Wednesday, August 17, 2011

Is the world flat and can apples rise to the sky? Not if you're in the shilling game and it's your job to tell gamblers they can't win.

A while back, a well-meaning (and, let's face it, mildly mischievous!) reader sent me a link to a website that looks like the screen shot below, and challenged me to respond to its seemingly irrefutable arguments.

No problem, because I have been cheerfully countering the YCW (You Can't Win) Brigade for years, and their message that losing is fun, so learn to live with it is a topic that I am always happy to revisit.

First, let's set the scene once again for the benefit of new readers.

In the red corner are casinos, bookmakers and their acolytes, including Dr. Jacobson's consultancy outfit, which has among its associates the redoubtable Mike Shackleford. As the articulate and well-informed "Wizard of Odds" - a title he stole from Alex Trebek of TV's Jeopardy! - Mr. Shackleford is one of the most blatant casino shills anywhere on the world wide web.

(I think it is entirely appropriate that the Wiz proudly displays the name of his sponsor between the twin tailpipes of the fancy car Bodog bought him!)

Everyone has the right to make a living, but we have to recognize that it is in the best interests of the sharks of the so-called "gaming industry" and their lamprey-lipped remoras for gamblers to believe that only blind luck can make them winners.

In the blue corner is a motley collection of shysters, thieves and con-men with "winning" systems and strategies to sell for large sums of money, along with people like me who say (without asking for moolah) that consistent, educated, unemotional money management can beat almost any game in the house.

To get back to the Jacobson website, experienced gamblers will know that every word the good doctor has to say is true - at least as long as players do what the gaming industry requires of them and bet randomly and irrationally until their inadequate bankrolls are exhausted.

Casinos do not set bet values and play a passive role in the relentless reeling-in of lost wages, but they know their customers inside out and take a number of psychology-based steps to corral them into behaving the way they are supposed to behave.

Chief among those methods is the table limit, a cunning ploy so widely misunderstood (thanks to a very effective disinformation campaign supported by Dr. Jacobson and his ilk) that not too long ago, a state about to endorse table games proposed setting a $25 blackjack bet limit to "help" its citizens keep their losses under control.

The effect of that bit of nonsense would have been exactly the opposite of the politicians' claimed intention, routinely increasing the theoretical 1% house edge at blackjack to 20% or worse (see below).

Over the years, I have heard all sorts of half-baked explanations for table and house limits, the most common being that:

1. They exist to protect players from themselves, and
2. They are there to segregate gamblers according to their means, so that minnows are not intimidated by whales, and big fish are not infuriated by the underfunded bungling of small fry.

In fact, they exist - surprise! - entirely for the benefit of the house, to encourage players to bet relatively tight spreads, ensuring that when they inevitably hit a losing streak, they will be unable (assuming they might otherwise be willing) to buy their way out if it.

Regular readers know what I am going to say next!

The tighter a gambler spreads his bets, the more likely it is that he will be cleaned out by even a relatively short-lived negative trend.

The average gambler (at least when sober) very rarely spreads wider than 1 to 10, meaning that a $10 punter will blanch if a losing streak pushes him to bet more than $100.

It is a mathematically simple matter to demonstrate that a very wide spread (at least 1 to 1,000) will consistently overcome the house advantage, particularly at games where the HA is less than 2% (blackjack, baccarat and craps, for example).

I plan to stretch this discussion out over several posts in coming weeks, but I decided to log on to the Wizard's sponsor and play a few rounds of baccarat at a virtual table where the limit is $200 and the minimum bet is $1.

A 1 to 200 spread is about right from a casino's standpoint, because it will wipe out more than 99% of all players, especially because most punters belly up to table games with far too little money to make them a threat to the house.

Before going into detail about the 2,500 rounds of baccarat I played against Bodog, I want to address the main points of the Jacobson home page.

It is of course axiomatic that even if 10% of all the players on a given day are winners, the house's take when all the chips are counted will at worst match Dr. Jacobson's disingenuous equation.

What is not mentioned is that erratic, random betting, drunkenness and outright idiocy, among other factors favorable to the house, will ensure that the casino's true advantage will far exceed negative expectation, and that a major contributor to the bottom line will be table limits.

So although at blackjack the negative expectation for a sensible, sober player will be less than 1%, inadequate resources and random betting will often increase the house edge against some players to 25% or more.

