them in they offer perks. Some of those perks include slight modifications to the rules and a "loss discount" -- for example: losing $500k only costs you $400k. This guy negotiated rules that changed his odds to 50/50. Then he negotiated an 80% loss discount, which meant for each $1 of upside, his downside was $0.80. So to pull this off, you need $1m to put down, great negotiation skills, even better blackjack skills, good luck, and a very sophisticated understanding of stats.
- gcheong 15y ago
  even better poker skills He plays blackjack.
  - nostromo 15y ago
    Thanks, updated
- raldi 15y ago
  Thank you for the summary. I hate when articles open with a teaser then bury the explanation.
  - krschultz 15y ago
    Then you probably shouldn't click through to anything published by The Atlantic. (Or for that matter, the New Yorker, the New York Times, etc). This isn't a blog post or a new article. This is a short story. I thought it was interesting and I thought it was well written. HN has a strong bias against anything artfully written (read: more than the bare minimum of words). I guess I shouldn't be surprised considering the crowd (mostly engineers, myself included) but it is sad to me when people do the 'TL;DR' thing.
    - schleyfox 15y ago
      Sadly, I think this is an increasingly recent phenomenon (get off my lawn). It's kind of funny given the style and length of HN favorites like pg and Steve Yegge.
alpad 15y ago
The article is a bit confusing. If I take it correctly, a few casinos offered him nearly 50:50 odds, and a discount on his losses if he lost more than ~500k. In other words, a great deal, worth ~$50k. And then he proceeded to have amazing games, winning millions by sheer luck. The article doesn't talk much about the luck this requires, and one wonders if he does have something else going on.
- DanBC 15y ago
  The article makes it clear that he's very good at the odds of Blackjack. It was a bit confusing when it described the difference between the odds-sheets given by the casino and his method. But, basically, he follows optimal betting technique for every card played.
- krschultz 15y ago
  The negotiation on the rules of the game is key. For example the difference between a 'soft 17' and a 'hard 17' is worth a few percentage points, and those points are valuable.
  - TylerE 15y ago
    No it's not. Soft 17 is worth approx. 0.25% on the house edge. Even in Vegas, it's not hard to find 0.50% edge blackjack, even at low stakes.
    - corin_ 15y ago
      I've literally never been in a casino where a dealer can hit anything soft, or where a player can't. Admitedly I've never been in a US casino.
  - harryh 15y ago
    The difference between dealer play on soft 17s is worth a few 10ths of a percentage point, not a few percentage points.
- Steko 15y ago
nl 15y ago
“They began offering deals that nobody’s ever seen in New Jersey history,” he told me. “I’d never heard of anything like it in the world, not even for a player like [the late Australian media tycoon] Kerry Packer, who came in with a $20 million bank and was worth billions and billions.” Kerry Packer's gambling is pretty legendary. There's a story about how he was in a high-roller room in Los Vegas and there was a Texan (oil?) millionaire boasting about how big his ranch was. Packer was annoyed at how noisy he was, so he walked over. Packer: "So how much is this property worth then?" Texan: "'bout $20 million" Packer (pulls out a coin): "toss you for it" Apparently the Texan didn't like that idea much... Packer successfully invested a lot in building casinos in Australia and Macau. His son has taken over his empire and invested even more, though not as successfully.
- jacques_chester 15y ago
  His best ever gamble was selling Channel 9 to Alan Bond for $1 billion, before getting it back a few years later for $250 million. He later said "You only get one Alan Bond in a lifetime ... and I've had mine".
harryh 15y ago
There's a lot in this article that doesn't add up. For example this quote: "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." If he's already up significantly (battling with their money) the discount isn't likely to come into play. And he's still playing a negative expectation game so every hand he plays he should expect to give back a little of his gain. I don't think we're getting the real story here.
- fragsworth 15y ago
  I agree - they state the following: “You’d never lose the million. If you got to [$500,000 in losses], you would stop and take your 20 percent discount. You’d owe them only $400,000.” ... So when Johnson got far enough ahead in his winning sprees, he reasoned that he might as well keep playing. I don't quite see how this makes any sense - if you get far ahead in a winning spree, the value of your discounted loss diminishes significantly... doesn't it? For instance, if you won $2 million, the discount is now $100k on a $2.5 million loss, which is only 4% (much smaller than the initial 20% discount of $100k on a $500k loss)
  - acak 15y ago
    He went in with $1M, odds of 50/50 and a 20% discount once the losses are over $0.5M. Lets assume for simplicity that all hands he plays are equal ($0.1M according to the article) Because the discount kicks in at $0.5M of losses, he should plan to lose bets for $0.5M first. This is a setup. Now he needs play to win the bets for remaining $0.5M he has. Because the odds are 50/50, after a few rounds of playing with the $0.5M he has, he's going to have lost half the hands, and won half of them. While he gets 2x for his wins, he gives up only 0.8x for his losses. Net = 2x - 0.8x = 1.2x. He just had to rinse and repeat with the $0.5M he was left with. Though I'm sure he brought in a lot more money once the $0.5M loss kicked in the discount. Just note that this explanation is a simplification. 50/50 odds (technically 49.75/50.25 according to Johnson) have to be accompanied by an even performance on double-downs and splits.
dfc 15y ago
