The Odds of Gambling
By William Bennett
Many Casino games exist in today’s gambling world. Some have been around for a long time and have become dominant while others exist on the margins of the gambling world. Casino games are designed to be probabilistic in nature and therefore bring the element of luck into the game. Some games, however, allow for some element of skill together with luck which brings in the concept of good and bad gamblers (based on their skill level.)
Casino games — or to be more specific, the payouts — are designed so that in the long run the house is making money on every customer. This is perfectly logical as the casinos are running a business and need to have some sort of revenue stream to cover their costs. Therefore, whoever goes to a casino to gamble should know their expected winnings are bound to be negative despite the allure of the get-rich-quick stories. This is most striking in the game of roulette in which everyone knows they are making 50:50 bets in terms of their winnings however with the presence of the 0 on the board, the odds of actually winning are just shy of 50:50.
Amongst the popular games, there is one in which it is possible to slide the odds over to the player’s side rather than that of the house. However, this also comes with the catch that the rules for this game can be different in different casinos and, therefore, it is a good idea to check at the table the subtleties of the rules before developing a strategy on how to play it.
Before I talk about the details of how players can shift the advantage from the house to themselves, I’ll mention the basics of blackjack. The game, although originally played with just one deck, is now normally played with multiple decks. Also, the cards 2 to 10 are counted at their nominal value while 10, J, Q, and K are all considered as 10. The Ace, however, has a curious attribute where it can be counted as a 1 as well as an 11. The objective of blackjack is to get a score in your hand that is greater than the score in the hand of the dealer without getting busted. A player is busted when he or she has a score of more than 21 in hand. This may seem balanced in itself, however, the fact that the player has to go first means that if both go bust, in effect it is the dealer who has won.
The way skilled gamblers can shift the odds in their favor is by counting the cards that have been dealt and adjusting the amount they bet according to whatever cards are left in the deck. It may be extremely difficult to remember each and every card that is being dealt, especially if multiple decks are being used, but to beat the house at blackjack using card counting that isn’t necessary. There are several strategies to count cards and none of them require the player to remember each and every card that is being dealt. Usually, the methodology is to assign positive and negative scores to each card based on how favorable or unfavorable it is and then simply maintain a running count that indicates the luck factor for winning by being in the game based on what cards are left in the deck.
One of the earliest and simplest card counting technique using the principle above is the one developed by Claude Shannon in 1961. In this simple method, also known as the High-Low method, a Level 1 count methodology is used. Level 1 means that each card can only have the values -1, 0 or +1. Having a running score of positive in the High-Low method means that the remaining cards are favorable to the player. This could be flipped the other way if the system has cards assigned values the other way round. In the High-Low method, the cards having a score of +1 are 2, 3, 4, 5 and 6. All of these cards, if they were remaining in the deck, would be bad for the player. Therefore, once these cards have been removed from the deck, the running total becomes positive. The cards on the other end of the spectrum, 10, J, Q, K and the Ace are, however, good for the player. When the cards have been removed from the deck the player’s likelihood of winning falls and therefore these cards have a score value of -1. The remaining cards that are in the middle (7, 8, 9) are given a 0 score as they can be considered going either way.
A more complicated system is Level 2 in which cards have values of -2,-1, 0, +1 or +2. Although there are also several methods, a popular one is Omega II. This is a highly accurate system and, like the High-Low method, this is also a balanced method of counting. (A balanced method of counting means the sum of all cards in the deck would equal 0). In this method, the following scores are used for the cards. A score of +2 is given to the cards 4, 5 and 6, a score of +1 to 2, 3 and 7, a score of 0 to 8 and the Ace, a score of -1 to 9 and a score of -2 to 10, J, Q and K. Now a score of 0 for the Ace might seem anomalous, however this is because of its dual nature where it can count as both a 1 as well as an 11.
Further complicated systems for card counting include the Level 3 system, which, following the terminology, has card score values from -3 all the way to +3. However, at this level of complication, it adds very little value compared to a Level 2 system. Another useful methodology is to start counting Aces as a separate tally. This can be useful, as the dual nature of the Ace card makes it unique and therefore worthy of more attention by itself as opposed to all of the other cards.