The common calculation that at a -1.41% game such as craps you can expect to lose 1.41% of the sum total of all your bets is claptrap, and Dr. Jacobson and his associates know it full well.

If you bet randomly and "conservatively" (with a narrow spread, in other words) there is a better than 50% probability that you will lose ALL your money.

Dr. Jacobson archly derides progressive betting, knowing that while it will not win every time, it is the ONLY way to repeatedly overcome the house advantage at table games.

Regressive betting can't win, obviously, and neither can flat betting (or random betting, which ultimately amounts to the same thing).

In the short term, blind luck can make even an idiot a winner. But no one with more than half a brain can (or would) count on luck in the long run.

Bodog does not offer a round-by-round log of its "practice" games, so I kept my own, noting bet values, outcomes, naturals and ties as I did years ago against Ken Smith's excellent blackjack simulation.

I then punched the whole lot into a spreadsheet, and ran Target rules against the exact same set of outcomes, dispensing with the $200 limit and allowing instead bets up to $5,000 (1 to 1,000).

Dr. Jacobson and his casino clients want us to forget that when we hit a table limit, our chances of winning are unaffected if we defer to that limit, and take our money to a layout where much higher values are acceptable.

Double-up or Martingale bettors do that all the time in the real world, table-hopping after two or three losing wagers in any one location until they finally hit the single win they need - hopefully with a natural at blackjack or a 2x payback at craps to give their bottom line a bonus boost.

Dr. Jacobson betrays his true agenda by pretending that casino managers encourage progressive bettors, knowing that they are certain long-term losers.

That's a lie. Casinos abhor progressive bettors because of the damage they do to the house's bottom line, and they will do whatever it takes to hinder them. One common ploy is to prevent new players from betting on a blackjack or baccarat layout between shuffles. Another is to show these "cheats" the nearest exit.

Here's a summary of my marathon session against Bodog's freebie baccarat game.

The Target rules variation in use can be discerned from this summary, but for the most part, the rules are irrelevant.

The only rule that matters in the end is that after a mid-series win (meaning a win while you're "in the hole") you must bet either 10x the value of your previous bet or the value of the loss to date plus your Target value.

So if you win a $50 bet and you're still $375 down with a win target of $25 per series, your next bet must be $400. And if that exceeds the current table limit, back away and place the bet somewhere else.

Target includes a multitude of other rules which enhance the overall win and reduce the risk of ruin along the way, and a serious player should learn and understand them.

But in the end, the "LTD-plus" rule will save the day, not every time (obviously!) but often enough to make nonsense of the Jacobson axiom, at least as far as you are concerned.

As for me and Bodog's $200 limit baccarat scam, when I bet the house's way, the bottom line looked like this:

A sad, sad story, we can all agree, with the -1.41% overall house edge more than doubled in my case.

The Target summary shows what was achieved against the same set of outcomes with a 1 to 1,000 spread ($5 to $5,000) which is well within Las Vegas reality: instead of a loss of -1.41% of my total action, a win worth 8.3% of the combined value of all my bets.

You can see from the summary that a lot less than 5% of all my bets exceeded $500, that 87% of them were at $50 or less, that the average bet value was $105 and the maximum bet the strategy required was $3,840 (not $5,000).

For the record, my exposure at a sensible spread rather than at the one devised to fatten Bodog's bottom line was $6,105, giving me a 350% return on my investment.

Something Dr. J and his cronies won't tell you is that anyone who backs the Bank at baccarat is, er, unwise to say the least.

The house line is that the commission on Bank wins is 5%, which would be relatively painless if the house also took only 95% of your dough when you lost a Banker bet.

No such luck!

I never bet on the Bank, but we can get a good sense of how misleading the "only 5%" claim truly is by assuming that half of the wins in my Bodog session were Bank bets, and then deducting 5% from their total.

Wins totaled about $120,000 making $60,000 subject to the 5% gouge - and deducting $3,000 from my final win: almost 14%, NOT 5%.

It is not uncommon in a really challenging to-and-fro for commission to wipe out a player's entire winnings and more besides.

Why put up with that?

More about this another day...

An important reminder: The only person likely to make money out of this blog is you, Dear Reader. There's nothing to buy, ever, and your soul is safe (from me, at least). Test my ideas and use them or don't. It's up to you. One more piece of friendly advice: If you are inclined to use target betting with real money against online "casinos" such as Bodog, spend a few minutes and save a lot of money by reading this._