The description of his odds system did not make a lot of sense to me; especially in light of the statement that he does not count cards. Can anyone elaborate? "Many casinos sell laminated charts in their guest shops that reveal the optimal strategy for any situation the game presents. But these odds are calculated by simulating millions of hands, and as Johnson says, “I will never see 400 million hands.” More useful, for his purposes, is running a smaller number of hands and paying attention to variation. The way averages work, the larger the sample, the narrower the range of variation. A session of, say, 600 hands will display wider swings, with steeper winning and losing streaks, than the standard casino charts."
- gibybo 15y ago
  The charts are maximizing EV without taking into account the discount he negotiated. With the loss discount, it becomes more profitable to increase short term variance beyond what the chart strategies would lead to.
  - dfc 15y ago
    I'm sorry but your answer neglects the second paragraph that I quoted. That seems sort of important...
- corin_ 15y ago
  Here's the simplest example I can think of. Basic strategy says to split 8s, even if the dealer is showing a face card or an ace. Statistically, you are most likely to lose this hand whether you stand, hit or split it. By splitting them (following strategy) you give yourself the best odds of your choices, and according to probability, this makes it a better option in the long run. However, by splitting them, you are doubling the money you have risked on them, and therefor if you are only playing a single hand and then never touching blackjack again, you are basically risking twice as much money on a hand that, more often than not, you will lose.
3am 15y ago
I can't be the only one who thought this was about Donald Trump before I clicked through... edit: I am completely serious
deleted 15y ago
[deleted]
CurtMonash 15y ago
The article is clear on only one point, but it's not an explanation for his winning. That point is that if he loses $500K, he only has to pay $400K of it. I'm pretty sure that if you bet $100K a hand, and stop whenever you hit the first of +$500K or -$500K, and get a $100K rebate if you hit the lower number ... well, the whole plan would seem to have a positive expected value. And perhaps the same would be true even with a bet increment of $10K or less, Second, it is strongly implied (without details being given) that he has negotiated rules giving him an unusually favorable expected value per hand -- either a very slightly negative one (which would explain why Tropicana is willing to keep playing with him), or perhaps even a positive one that they keep overlooking. The only rule I saw in there that sounds odd to me is "calling the hand" -- is that a recent twist to blackjack or something?
- corin_ 15y ago
  You're talking about this, right? > It was the dealer’s turn. He drew a 10, so the two cards he was showing totaled 15. Johnson called the game—in essence, betting that the dealer’s down card was a seven or higher, which would push his hand over 21. This was a good bet: since all face cards are worth 10, the deck holds more high cards than low. When the dealer turned over the house’s down card, it was a 10, busting him. Johnson won all four hands. Pretty sure that by "betting that the dealer’s down card" it means that this was the logic behind his betting on the four hands, not that there was a seperate bet on it. "Calling the hand" most likely refers to the kind-of-tradition of cheering on what you want ("come on facecard... COME ON FACECARD!!")
shareme 15y ago
What is surprising is how easy it is to compute the odds..its just permutations and combinations..not that hard its a 100 level math course in most colleges. What makes it different is that we needed two things to leverage the $1 million he put up per Casino and the Casino management being fool-hardy enough to believe that they computed the odds on the change in rules and discounts correctly. It would be like say oh stacking the deck in that the founders get one class of stock and everyone else another class which allows the founders to retain ownership control of a start-up. You do not need to card count as he changed the rules to only have hand shuffled six decks in the shoe..I can with a certain memory system compute the odds on cards dealt from that shoe and so can you..its not hard..its simple math..
- pellias 15y ago
  How does hand shuffling six decks in the shoe give the player an edge compared to the normal machine shuffling of the same six decks ?
  - hudibras 15y ago
    There is some debate about this (to say the least) but the theory is that "hot sections" of the deck are propagated between shuffles of the decks when hand-shuffled. So if you run into a streak of good cards at the beginning of one shoe of cards, then that means you'll have another streak of good cards mid-way through the next shoe (or whatever). Then you can plan your bets accordingly by placing small bets to minimize your losses during the cold sections and then upping your bets during the period of hot cards.
dustingetz 15y ago
hey guys, i actually think he might have positive expectation: he negotiated a .25% houe edge (roughly half of normal perfect play) and if he loses 500k he gets 20% back, each session independent. check this analysis. he is +EV by martingaling his wins - 7/8 times he loses 400k with a 20% discount (400k x 7 x .80 = 2 240 000), 1/8 times he wins 400k x 8 with no reverse-discount = 3 200 000, so that's a mil in EV. if he pushes his martingale as far as he can his expectation grows superlinearly, which is why he martingales his wins until they cut him off. is this math right? if he was -EV, the house would let him keep playing, hence telling him he can continue to play under normal rules. note he refused. update: an easy way to see this (gross oversimplification) is if he plays only one hand/session he stands to win 100% of the money 49% of the time and loses 80% of the money 51% of the time.
- gojomo 15y ago
  This explanation seems most consistent with the limited information in the article. We don't know whether he had several -$400K sessions before his big run. Gamblers and non-gamblers talk more about upswings than downswings. There could be some other unmentioned factors that aided him a little, but the capped downside, a lucky run, and selective reporting are probably a sufficient explanation.
