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R. Paul Wilson On: Money Management, Strategy and Luck in Gambling

Playing against the house usually means playing with a negative expectation, but when luck is on our side, we can sometimes walk away with a healthy (or enormous) profit, in the long run, we are bound by simple arithmetic to lose. Whether we narrow that house edge to a hairline advantage or play a system that swings the odds in our favor, how we play and what we play will affect the ultimate outcome, and we must be extremely careful with those choices.

Winning Streak and Timeless Gambling Tactics

In Las Vegas, sometime in the early 2000s, word quickly spread of a player who was on an implausible winning streak that had already netted over a hundred thousand dollars from one of the well-known Downtown brick-and-mortar casinos. The player soon moved to the strip and continued his run, ballooning his bankroll to well over one million dollars as casino managers across the city began to wonder if those wins were legitimate.

The Las Vegas gaming industry was soon flush with rumors of a “new system,” so to sort fact from fiction, bosses contacted each other directly and were stunned to learn the player had started with just a few hundred dollars, which he had quickly increased as he moved to higher and higher stakes.

Was this guy controlling dice, switching in loads or using psychic powers?

All of these possibilities were considered, but the truth was much simpler: He was using nothing but the simplest of all strategies while relying entirely on luck.

Let’s not be distracted by the fact that a winning player is so unusual that the Las Vegas grapevine went into a panic or that the most likely explanation was that he must be cheating; instead, let’s consider exactly what he was doing and why it was so successful over such a short period of time.

Many years ago, I read “The Gambling Secrets of Nick the Greek”, a pseudo biography detailing Nick Dandalos’s life and how one of the most famous gamblers played. The book is filled with questionable stories, but the one lesson I learned is that a true gambler must bet big when they’re winning and bet small when they’re losing.

That there, in one line, is the gambling secret of Nick the Greek (not to be mistaken with Archie Karas, who has the same nickname); it’s also the secret of that mysterious Las Vegas player who, for one weekend, confused and concerned the Nevada gaming industry.

Playing for the Game - Beyond Wins and Losses

Nick Dandalos famously won and lost over $500 million dollars during his career but died almost penniless in 1966, ending his days playing $5 poker in Gardena. When asked how he could play for such low stakes when he once played for millions, his response was, “It’s action, isn’t it?”

Nick the Greek lived one hell of a life and was a consummate gambler, interested in playing more than winning. In a way, Nick’s secret is in the title of the book “The Gambling Secrets” rather than “The Winning Secrets” because whether or not Nick won, he fulfilled his primary goal, which was to play.

As he famously said:

The next best thing to gambling and winning is gambling and losing!

If that sounds like music to your gaming ears, then good luck to you, and I hope you gamble responsibly and only bet what you can afford to lose, but for many of us, the goal is to play with the best available odds and, if possible, shift those odds in our favor.

There’s a reason many advantage play systems are considered to be a grind.

Regardless of the game you play and or what strategy you use, it’s essential that you monitor and assess results with a cold eye. From travel expenses to negative swings, all of us pay to play, and any strategy that offers an advantage must first cover our costs before turning a profit.

If we’re really honest with ourselves, those profits need to be worth all that effort, or we’re just throwing away our time, which is arguably our most valuable resource in life. In the long run, our profits or losses will reflect the odds, and the one thing I’ve learned since playing for too many hours is that walking away from the table would have increased my overall profits on many occasions.

Another quote from Nick the Greek perfectly illustrates this:

The house doesn’t beat the player. It just gives him the opportunity to beat himself.

Whatever game or strategy you’re playing, whatever odds you have and however much you might be “up,” there’s a point where you are bound to start losing, and there’s no sure way to know the best time to walk away except in hindsight. I’m often asked about the so-called “hit and run” approach of playing until you reach a pre-determined profit, then walking away, but in the long run, that approach will not be profitable unless luck lends a hand.

The Delicate Balance of Luck and Strategy in Craps

The one game I play “just to play” is craps, where my only goal is to enjoy the game without losing too quickly; sometimes, I walk away with more money, but often, I simply try to last as long as I can and enjoy myself. With a little luck, I can find my stack increasing enough to play more of the layout, increasing bets until the dice turn against me when I revert to betting the minimum.

This approach can be extremely profitable and allow me to play a lot longer simply because I play small when the dice are cold and big when the dice are hot but let’s be clear, I am still relying on luck, and most days, I will be happy just to break even. When we look at roulette and craps playing systems, the “bet more when you win and less when you lose” approach is baked into all of them, but while maths can help win games, it can work against you if not careful.

This is not the same as playing an advantage where any strategy must be observed with a cold heart while the numbers dictate every decision. I often wonder if managing money according to wins and losses instead of mathematical factors such as a solid count might have increased profits over time, but as a friend rightly observed, card counting (and other strategies) is money management based on hard data.

So, is it really worth learning to size your bets according to your playing results? Logically, the answer is no since your bet sizing is based on something that’s already happened (a win or a loss) but to players, it’s based on what’s happening because they believe winning and losing happens in streaks other than in isolation. We can discuss why this isn’t so but try telling that to a player who just won or lost ten times in a row!

The Bottom Line

Money management is mathematically questionable but can increase the amount of action in the long run (which was Nick the Greek’s goal). As it turned out, that winning player in Las Vegas did the same, and by the time his luck ran out, he had more than enough money to walk away but true to The Greek’s wisdom, he kept playing, and the odds allowed him to lose it all.

In the end, the money simply moved from one casino to another while the player went home a loser.

It reminds me of an old joke:

In Las Vegas, a couple are heading for the elevators when the husband decides he’s not tired, so sends his wife upstairs while he heads to the tables. He places $5 on his favorite number, and it comes up! He presses his winnings, and it comes up again!

Three more winners, and he is escorted to the high stakes room where he plays for tens of thousands of dollars a time, hitting many more than he misses until he asks the house to let it all ride on one spin of the wheel.

Betting millions on red, he watches the ball spin and land in GREEN!

He lost it all.

Returning to his room after playing for hours, his worried wife asks how much he lost.

“Just five bucks,” he said and went straight to sleep.

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