Recently in *Gambling Category

MIT's Card Counting Team Business Plan

By Philip K. on October 2, 2009 1:26 PM | 1 Comment
The Boston Team aka MIT Team aka Strategic Investment card counting team's business plan has found its way on the internet.  

Card counting teams are so 19 - 90's.  



If you scroll to the very bottom you can see the bankroll they were working with. $1.2 Million.  Serious money.

College Problems With Gambling

By Philip K. on October 2, 2009 10:23 AM | 0 Comments

Colleges Often Turn a Blind Eye to Student Gambling Problems

Illustration of student thinking about gambling.The New York Times

Sometime last year, the University of Alabama got serious about raising awareness on campus of gambling addiction. For about a week, there were articles about the subject in the student paper and some talks on campus, Shannon Shorr, a business major, recalled.

After that, the campaign seemed to fade, Mr. Shorr said.

................... (NYT)


Kids in college have a lot more to worry about than studying for the calculus exam or which major to choose.  Too many college students are taking a binge approach to everything including gambling.

They binge drink (well, they've always had).  They binge eat.  They binge spend and now some are binge gambling.

The funny thing about college is that was when I first learned how to gamble.  Before I took a statistics course on blackjack card counting, I hated gambling.  Even after I acquired an edge from this peculiar college course, I still adopted a negative view of the gaming industry.

I see the problems from gambling all the time.  They prey on those with addictive propensities and rob them of their financial worth.  Casinos wrap this distasteful behavior under the pretense of "entertainment".  I can tell you right now, it's not fun to see the fish lose their rent money or money they were going to spend on clothes for their children.

I imagine it's worse for the majority of college students who pick up gambling.  A little football betting or poker betting might seem harmless.  Many students, I'm guessing over 95%, don't have the mental acuity and risk personality to succeed in gaming.  Many will think they're smart enough to win in gambling, but that's just a disconnect with reality.  The kids will lose a large portion of their young adult lives and for that, Universities should do something more.

I'll Have Some Pie

By Philip K. on September 3, 2009 9:54 AM | 0 Comments
Some humble pie.  My stop loss on gold has been hit and I'm out of my losing position.  On August 10th, I was short gold in DZZ at $20.53.  Today it's at $18.72.  I'll take the 9% loss on this position and cut it.  My loss is much less than that, but for the sake of site consistency I'll go with the 9% figure.

Upon introspective reflection, I could have done some things differently.

I've previously backtested a number of technical systems for gold.  My technical systems actually gave me a buy signal for gold.  I went against these technical signals and followed a more macro approach.  I am still of the firm opinion that gold is overpriced, but it can stay overpriced much longer than I have patience.

I hate technical systems with a passion.  I know how the math works and I see some of the statistically significant results, but some measurements like stochastic and oscillators aren't grounded in much intuition.  In this case, the technical signals were correct.

The lesson I'm taking away from this trade is that I can be right or I can make money.  I might be right about gold one day, but that indeterminacy is not enough to make me any money right now.


Update:  Uhh.  Gold futures have just broken above their top Bollinger band.  My backtests found a reversion when Gold touches either side of the band.  The recent breakthroughs are technically a sell signal for Gold, with about a 1.1% expected return.  Combined with my macro forecasts, now would be the better time to short gold. Would haves, should haves, and could haves.  Loser talk.  Even though macro and technical signals are aligned, I'd have to sleep on it.

Would You Politely Shut the Fuck Up

By Philip K. on August 26, 2009 9:45 AM | 0 Comments
2195597.jpgArnold Snyder wrote an excellent post about talkative players at the poker table a while back, entitled Shut the Fuck Up.  Some poker players just don't realize that educating the fish makes the game harder.

People's propensity to talk too much exists in all forms of advantage play and investing.  A fine delicate line exists between sharing ideas among private individuals and shutting down the game.

A couple of years back one could have taken simple algebra and made a lot of money gambling online through the various bonuses.  The returns on some of these games were equivalent to a ROI of 100% for about 10 minutes worth of work.  No kidding.  That was precisely how I built my small fortune with a couple of hundred dollars.  

The first popular site to discuss these ideas decided to shut down its message board because of the information leaks.  Another site popped up to replace it.  The leaks weren't as bad as the previous site, but that site shut down too.  The current most popular site has a new owner that does not understand the value of silence.  Any and all ideas are discussed and talkative bitches have killed the game.  Where ROIs of about 30% were common, now the most common ROIs are about 1%.  The game is dead after factoring in the risk of having one's funds stolen.