  - corin_ 15y ago
    That's funny, I much prefer the story of mybiggest loss in an hour of blackjack than any of my winning stories, just seems more entertaining and less boastful perhaps.
- cityhall 15y ago
  It depends on how he expects to be taxed. If this is his only session during the year, he actually wins 60-70% of the money vs losing 80%. So he needs to either be way ahead or way behind from other gambling activity for this to work out the way you described (assuming he's a US citizen).
  - dustingetz 15y ago
dkrich 15y ago
Even taking into account his negotiated edge, which is impressive, it isn't enough mathematically to account for such substantial winnings over such a short period of time. I agree with what others have said and think he must either have had a counting system or had a terrific run of luck. Great runs are rare of course, but not unheard of. The reason people don't hear about them often is that very few players play at such a sophisticated level to minimize the house advantage to a paper-thin margin, and even fewer do so at a high-stakes table where this would make big news.
grepherder 15y ago
I skimmed over the comments, and I'm surprised to see no mention of it here. Maybe I missed it. The house always wins, and they still won. This is, for each of them at just a few million, very cheap advertising. Consider how poker/holdem was hyped during the last decade, this is just the same in a different setting. They will easily win those few millions each back and more. For every smart person such as this guy, there are thousands of idiots out there. The article itself mentions they're trying to lure in high-rollers. This looks rather obvious. Thus, the title, how Atlantic City supposedly "got broke" by a man, seems very misleading in this context. Still, maybe I'm missing something here.
tucson 15y ago
Great PR for the Atlantic City Casinos? could that be the explanation for this great winning streak?
artist777 15y ago
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corin_ 15y ago
The line that annoyed me most in this was about card counting, saying > "The tactic requires both great memory and superior math skills." Not honestly true, at least about the maths skills. Memory... isn't how I'd describe it, though I suppose it's sort of right. In my opinion, the most difficult thing is concentrating on multiple things at the same time (1. Keeping the running count 2. Counting how many cards have been played 3. Following the game itself and deciding what to do 4. Chatting with dealer / other players) - so this can perhaps be called "memory" as you have to remember these things all at the same time. But for each thing you need to remember, it's a very simple thing on its own. Counting isn't about remembering the order of every card that's come out, it's not even about remembering what card has come out. If you were to watch a video of a Blackjack game, i.e. you were left in peace and not doing anything yourself, few people would be incapable of counting the cards.
- nikcub 15y ago
  exactly. the best blackjack dealers (for the house) are those that can keep you distracted.
  - corin_ 15y ago
    As far as I'm concerned they're the best dealers for players too - I don't try and count cards in the casino, and find that both winning and losing sessions are much more enjoyable with a friendly dealer.
- glenra 15y ago
  There's also remembering your strategy index tables. True, that's not a lot of numbers - some might use as few as 18 indices - but still: You're keeping in mind at the same time (a) the count, (b) a set of basic strategy rules appropriate for your specific game (c) a table of strategy variance index numbers appropriate for your specific game, (d) a deck depth estimate. And probably a few other relevant numbers. (here's an example of the "Illustrious 18" set of strategy index numbers for one counting system: http://bjmath.com/bjmath/tcindex/i18index.htm http://bjmath.com/bjmath/tcindex/i18index.htm )
ap22213 15y ago
It seems that every once in a while an enticing story comes out about a person (or team) who beats the house and wins big. I spent a short time in the 'gaming' industry building electronic slots and other types of games. The word on the street was that the industry encouraged these types of stories. And, while maybe they didn't directly sponsor them, they looked favorably on them. These types of stories perpetuate ideas of the little guy beating the house. The profit of the gaming industry comes from the average person thinking that they can beat the house, when, the fact they can't. When the average person begins to believe that they can't win, casino profits go down. As such, casinos put billions of dollars into R&D and marketing to give the average person the illusion that they can win. I wasn't involved long enough in the gaming industry to be an expert, and I'm sure there are some exceptions. But, generally, to average people, of which I would classify 99.9% of the population, even those of us terribly smart people, the house advantage always wins.
maeon3 15y ago
Calling card counters cheaters is like calling people who get good grades on tests cheaters because they discovered the solution to the problem during the test with their mind by eliminating the wrong answers using statistics and probabilities. Card counting is a code phrase that translates to "if you don't let the house win, we won't let you play".
danbmil99 15y ago
Classic ringer's game: they underestimated his ability, including the meta-ability to calculate odds and stay unemotional. Most players, even high rollers, get into the game and start to make hunch bets as play goes on. He was disciplined enough to trust the math and not waver his strategy.
seanp2k2 15y ago
Just goes to show that the world is still human in some regards, and communication and negotiation skills are still king (pun def. intended.)
signalsignal 15y ago
I thought casinos were mostly fronts for money laundering, but since this has a story to it, there is credibility that a growth industry like gambling has real credibility in the startup scene. Therefore, there should be more gaming startups in YCombinator.

