THE IRRELEVANCE OF ADVANTAGE PLAYERS
by Nicholas Colon
Nicholas Colon is the Managing Director of Alea Consulting Group, a casino gaming consulting firm with a player centric philosophy. It is staffed with world class players, gaming authors, mathematicians, top legal minds and a variety of industry professionals.
Every once in a while a person comes along that is an exceptional talent. Mozart for music; Einstein and Tesla in Physics; Abraham Lincoln in American Politics; and for casino gaming, in the realm of advantage play, there is Professor Edward Thorp and gaming virtuoso James Grosjean. For those who do not know, Professor Thorp published the book Beat the Dealer in 1962, and it was the first gambling system that had a strict mathematical foundation on how to beat the game of 21. The ideas presented in Thorp's original book (Beat the Dealer) were ground breaking, and had a profound impact on the Las Vegas and casino gaming industry. (Note: Random House recently released Thorps memoirs in a book titledA Man For All Markets, which chronicles his life from his discovery of card counting through his enormous success in the stock-market.)
Similarly, Grosjean has written the rarest and likely the most advanced book on the subject of advantage play,Beyond Counting Exhibit CAA. The book is just short of impossible to purchase because its printing was limited to 1,000 copies.
Given the above information, the question I would pose to casino operators is this: Does the limited number of overtly skilled casino players justify the high price tags of services (like the Griffin Detective Agency) to catch skilled players or restricting playing rules that sacrifice the revenue gained from the populous?" From the title of this article, you have likely assumed my answer is "No". Let me explain why.
Perfecting advantage play takes discipline and dedication. Anyone who says that it can be executed well enough to win lots of money without an overwhelming number of hours of preparation and play does not have the vaguest idea of what it takes to be a top-tier, successful advantage player. It's the equivalent of having a second AND third job. The learning and perfecting of any advantage-play technique is only the first step.
A player then must obtain a large enough bankroll so that he or she is able to withstand the negative bankroll swings that will inevitably occur. Any dollar amount under $25,000 is not viable for a professional player. With the current economic turmoil, very few players have an extra $25,000 dollars to dedicate exclusively to casino play.
Another rate-limiting step for most "wanna be" advantage players is time. Time to scout games, and time to play is excessive, almost to the point that it becomes frustrating for the player. Dedicated professionals often spend many hours scouting games, and then more hours playing the beatable ones. The playing time is very important because playing time equals rounds played. To get beyond the noise of statistical variance, a player needs at minimum 10,000 rounds of play, and this is just to SEE if his or her results, good or bad, are within the acceptable standard deviations of the math models.
Consider a scenario where a player is able to perfect an advantage-play technique and acquire the necessary bankroll to prevent going broke in the short run ($70,000 in this example). The player still has to overcome the initial ups and downs of play that they will experience. For example, having an average bet of $100 while playing at a 1% advantage against the house after 5,000 rounds of play, the expected win is $5,000. At a playing rate of 60 rounds an hour it will take over 80 hours ( two weeks at a full time job) to make $5,000.
888casino.com is a leading online company that offers a wide range of slots, blackjack, roulette, and other popular online casino games. They also have a live casino with real dealers. Utilizing the real dealer's aspect, the player gets a first-hand look on what it is like to play for profit. It is likely that the concentration required will give way to the desire for the excitement of gambling after only a short period of time. Many gaming authors agree that the discipline that needs to be attained is a rare commodity. For example, approximately only 1 in 46,000 people who walk into a casino are competent enough to execute even the most basic form of advantage play. Of those 1 in 46,000 people only 10% have the required bankroll to withstand the bankroll swings. In 2015, five million people walked through the doors of The Tropicana Casino in Las Vegas. Applying the informed estimates, we have a (whopping) total of 11 players that have the skill and bankroll to make $5,000 in 80 hours of play.
Despite this logic and math-based argument, casinos continue to exhaust financial resources on services that are provided by firms (similar to the Griffin Detective Agency) who routinely charge tens of thousands of dollars per month to a casino for use of their "various products." These firms have a financial interest in scaring casinos into using their products by perpetuating the exaggerated reputations of organized advantage play teams like the MIT blackjack teams. I was on that team, and the untainted truth is the original MIT blackjack team (known as Strategic Investments) only made about $150,000 in its18 months of existence; hardly a financial windfall. (This is especially true when you have to divide the after-expense profits between investors and 15 players.)
Regardless of what casinos tell you, THEY HATE LOSING MONEY. And companies go to great lengths to exploit that fear. Card Counters and Advantage Players are an easy target. And these "game protection" companies charge gobs of money and sell the illusion of security to ease that fear. But it's safe to assume that the people who raise the money and put forth the required effort to engage in play have the forethought to take precautions so they will not get caught. They didn't catch me when I played and they won't catch any player of real consequence and skill; simply stated they are too smart.
Casinos have tremendous cash flow, which is why almost all of Atlantic City's casinos and Caesars Entertainment properties can still operate while in bankruptcy. Caesars at one time had a debt to equity ratio of 417 to 1. Most casinos are so poorly managed that the executives have turned cash-printing entities into money pits. It is decisions like directing reinvestment dollars into ineffective and irrelevant technologies that have caused properties, and the industry as a whole, to decline. An appropriate analogy would be if Walmart decided to spend hundreds of thousands of dollars on preventing candy bar theft when the cost of the loss is only $8,000.
In addition to these negative dividend investments that the game protection establishment has convinced the decision makers at casinos to implement, they institute variants of games that KILL a player's positive experience. The 6:5 blackjack payouts on 21 games is a prime example. To all the executives at the COSMOPOLITAN in Las Vegas let me ask you this: how full are the 25 plus 6-5 blackjack payout games on your casino floor? I've been there, often, and the answer is not very. Adjustments like this burn a player out faster than the traditional game. When this happens, players subconsciously make the connection with feeling lousy (losing fast) with your property. Not a very good marketing strategy.
Another revenue lowering adaptation that is utilized in the name of game protection is cutting 2 to 2 and one-half decks on a six-deck 21 shoe game. This is another example of lack of understanding of basic economic principles by a casino's executive managers. For ever additional round a casino blackjack table deals per shoe, the casino profits increase over $120,000. (This is after factoring in the losses that would be incurred from card counters.) The derivation for this is outside the scope of this article but those who want verification may contact me for the mathematical proof.
These are just a few insights into the overall approaches that casinos take. Even at this superficial level, it's easy to see why the casino industry is in such bad shape, and more importantly, it verifies that the gaming industry is among the most poorly managed sectors of the economy. This is not to say all are terrible, but many are. In fiscal year 2015, the Las Vegas casino gaming industry lost a total of 662 million dollars and, believe it or not, this was a vast improvement over previous years. But this doesn't have to be the case.
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