What most people don't realize is that excess returns are proportional to the flow of information.  A broad interdisciplinary understanding between information theory as it relates to gambling, investing, and maximization of wealth would clearly illustrate this.  If you care to explore this idea further I'd recommend the book Fortunes Formula by William Poundstone.

By writing this very post I am also guilty of contributing to the information leak.  I'd like to believe that my contribution is much more minimal.  I don't mention too many specifics and have not discussed the strategies or the ideas behind these opportunities, but the very act of mentioning them is a leak.  I maintain this blog so that I can crystallize my thoughts into a concrete form.  The value from forcing me to organize my thoughts exceed the slight leak it might cause.  I apologize for that.  If at anytime I feel this site is hurting my profits, I'd shut it in a heartbeat.

Relating this to the investment world, people with high Investor Quotients (IQ) don't discuss their methods.  Rather than proving to the world they're right and the Efficient Markets Hypothesis is wrong, they'd rather make millions and billions.  If that much money is on the line, they know how to the STFU.

If you spot an investment opportunity, $100 lying on the floor, or a game that can be beaten, don't tell others.  STFU and take the money.  It sounds simple enough, but people can't keep their mouths closed in real life.

Some People Just Don't Get Statistics

By Philip K. on August 25, 2009 7:23 PM | 0 Comments
I've met many bright legal minds.  Probably some of the sharpest people on this brown and blue planet.  Unfortunately for many attorneys, they're not very sharp when it comes to math and statistics.  I suppose that's the reason why they are lawyers and not engineers.  

The following are comments about the expected value for a contestant on Who Wants to Be a MIllionaire.  (Above the Law)

Card Counting Is Not Illegal

By Philip K. on July 30, 2009 10:48 PM | 0 Comments
hangover.jpg"Card counting is not illegal.  It's just frowned upon.  Like masturbating on an airplane." -- Alan


Bill to Re-introduce Online Gambling to U.S.

By Lowball on July 2, 2009 6:29 AM | 0 Comments
Thumbnail image for barneyfrank.jpgCongressman Barney Frank, [D-MA4] is gaining support for his
HR2267.pdf bill which will overturn current gambling restrictions imposed on U.S. players by the Unlawful Internet Gambling Enforcement Act. This bill introduces new policies that would allow the United States to generate up to $52B in tax revenue over the next decade according to the accounting firm PricewaterhouseCooper (pricewater2008.pdf).   The congressman continues to gain additional support from house representatives (increased to 23 co-sponsors as of May 21st)

In the advent of today's economy, the incentive$ to pass this bill are difficult to completely ignore. 

on another note:

What would the government do with an extra $52B?  Spend it on the Department of Defense of course!  A new website detailing government spending on information technology investments and allow users to track the history/progress of these investments.  

Check it out! http://it.usaspending.gov/ 

 

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Russia to Relocate Its Casinos

By Philip K. on June 29, 2009 9:34 AM | 0 Comments
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Interesting read on Putin's executive morality in relocating casinos to the outskirts of Russia.  (NYTimes)  I never got a chance to play in Moscow and it's probably a good thing.  I've heard they've got some profitable angles at their casinos, but they're still heavily controlled by organized crime and cheating is not beyond their abilities.  I suppose it's a mixed blessing.

Mothers Just Don't Get It

By Philip K. on June 27, 2009 5:28 PM | 0 Comments
mother.JPGThe NYT has an excellent story of a young poker grinder from the mom's perspective.  My Son's Gamble.  Typical fashion of moms to be overly worried, crazy, and to not understand the math.

The Riviera Is Delisted From the NYSE

By Philip K. on June 25, 2009 11:51 PM | 0 Comments
Riviera Holdings (Riv) which owns the Riviera casino will be delisted from the NYSE for failure to comply with requirements.  Meaning its shares are no longer worth a buck.

I've been to the Riv maybe once.  That place stank.  I had some time to kill and thought I'd scout out the games.  When I left the place, I reeked of body odor and despair.

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Betfair Reports Suspicious Wimledon Bets

By Philip K. on June 24, 2009 1:51 PM | 0 Comments
The NYT Reports:

The Wimbledon men's first-round match between Jurgen Melzer, an Austrian player ranked 30th in the world, and Wayne Odesnik, an American ranked 109th, is being reviewed by tennis officials after a sudden rush of money poured into online betting services and traditional London betting shops.