229 points by mikexstudios 15y ago

po 15y ago

This stuck out to me: Made famous in books and movies, card counting is considered cheating, at least by casinos. In most states (but not New Jersey), known practitioners are banned. The wagering of card counters assumes a clearly recognizable pattern over time, and Johnson was being watched very carefully. The verdict: card counting was not Don Johnson’s game. He had beaten the casinos fair and square. Card counting is not cheating, at least if you can do it without an external device. That's like saying that you can play this game but only if you don't think about it really hard. Even with card counting the casinos have a slight edge against you. They swap the shoe out frequently so that you have to reset your count. The reason it's not illegal in NJ is because someone sued them and won. It should be legal everywhere.

kiba 15y ago
The keyword is "at least by" casinos. Nobody else think it's cheating because it's all about using your mind.
- fredoliveira 15y ago
  Casinos don't consider counting cheating either, but they can (and do) throw people out the door if they actually catch you doing it.
- po 15y ago
  Yeah, it was the final He had beaten the casinos fair and square quip that annoyed me.
dantheman 15y ago
I thought card counting was legal, and according to wikipedia it is(http://en.wikipedia.org/wiki/Card_counting http://en.wikipedia.org/wiki/Card_counting) As of January 2012, there are no federal, state or local laws which prohibit card counting in the United States as long as no external card counting device or person assists the player in counting cards. BUT: In all parts of the United States, with Atlantic City being the sole exception, casinos may ban any player for any reason including card counting as long as the Federal laws against discrimination based on race, creed, sex, national origin, age, or physical disability are not violated. -- I think that a casino should be able to kick out anyone that they want for any reason, including card counting, being extremely lucky, being a jerk, etc...
- bmelton 15y ago
  Allowing casinos to kick out anybody who shows winning potential is pretty much guaranteeing that the odds are always in their favor. It eliminates the 'jackpot' style story like present here. Also of note though, is that while Atlantic City casinos can't eject people for winning, they can hamstring them in a variety of other ways. Usually they just change the table stakes from "$100,000 max bet" to "$0.25 max bet" on whatever table the winner is on, severely limiting his winning potential.
- jurre 15y ago
  Yes I think you're right, it is legal but it can hardly be used anymore because most casino's use an automatic shuffling machine where they refill the cards after every deal and that continually shuffles.
dsrguru 15y ago
Yeah this article is awfully written. Its portrayal of counting as even possibly unfair ("he had beaten the casinos fair and square [by not counting]") is ridiculous, and it does a horrendous job explaining his method. His method isn't even addressed until half-way through the article, the article is littered with totally unnecessary comments like "He plays perfect cards" (if you're not counting, every hand's decision should be set in stone), and the actual method they describe isn't logically consistent. At first they make it sound like he won by bargaining down special rules to give himself a substantially greater discount than the house's edge, but then they go on to say that he won $2 million later on without the discount (despite the house having a fractional edge), without further explanation. They've already made it clear that this guy plays to win rather than to gamble, so he obviously didn't win it by pure luck. So we're clearly missing something here...
- cantbecool 15y ago
  You couldn't have written it any better. Mark Bowden, the writer of the article, is superficially looking at the situation and not telling us Don's methods of success. I'm more interested in what tactics Don is doing rather then the romanticized story behind it all. That's just me though.
  - mikeleeorg 15y ago