Card counting techniques owe much of their popularity to the MIT blackjack team. The roots of the team can be traced back to 1979 when a group of six students from the Massachusetts Institute of Technology used their mathematical genius and gambled at Atlantic City’s Resorts International, winning fortunes during their spring break. J.P Massar, one the students, went on to teach the course “How to Gamble if You Must” in the Independent Activities Period (IAP) and taught other fellows card counting. Later he organized teams with other students from this class and professional blackjack players to seize the opportunity of gambling at the Atlantic City casinos where the recent ruling rendered the casinos unable to ban card counters from their tables. This informal group had modest winnings at most. In 1980 Massar met up with Bill Kaplan and things took an interesting turn. Kaplan had an influential role in the formation of the official MIT blackjack team and brought it to the limelight.
Kaplan was a recent Harvard MBA graduate and had successfully managed blackjack teams in Las Vegas before the players went on to separate paths to explore opportunities at casinos worldwide. Massar asked Kaplan to observe his teams and give feedback. He discovered the teams were not employing the use of coordinating strategies and were unable to benefit fully from the use of these complex strategies. To gain from his experience managing such teams successfully, Massar acted upon Kaplan’s instructions and brought informal management procedures where all the members had to undergo tough screening and received training in the new card counting system and strategies that borrowed from Al Francesco and Ken Uston. Members were tested in trial-by-fire rounds and monitored during their playing sessions. Semyon Dukach, a member of the team in the early 1990s recalls that after a trip to Vegas, they would have to record and enter all the information about the game’s events into the computers. After all the preparation, the MIT blackjack team of ten members, including both Messer and Kaplan, first played in August 1980 and more than doubled their initial stake within a span of just ten weeks.
The members of the team traveled and gambled together. The team at one table would consist of a counter who would keep track of the cards and secretly indicate to the big bettor in the team when the high cards are about to be dealt. The big bettor would at this point start to intensely wager high until he was indicated otherwise. The team was making a lot of money and was traveling to Las Vegas almost every weekend. Gordon Adams of casino security is often famously quoted describing the $400,000 winnings weekend the team had in Las Vegas.
Anonymous investments started pouring in and the investors expected a high return on their investment. Famous numbers quoted include a 154 percent return on investment after expenses. With such large amounts of money being frequently won the members of the team started to live the high life with all of its perks and benefits. They had the finest penthouses, limousine rides and sat in the front rows of shows and championships. These were the luxuries they could now afford.
Winning such fortunes puts the casinos on alert, as they are losing money. While card counting is not illegal, casinos can spot and ban such players from their premises. In order to avoid being banned from playing at their tables, the MIT blackjack team members had to take certain precautions and not always appear to win, the controller of the team would lose small amounts of money while waiting for the big player to take his turn. Members often faked their identities, appearing to be high rollers and people who gambled on a regular basis to avoid suspicion. Dukach went to the Caesar’s Palace as a Russian arms dealer for a whole year and Johnny C, who later became a member of the Blackjack Hall of Fame, went multiple times dressed as a woman. Besides the impersonations, there was also the issue of handling the large sums of cash the team members won. Transporting large amounts of cash winnings involved strapping them to their bodies.
The casinos caught up to the scene and started identifying players and refusing to allow them to play. As the news would travel and others were alerted, the team members were being banned from other casinos as well. Kaplan had to withdraw from the team as he was frequently getting recognized and could not enter a casino without alerting the security to look for rest of the team members. During 1989, their peak year, the team consisted of 70 members. After this, the members were losing their interest or could not keep up with the high stress of the game. A few of them also disbanded under the illusion they had the money no longer needed investors and rules to play by. Given such a scenario the team grew apart.
In 1992 Kaplan decided to make a return after things had slowed down and casinos were not looking for them. He partnered with the veterans Massar and John Chang and set up Strategic Investments (SI). They recruited and trained students and had teams play in casinos throughout the world. The business plan for SI was quite efficient, however, it failed to execute properly due to many management and compliance issues. Also, the casinos had started to catch on to the team’s tactics and strategies and successfully identified players from their university yearbooks. The reign of SI was short lived and, after paying out all of the team members and players, SI shut down its operations in December 1993. The players went their separate ways and many continued playing at casinos in other regions of the world.
The MIT blackjack team legend has received much attention from the media and the players have
been covered by documentaries and interviews frequently. Their stories and how they managed to make fortunes formed the basis of many books such as “Bringing Down the House: The Inside Story of Six MIT Students Who Took Vegas for Millions.” A few players also went on to author their experiences, including Jeffery Ma and Nathaniel Tilton. Hollywood has also presented us with movies such as “The last Casino” and “21,” inspired by the events that occurred while the MIT blackjack team earned their fortunes at various casinos.
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