The bookies, however, said they had not found any evidence of match fixing, and blamed nothing more than sharp gamblers discovering the news of an injury for the run on the match. Odesnik, who had strained a thigh, lost in straight sets to Melzer in only Odesnik's second grass match of the year....

Maybe the Electronic Poker Tables Aren't too Popular

By Philip K. on June 23, 2009 11:28 AM | 0 Comments
ppt.jpgThe Excalibur, one of the first casinos in Vegas to offer electronic poker tables, will be pulling all twelve of them from their poker room.  (Forbes)

*The proposed benefits of these poker tables were to come in the form of faster speeds, no shuffling, and a better transition for internet poker players.  I'll have to admit that I'm not a big fan of these electronic poker tables.  It's nice having a dealer at the table, and there's something satisfying about the feel of the poker table and chips.  

The Legality of Centsports

By Philip K. on June 20, 2009 11:36 AM | 1 Comment
Centsports.com has become very popular over the past two years.  For those unfamiliar with Centsports, you watch an ad and you get .10 cents to gamble on sports games.  cs.jpgThe website claims that the website is legal, because no money is ever deposited into the website.  This is the most recent interview with the founder.  

I have doubts about the supposed legality of the website. Sports betting is sports betting. They can argue that nobody ever put up any money and it's all "for fun". The DOJ will argue it's sports betting as covered under the Wire Act and players and the site are making money. Money is being made by watching the ads, and that cash is being used to gamble on sports online.  The Wire Act states:

Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, shall be fined under this title or imprisoned not more than two years, or both.

It's money, people are wagering on sports, and the site is presumably profiting from it. This sounds awfully like the business of wagering on sports, as covered under the Wire Act.

The DOJ probably won't come after the bettors, but they'll go after the site's owner. It doesn't help that the kid who runs the site lives in the United States, Texas to say the least. If he gets "investigated", I'll be willing to bet top dollar the site will buckle. On that corollary, whenever you can reasonably cash out, you should do so. There are no guarantees with this site. 

What centsports is hoping is that if they stay a small fish (betting cents), they'll be under the DOJ radar. Considering the DOJ priority shifts, current resistance from online gamblers, and the new presidential administration, it's not a completely stupid decision. It's still a stupid decision though, because the site owner is gambling with jail time. To put it bluntly, jail sucks, so the EV of the crime better be worth the probability of jail time. 

The reason why the site refuses to post anything regarding its legality is because it's probably not legal. No reasonable lawyer will advise otherwise. Simple enough explanation.

I would put the odds of any prosecutor argument being successful in this particular case at 85%. That's just my educated guess.

Gambling MySpace? Won't work.

By Philip K. on June 12, 2009 5:01 PM | 2 Comments

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As was reported by the Bear, Resorts Atlantic City is hoping to capitalize on online social networks by offering a network that revolves around gambling, MyResortsCasino.  

I just don't see it making significant inroads for two very strong reasons:

    1. Gambling is a stigma and it's difficult for people to profess a liking for it.
    2. The value from online networks is dependent on the number of members.  The network is very small meaning it has very little value in drawing people.
The stigma of being labeled a "degenerate gambler" probably outweighs any slight benefit of the network.  

I used to know a fancy ten dollar equation that describes the strength of networks based on the number of members.  It escapes me at the moment, but the above intuition makes sense enough.

NYT Writes About US Online Gambling Again

By Philip K. on June 12, 2009 4:44 PM | 0 Comments
As was previously reported by the the New York Times about US Poker players getting their money frozen, a new NYT blog entry offers a valuable tidbit from Professor Nelson Rose.  

Online poker player should diversify by having their money in multiple accounts in the case of government seizures.  The advice for all online gamblers to diversify into multiple accounts is valuable overall.  There are too many shady casino companies, e-wallets, and outright theft.  It's prudent to hedge your funds even though it might reduce liquidity.

There's not much in the way of diversification for US Gamblers because of limited options, but every little bit helps.  

US Online Payment Processor Gets Frozen

By Philip K. on June 10, 2009 11:58 AM | 0 Comments
The New York Times is reporting two payment processors that handle poker funds for Full Tilt Poker and Poker Stars have been frozen.  This cat and mouse game has been ongoing for American players since the 90's.

My legal hat says the payment processors will be fighting this seizure in the courts.  The legal arguments that the US Wire Act does not apply to poker will be put to a legal test.