    I was really hoping to read about Don's tactics too, but when I saw the publication source, I removed those expectations ;)
- vacri 15y ago
  if the balance is 50/50 (or close enough to), but your losses are 20% less than your wins, then over the long game (which is repeated several times in the article) you will come out ahead. You will have some winning streaks and some losing streaks. But in the long run, that 20% difference at 50/50 win/loss will give you an overall win. He did not just walk into each casino and win those millions in one sitting apiece.
  - 15y ago
corin_ 15y ago
It's not illegal, but how do you define cheating - is it by laws, or by rules set by the game runner? For example, in football (soccer) it's cheating to punch the ball into the goal... but the associations that decide on the rules could make this perfectly fair play next year, just by deciding that they no longer define it as cheating.
- bmelton 15y ago
  There are rules set by the gaming commissions in each state that the casinos are fairly well bound to upholding. In Vegas, the legislation is more in favor of the casinos than in New Jersey, but both are pretty broadly pro-casino. In Vegas, it's worth noting that a casino can eject any player for any reason, whether they are 'cheating' or not. If they are deemed to be actually cheating, they have the potential to sue for recompense, as well as blackball the gambler from that (and other) casinos. Nevada also has state laws that define what cheating is[1] and what recourse the casinos have. Card counting is considered 'illegal' by the casinos, but most legislation only applies to physical tampering, such as marking cards or using illicit devices. That won't stop the casinos from ejecting or blackballing you for counting. In Atlantic City though, they can't eject you for card counting, but they are allowed to change the table stakes on you. If you're at a $10,000 a hand table, and wiping out the casino in a way they don't like, they're perfectly allowed to change the table stakes to 25 cents at any table you sit down at. It's crappy, but you're still welcome to enjoy the gambling experience, just without the potential to win anything significant. [1] - http://www.leg.state.nv.us/NRS/NRS-465.html#NRS465Sec083 http://www.leg.state.nv.us/NRS/NRS-465.html#NRS465Sec083

nostromo 15y ago

The short version: Because of the recession casinos are desperate for high-rollers. To lure them in they offer perks. Some of those perks include slight modifications to the rules and a "loss discount" -- for example: losing $500k only costs you $400k. This guy negotiated rules that changed his odds to 50/50. Then he negotiated an 80% loss discount, which meant for each $1 of upside, his downside was $0.80. So to pull this off, you need $1m to put down, great negotiation skills, even better blackjack skills, good luck, and a very sophisticated understanding of stats.

gcheong 15y ago
even better poker skills He plays blackjack.
- nostromo 15y ago
  Thanks, updated
raldi 15y ago
Thank you for the summary. I hate when articles open with a teaser then bury the explanation.
- krschultz 15y ago
  Then you probably shouldn't click through to anything published by The Atlantic. (Or for that matter, the New Yorker, the New York Times, etc). This isn't a blog post or a new article. This is a short story. I thought it was interesting and I thought it was well written. HN has a strong bias against anything artfully written (read: more than the bare minimum of words). I guess I shouldn't be surprised considering the crowd (mostly engineers, myself included) but it is sad to me when people do the 'TL;DR' thing.
  - schleyfox 15y ago
    Sadly, I think this is an increasingly recent phenomenon (get off my lawn). It's kind of funny given the style and length of HN favorites like pg and Steve Yegge.

alpad 15y ago

The article is a bit confusing. If I take it correctly, a few casinos offered him nearly 50:50 odds, and a discount on his losses if he lost more than ~500k. In other words, a great deal, worth ~$50k. And then he proceeded to have amazing games, winning millions by sheer luck. The article doesn't talk much about the luck this requires, and one wonders if he does have something else going on.

