Apr

15

I just read The Atlantic article "The Man Who Brok Atlantic City" about Don Johnson the blackjack player who once took $ 6 million in one night from an Atlantic City casino. It was a great read, and I think any one who asks questions about how to be a trader or an investor should read it.

One amazing thing I learned is that Johnson figured out how to drive the house edge even lower. Through hard negotiations he got it down to (by his estimate) just one quarter of one percent. That’s super close to dead even — but still not quite enough. And then came the coup de gras. With some negotiated loss discounts on top of that — agreements for the casino to reimburse a certain amount of if Johnson lost — he actually flipped the overall edge in his favor without the casino realizing it.

House management got played by a math shark. So how did all these casinos end up giving Johnson what he himself describes as a “huge edge”? “I just think somebody missed the math when they did the numbers on it,” he told an interviewer.

Sam Marx writes: 

The article stresses that the player, Don Johnson, did no card counting.

If true, he may have used the Basic Strategy with a few of the newer techniques , plus the concessions he received to get the edge.

Card counting is primarily used to determine size of bet and to a lesser extent to vary the Basic Strategy under different counts.

Beating the House and varying the size of the bet are the two things that give away card counting.

However, varying the size of the bet may be somewhat hidden by betting the same amount from hand to hand but after a winning hand if the count is positive then just the let the original bet plus the winnings ride, as letting a winning bet ride is a technique used by many gambler who are not card counters and usually does not cause the House to be suspicious.

The article does not indicate if Don Johnson varied his bets.

If the article is true, he may have been a big winner even with a small edge , because his bets were huge and he may have quit before playing many hands and with luck may have had a good streak during those few hands he played.

The article is interesting, it may be true or hype.

I would like to know more details.


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3 Comments so far

  1. steve on April 16, 2012 4:08 pm

    The biggest and best lesson here is

    EVERYTHING IN LIFE CAN BE NEGOTIATED.

    A true businessman and entrepreneur understands. It is a natural part of the essence of business. Nothing is etched in stone. In fact, played at the highest level executives, lawyers, all love to play it. For some of them it is what they live for.

    In gambling circles two of the great “props” fellows were Binion and Jack Stupak (owner of Vegas World). Binions had a reputation of never refusing a bet no matter how large. Stupak was a flat out character.

    The second lesson here is negotiation is a learned process. It is far more art than science. The best way to learn to negotiate is to start doing it after learning a few techniques and trying them out. That is what most people do not want to do. They want to win but they do not want to work at it.

    The third lesson is ask ask and keep on asking for something. You will be amazed as to what people will concede.

    sl.

  2. Terry Lesniak on April 16, 2012 11:28 pm

    Interesting article.

    It reminded me of Steidlmayer’s concept of “free exposure” in Markets and Market Logic by Steidlmayer and Koy.

  3. steve on April 18, 2012 10:13 am

    Archie Karas was the most famous crap shooter of all time. He won millions he was ahead as much as $20Million at one time. He once held all of the big chips at Binions in his safe in his room. Binion had to ask him to come down to exchange them for cash.

    He went on a tear for several years. Eventually he went broke as all gamblers do. Notice i said gamblers. I do not equate poker players as gamblers.

    This fellow also will go broke if he continues to play blackjack without counting. It is just a matter of time until he hits a bad streak.

    Keynes said the market can remain irrational far longer than you can remain solvent.

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