Occupational Hazards - Losing While Winning

By Philip K. on June 8, 2009 10:57 AM | 1 Comment
The general public just doesn't realize that even if you have an edge in gambling or investing, you can still lose.  It's so counter-intuitive and jarring for so many people that if they had the same exact recipe as any other legitimately successful money manager, they couldn't do it.  They can't replicate the success of these earners, because they can't handle the losing it takes to win.  

haz.gif
Forgive me if I can't reveal any specifics like the location, amount wagered, or what type of game that I played.  Not too long ago, I was playing a game with a 20% edge.  This 20% edge isn't some made up figure.  It has been computer simmed by billions of trials.  It has been subjected to the law of large numbers.  The 20% is the approximate expected value from continued play.

Even with this huge 20% edge, I still lost.  The best blackjack card counters can only expect about a 2% return on each hand on average.  An S&P Index fund will get you maybe 10% a year.  20% is a bigger edge with the added benefit of being able to play multiple hands.

I lost because of the variance, plain and simple.  The 20% game operates on the principle that you lose a lot of times.  The few times that you win, your wins more than make up for the losses.  You never win 20% on each hand.  It's only when you average the large number of losses with the rare gigantic wins that you arrive at the magic 20%.  Unfortunately, I just never received any of the rare wins and that's why I came up short.  

The variance on investing, sports betting, and blackjack is considerably less than this game but the variance still exists.  Similar to how investing in a broad based market fund is a good bet, people still lose money.  This principle of losing money to make money is something that people will never get.  You just have to trust the averages.

Harrah's Eyeing Taiwan, Japan??

By Philip K. on June 4, 2009 1:16 AM | 0 Comments
The Straits Time is reporting that Harrah's wants to get its claws into Japan and Taiwain.  There are three major problems with the article.  

  1. Harrah's is now Caesars Entertainment.
  2. I didn't know there was legalized casino gambling in the respective countries.  The closest thing to gambling in Japan are the pachinko parlors.
  3. Caesar's doesn't have the political or financial capital to change any of the laws in those two countries.  They're dealing with bankruptcy concerns.

What a company wants is completely different from what's feasible.  What a stupid article.

Bringing It All Together - Investing, Gambling, Economics

By Philip K. on June 2, 2009 6:36 PM | 1 Comment
Yesterday I wrote about some of the analytical framework that goes on in setting the sports line.  I might as well tie together this analytical framework in setting point spreads to investing, and economics.


Sports Gambling
  • Point Spread =  Home Court + Team Stats + Popularity +.......

Economics
  • GDP  = Consumer Spending + Business Investments + Government Spending + Net Trade

Investing
  • Stock Price = Earnings Per Share + Book Value + Market Cap +.....

In the three examples, an outcome can be estimated through regression analysis.  How we determine the  ultimate value of something is based on the parts that make up the thing.  Using regression analysis can be one of the most powerful ways of finding the truth in gambling, investing, and economics.


Note:  I've dumbed things down considerably to make this as accessible as possible.  There's also usually a coefficient value in front of each factor, but adding coefficients would make it look more confusing.  There's also the assortment of problems from data mining, multicollinearity, bad models, etc., etc.  But the three example is its simplest form

NBA Finals - Game 1

By Philip K. on June 1, 2009 12:07 PM | 1 Comment
nba-logo.jpgThe sports book numbers on big action games like the NBA playoffs and the Superbowl are pretty damn accurate.  The lines are usually set right down the middle, splitting the action.

Anyway, the line for the first game in the Lakers-Magic roundup is soundly set at -6 for the Lakers.  This sounds just about right -- maybe with a slight over shading for the Lakers.  I would have thought -5.5 would have been a more accurate line.

The average home court advantage is about 4 points.  The other 1.5 points is probably the result of a slightly better Lakers team even though the Magic came out ahead in the regular season (the line now factors in the injured Nelson).

In my opinion, the last .5 point is the shading for the general public in favoring dynasty teams like the Lakers.  This represents value for the Sharp players, but if you're unfortunately betting with the normal -110, aka 4.5% trading costs, then the extra half point just means it will be a break even proposition.  

Each additional half point in NBA is usually worth about 4%.  Having a 4% bonus from the general public doesn't add up to anything when you subtract out the 4.5% cost.

If you can find a bet paying even money +100 (like it is at Matchbook), then Orlando +6 is probably the sharp bet.  

But hey, what do I know about basketball?
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