DanBC 15y ago
The article makes it clear that he's very good at the odds of Blackjack. It was a bit confusing when it described the difference between the odds-sheets given by the casino and his method. But, basically, he follows optimal betting technique for every card played.
krschultz 15y ago
The negotiation on the rules of the game is key. For example the difference between a 'soft 17' and a 'hard 17' is worth a few percentage points, and those points are valuable.
- TylerE 15y ago
  No it's not. Soft 17 is worth approx. 0.25% on the house edge. Even in Vegas, it's not hard to find 0.50% edge blackjack, even at low stakes.
  - corin_ 15y ago
    I've literally never been in a casino where a dealer can hit anything soft, or where a player can't. Admitedly I've never been in a US casino.
- harryh 15y ago
  The difference between dealer play on soft 17s is worth a few 10ths of a percentage point, not a few percentage points.
Steko 15y ago

nl 15y ago

“They began offering deals that nobody’s ever seen in New Jersey history,” he told me. “I’d never heard of anything like it in the world, not even for a player like [the late Australian media tycoon] Kerry Packer, who came in with a $20 million bank and was worth billions and billions.” Kerry Packer's gambling is pretty legendary. There's a story about how he was in a high-roller room in Los Vegas and there was a Texan (oil?) millionaire boasting about how big his ranch was. Packer was annoyed at how noisy he was, so he walked over. Packer: "So how much is this property worth then?" Texan: "'bout $20 million" Packer (pulls out a coin): "toss you for it" Apparently the Texan didn't like that idea much... Packer successfully invested a lot in building casinos in Australia and Macau. His son has taken over his empire and invested even more, though not as successfully.

jacques_chester 15y ago
His best ever gamble was selling Channel 9 to Alan Bond for $1 billion, before getting it back a few years later for $250 million. He later said "You only get one Alan Bond in a lifetime ... and I've had mine".

harryh 15y ago

There's a lot in this article that doesn't add up. For example this quote: "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." If he's already up significantly (battling with their money) the discount isn't likely to come into play. And he's still playing a negative expectation game so every hand he plays he should expect to give back a little of his gain. I don't think we're getting the real story here.

fragsworth 15y ago
I agree - they state the following: “You’d never lose the million. If you got to [$500,000 in losses], you would stop and take your 20 percent discount. You’d owe them only $400,000.” ... So when Johnson got far enough ahead in his winning sprees, he reasoned that he might as well keep playing. I don't quite see how this makes any sense - if you get far ahead in a winning spree, the value of your discounted loss diminishes significantly... doesn't it? For instance, if you won $2 million, the discount is now $100k on a $2.5 million loss, which is only 4% (much smaller than the initial 20% discount of $100k on a $500k loss)
- acak 15y ago
  He went in with $1M, odds of 50/50 and a 20% discount once the losses are over $0.5M. Lets assume for simplicity that all hands he plays are equal ($0.1M according to the article) Because the discount kicks in at $0.5M of losses, he should plan to lose bets for $0.5M first. This is a setup. Now he needs play to win the bets for remaining $0.5M he has. Because the odds are 50/50, after a few rounds of playing with the $0.5M he has, he's going to have lost half the hands, and won half of them. While he gets 2x for his wins, he gives up only 0.8x for his losses. Net = 2x - 0.8x = 1.2x. He just had to rinse and repeat with the $0.5M he was left with. Though I'm sure he brought in a lot more money once the $0.5M loss kicked in the discount. Just note that this explanation is a simplification. 50/50 odds (technically 49.75/50.25 according to Johnson) have to be accompanied by an even performance on double-downs and splits.

dfc 15y ago

The description of his odds system did not make a lot of sense to me; especially in light of the statement that he does not count cards. Can anyone elaborate? "Many casinos sell laminated charts in their guest shops that reveal the optimal strategy for any situation the game presents. But these odds are calculated by simulating millions of hands, and as Johnson says, “I will never see 400 million hands.” More useful, for his purposes, is running a smaller number of hands and paying attention to variation. The way averages work, the larger the sample, the narrower the range of variation. A session of, say, 600 hands will display wider swings, with steeper winning and losing streaks, than the standard casino charts."

gibybo 15y ago
The charts are maximizing EV without taking into account the discount he negotiated. With the loss discount, it becomes more profitable to increase short term variance beyond what the chart strategies would lead to.
- dfc 15y ago
  I'm sorry but your answer neglects the second paragraph that I quoted. That seems sort of important...
corin_ 15y ago
Here's the simplest example I can think of. Basic strategy says to split 8s, even if the dealer is showing a face card or an ace. Statistically, you are most likely to lose this hand whether you stand, hit or split it. By splitting them (following strategy) you give yourself the best odds of your choices, and according to probability, this makes it a better option in the long run. However, by splitting them, you are doubling the money you have risked on them, and therefor if you are only playing a single hand and then never touching blackjack again, you are basically risking twice as much money on a hand that, more often than not, you will lose.

