How a high roller took millions off three Atlantic City casinos without cheating


Mark Bowden's Atlantic article tells the story of Don Johnson, a high-rolling gambler who broke the bank at three Atlantic City casinos without card-counting or other "cheats."

Years ago, I was mildly obsessed with understanding casino economics and cheats, and read a bunch of books on how to win (or at least lose slowly) at a casino. The consensus among the experts I read was to realize that most skill-based casino games are only mildly "negative expectation" (that is, if you play them with perfect statistical strategy, you'll lose a little money over time). Also, most casinos distribute "comps" (freebies) to make up about forty percent of your estimated losses. These losses are calculated by pit bosses who keep an eye on consistent gamblers and observe the size of your normal bet and the tightness of your play, then make a guess at how much you're losing per hour, and multiply that by the number of hours you spend at the table (or at least, they did -- some casinos now use automated stored-value wagering cards that eliminate the need for estimation).

The secret to converting the negative expectation game to a positive expectation game was to trick the pit bosses. Play very slowly when the pit boss isn't watching, making the minimum bet on each hand and losing as slowly as possible. When the pit boss comes by to look, start playing fast and loose, and increase your bet-size. If the ruse works, the pit-boss will be tricked into comping you enough freebies to make your play pay, even if only by a little.

The problem with this method is that it means that you can get a "free holiday" in Vegas or Atlantic City only if you're willing to devote most of that holiday to standing at a blackjack table or video-poker machine playing hand after hand after hand, for eight or ten hours a day, playing with perfect, machine-like precision, making no mistakes at all (get the odds wrong and your profits can disappear in a single hand), in order to win a few nights in a hotel, show tickets, buffet passes, and some golf. Most people capable of that sort of consistent activity and focus can find gainful employment that pays substantially more than they'd earn at the tables and just buy the vacation outright, without having to squander their holidays trying to beat the house.

But Don Johnson went much further. As a high-roller, Johnson was often solicited by the big casinos to come and play at their tables. As the recession deepened, the offers got sweeter. They offered him "discounts" on his losses -- cash rebates of a fixed percentage of the money he lost at the tables. Johnson is also a monstrously focused, skilled blackjack player. So he would negotiate these excellent deals from the casinos, bring a huge stake with him, sit at a blackjack table, and play at high velocity, making zero mistakes, for extremely long stretches. With perfect, high-speed play, he could convert his small positive expectation -- thanks to the discount he'd negotiated with the house -- to multimillion-dollar winnings.

Sophisticated gamblers won’t play by the standard rules. They negotiate. Because the casino values high rollers more than the average customer, it is willing to lessen its edge for them. It does this primarily by offering discounts, or “loss rebates.” When a casino offers a discount of, say, 10 percent, that means if the player loses $100,000 at the blackjack table, he has to pay only $90,000. Beyond the usual high-roller perks, the casino might also sweeten the deal by staking the player a significant amount up front, offering thousands of dollars in free chips, just to get the ball rolling. But even in that scenario, Johnson won’t play. By his reckoning, a few thousand in free chips plus a standard 10 percent discount just means that the casino is going to end up with slightly less of the player’s money after a few hours of play. The player still loses.

But two years ago, Johnson says, the casinos started getting desperate. With their table-game revenues tanking and the number of whales diminishing, casino marketers began to compete more aggressively for the big spenders. After all, one high roller who has a bad night can determine whether a casino’s table games finish a month in the red or in the black. Inside the casinos, this heightened the natural tension between the marketers, who are always pushing to sweeten the discounts, and the gaming managers, who want to maximize the house’s statistical edge. But month after month of declining revenues strengthened the marketers’ position. By late 2010, the discounts at some of the strapped Atlantic City casinos began creeping upward, as high as 20 percent.

The Man Who Broke Atlantic City

(Image: A blackjack hand at the casino, a Creative Commons Attribution (2.0) image from Images_of_Money's photostream)

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