3am 15y ago

I can't be the only one who thought this was about Donald Trump before I clicked through... edit: I am completely serious

deleted 15y ago

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CurtMonash 15y ago

The article is clear on only one point, but it's not an explanation for his winning. That point is that if he loses $500K, he only has to pay $400K of it. I'm pretty sure that if you bet $100K a hand, and stop whenever you hit the first of +$500K or -$500K, and get a $100K rebate if you hit the lower number ... well, the whole plan would seem to have a positive expected value. And perhaps the same would be true even with a bet increment of $10K or less, Second, it is strongly implied (without details being given) that he has negotiated rules giving him an unusually favorable expected value per hand -- either a very slightly negative one (which would explain why Tropicana is willing to keep playing with him), or perhaps even a positive one that they keep overlooking. The only rule I saw in there that sounds odd to me is "calling the hand" -- is that a recent twist to blackjack or something?

corin_ 15y ago
You're talking about this, right? > It was the dealer’s turn. He drew a 10, so the two cards he was showing totaled 15. Johnson called the game—in essence, betting that the dealer’s down card was a seven or higher, which would push his hand over 21. This was a good bet: since all face cards are worth 10, the deck holds more high cards than low. When the dealer turned over the house’s down card, it was a 10, busting him. Johnson won all four hands. Pretty sure that by "betting that the dealer’s down card" it means that this was the logic behind his betting on the four hands, not that there was a seperate bet on it. "Calling the hand" most likely refers to the kind-of-tradition of cheering on what you want ("come on facecard... COME ON FACECARD!!")

shareme 15y ago

What is surprising is how easy it is to compute the odds..its just permutations and combinations..not that hard its a 100 level math course in most colleges. What makes it different is that we needed two things to leverage the $1 million he put up per Casino and the Casino management being fool-hardy enough to believe that they computed the odds on the change in rules and discounts correctly. It would be like say oh stacking the deck in that the founders get one class of stock and everyone else another class which allows the founders to retain ownership control of a start-up. You do not need to card count as he changed the rules to only have hand shuffled six decks in the shoe..I can with a certain memory system compute the odds on cards dealt from that shoe and so can you..its not hard..its simple math..

pellias 15y ago
How does hand shuffling six decks in the shoe give the player an edge compared to the normal machine shuffling of the same six decks ?
- hudibras 15y ago
  There is some debate about this (to say the least) but the theory is that "hot sections" of the deck are propagated between shuffles of the decks when hand-shuffled. So if you run into a streak of good cards at the beginning of one shoe of cards, then that means you'll have another streak of good cards mid-way through the next shoe (or whatever). Then you can plan your bets accordingly by placing small bets to minimize your losses during the cold sections and then upping your bets during the period of hot cards.

dustingetz 15y ago

hey guys, i actually think he might have positive expectation: he negotiated a .25% houe edge (roughly half of normal perfect play) and if he loses 500k he gets 20% back, each session independent. check this analysis. he is +EV by martingaling his wins - 7/8 times he loses 400k with a 20% discount (400k x 7 x .80 = 2 240 000), 1/8 times he wins 400k x 8 with no reverse-discount = 3 200 000, so that's a mil in EV. if he pushes his martingale as far as he can his expectation grows superlinearly, which is why he martingales his wins until they cut him off. is this math right? if he was -EV, the house would let him keep playing, hence telling him he can continue to play under normal rules. note he refused. update: an easy way to see this (gross oversimplification) is if he plays only one hand/session he stands to win 100% of the money 49% of the time and loses 80% of the money 51% of the time.

gojomo 15y ago
This explanation seems most consistent with the limited information in the article. We don't know whether he had several -$400K sessions before his big run. Gamblers and non-gamblers talk more about upswings than downswings. There could be some other unmentioned factors that aided him a little, but the capped downside, a lucky run, and selective reporting are probably a sufficient explanation.
- corin_ 15y ago
  That's funny, I much prefer the story of mybiggest loss in an hour of blackjack than any of my winning stories, just seems more entertaining and less boastful perhaps.
cityhall 15y ago
It depends on how he expects to be taxed. If this is his only session during the year, he actually wins 60-70% of the money vs losing 80%. So he needs to either be way ahead or way behind from other gambling activity for this to work out the way you described (assuming he's a US citizen).
- dustingetz 15y ago

dkrich 15y ago

Even taking into account his negotiated edge, which is impressive, it isn't enough mathematically to account for such substantial winnings over such a short period of time. I agree with what others have said and think he must either have had a counting system or had a terrific run of luck. Great runs are rare of course, but not unheard of. The reason people don't hear about them often is that very few players play at such a sophisticated level to minimize the house advantage to a paper-thin margin, and even fewer do so at a high-stakes table where this would make big news.

grepherder 15y ago

I skimmed over the comments, and I'm surprised to see no mention of it here. Maybe I missed it. The house always wins, and they still won. This is, for each of them at just a few million, very cheap advertising. Consider how poker/holdem was hyped during the last decade, this is just the same in a different setting. They will easily win those few millions each back and more. For every smart person such as this guy, there are thousands of idiots out there. The article itself mentions they're trying to lure in high-rollers. This looks rather obvious. Thus, the title, how Atlantic City supposedly "got broke" by a man, seems very misleading in this context. Still, maybe I'm missing something here.

tucson 15y ago

Great PR for the Atlantic City Casinos? could that be the explanation for this great winning streak?

artist777 15y ago

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corin_ 15y ago

The line that annoyed me most in this was about card counting, saying > "The tactic requires both great memory and superior math skills." Not honestly true, at least about the maths skills. Memory... isn't how I'd describe it, though I suppose it's sort of right. In my opinion, the most difficult thing is concentrating on multiple things at the same time (1. Keeping the running count 2. Counting how many cards have been played 3. Following the game itself and deciding what to do 4. Chatting with dealer / other players) - so this can perhaps be called "memory" as you have to remember these things all at the same time. But for each thing you need to remember, it's a very simple thing on its own. Counting isn't about remembering the order of every card that's come out, it's not even about remembering what card has come out. If you were to watch a video of a Blackjack game, i.e. you were left in peace and not doing anything yourself, few people would be incapable of counting the cards.

nikcub 15y ago
exactly. the best blackjack dealers (for the house) are those that can keep you distracted.
- corin_ 15y ago
  As far as I'm concerned they're the best dealers for players too - I don't try and count cards in the casino, and find that both winning and losing sessions are much more enjoyable with a friendly dealer.
glenra 15y ago
There's also remembering your strategy index tables. True, that's not a lot of numbers - some might use as few as 18 indices - but still: You're keeping in mind at the same time (a) the count, (b) a set of basic strategy rules appropriate for your specific game (c) a table of strategy variance index numbers appropriate for your specific game, (d) a deck depth estimate. And probably a few other relevant numbers. (here's an example of the "Illustrious 18" set of strategy index numbers for one counting system: http://bjmath.com/bjmath/tcindex/i18index.htm http://bjmath.com/bjmath/tcindex/i18index.htm )

ap22213 15y ago

It seems that every once in a while an enticing story comes out about a person (or team) who beats the house and wins big. I spent a short time in the 'gaming' industry building electronic slots and other types of games. The word on the street was that the industry encouraged these types of stories. And, while maybe they didn't directly sponsor them, they looked favorably on them. These types of stories perpetuate ideas of the little guy beating the house. The profit of the gaming industry comes from the average person thinking that they can beat the house, when, the fact they can't. When the average person begins to believe that they can't win, casino profits go down. As such, casinos put billions of dollars into R&D and marketing to give the average person the illusion that they can win. I wasn't involved long enough in the gaming industry to be an expert, and I'm sure there are some exceptions. But, generally, to average people, of which I would classify 99.9% of the population, even those of us terribly smart people, the house advantage always wins.

maeon3 15y ago

Calling card counters cheaters is like calling people who get good grades on tests cheaters because they discovered the solution to the problem during the test with their mind by eliminating the wrong answers using statistics and probabilities. Card counting is a code phrase that translates to "if you don't let the house win, we won't let you play".

danbmil99 15y ago

Classic ringer's game: they underestimated his ability, including the meta-ability to calculate odds and stay unemotional. Most players, even high rollers, get into the game and start to make hunch bets as play goes on. He was disciplined enough to trust the math and not waver his strategy.

seanp2k2 15y ago

Just goes to show that the world is still human in some regards, and communication and negotiation skills are still king (pun def. intended.)

signalsignal 15y ago

I thought casinos were mostly fronts for money laundering, but since this has a story to it, there is credibility that a growth industry like gambling has real credibility in the startup scene. Therefore, there should be more gaming startups in YCombinator.