Saturday, August 6, 2016
Advantage player - how one man got a legal edge to take on the casinos
On Flamingo Rd in Las Vegas, James Grosjean sat at a steel table outside a Starbucks. In the near distance stood a sign for a local casino, the Palms, where he has been shown the door more than once.
Being run out of casinos is an occupational hazard for Grosjean, a professional gambler who majored in applied math at Harvard and briefly considered careers on Wall Street and in academia.
He sipped from a venti-size container of coffee and typed rapidly on his laptop computer. He had been here most of the afternoon, working on a strategy to beat a casino game — but one situated far from America’s gambling capital. The opportunity was in Shawnee, nearly 65km east of Oklahoma City. Grosjean’s quarry: An offbeat version of craps played with cards instead of dice.
“This game is like the last dinosaur,” he said. “We killed most of the cards-based craps games, including one at Agua Caliente casino near Palm Springs. That’s where we won $335,000 — my team’s biggest single-session hit with me as the primary play caller. Once this is gone, we’ll pretty much be in the ice age as far as card-based craps games go.”
Grosjean specialises in finding vulnerable games like the one in Shawnee. He uses his programming skills to divine the odds in various situations and then develops strategies for exploiting them. Only two questions seemed to temper his confidence in taking on this particular game. How long would they be allowed to play before being asked to leave? How much money would they be able to win?
When Grosjean first reconnoitered the game, he saw that the 12 playing cards used to simulate a pair of craps dice were being shuffled by a machine designed to speed up play and randomise the order of the cards.
But Grosjean knew that shuffling machines are computer driven and therefore only as good as they are programmed and used: Sometimes, in fact, the devices are surprisingly predictable.
That was true in Shawnee. After each round, the dealer there swept up the cards and put them in the shuffler without mixing them by hand. Grosjean discovered that he could see the identity and order of at least three cards entering the machine, the bottom one held by the dealer and the two that were exposed during game play.
Because he has examined these shuffling machines and knows how they work, he could reliably judge the likelihood that certain cards would be excluded from play.
James Grosjean: ‘At Agua Caliente casino near Palm Springs we won $335,000 — my team’s biggest single-session hit with me as the primary play caller.’
Armed with that knowledge, he spent several months simulating the game in software; his computer mimicked the shuffling algorithm and played the game millions of times. His findings would give him a significant edge playing the card-based craps game in Shawnee. It would be equivalent to gambling at standard craps with dice and knowing which three dice faces — out of 12 possible — would have a reduced probability of coming up on any roll.
Many casino executives despise gamblers like Grosjean. They accuse him of cheating. Yet what he does is entirely legal. “I would not describe Grosjean and those like him as cheaters,” says Ted Whiting, vice-president of corporate surveillance at MGM Resorts International, one of the world’s largest casino companies.
Whiting acknowledges that they do not deserve to be arrested. “If you use a device to get information that other people do not have access to, it’s cheating in the state of Nevada” — and most other states as well.
Grosjean, for one, doesn’t use his computer in casinos. That is usually illegal, the sort of thing that can result in jail time. Whiting says: “When you are sitting there and doing what anyone else at the table can do, it’s what we call advantage play. But whether you’re a cheater or an advantage player, you can take money from us, and I don’t want that to happen. I view it all as preventable loss.”
Whiting estimates the number of successful advantage players to be in the hundreds. Cumulatively, they rake in large profits from games that were designed to be unbeatable:
While some bettors might get lucky and win in the short run, over time they are supposed to lose and the casinos are expected to win, statistically speaking.
In recent years, however, Whiting says the ranks of advantage players have swelled. Several factors are responsible. One is the ease with which gamblers can find each other online and share tactics. Grosjean has a blog called Beyond Numbers, for example.
Another is the proliferation of books like Grosjean’s Beyond Counting, which he published in 2000 and updated in 2009 as a self-published edition (though he claims that if he doesn’t know who you are, he won’t sell you a copy). And because regulated casino gambling now takes place in at least 40 states, casinos compete for customers in part by introducing new games, some of which turn out to be vulnerable.
Common advantage-play techniques include “hole carding”, in which sharp-eyed players profit from careless dealers who unwittingly reveal tiny portions of the cards; “shuffle tracking”, or memorising strings of cards in order to predict when specific cards will be dealt after they are next shuffled; and counting systems that monitor already dealt cards in order to estimate the value of those that remain in the deck.
Richard Munchkin, a professional gambler who is the author of Gambling Wizards and a co-host of the radio show Gambling With An Edge, claims to have mastered all of these techniques. “I think every game can be beaten,” he says.
(Munchkin, whose real first name is Richard, chose his professional surname because of the fact he stands slightly taller than 5ft.)
“For example, certain slot machines must pay off their jackpots once they have accumulated $30,000. At $28,000, a slot machine might be a play” — gambling argot for something that can be bet on advantageously — “and there are slot teams that specialise in this. I know people who clock roulette wheels and others who can control a single die at craps.”
Among the most susceptible games these days are blackjack and poker variations like Ultimate Texas Hold ’Em, in which play is against the house rather than other gamblers.
Teams of advantage players — which usually require one person to bet and another to spot dealers’ hole cards (those turned down and not supposed to be seen), track shuffles or count cards — have become so prevalent that they often find themselves in the same casino, at the same time, targeting the same game.
“We had a blackjack game in Atlantic City with a weak dealer,” recalls Bobby Sanchez, known as the Bullet, a frequent playing partner of Grosjean’s. “We had our key seats locked up when players from two other crews tried jumping into the game. Elbows were thrown and there was a lot of jostling around the table. An older civilian accidentally got in the middle of it. His son thought I had hit him, and the son jumped on my back.”
Things ultimately calmed down and an agreement was reached via surreptitious mobile-phone conversations: Members from the other teams would be able to sit and play at the table and use information from Sanchez’s spotter, but their betting would be capped at $800 per hand.
“Meanwhile I bet three hands of $3,000 each,” Sanchez says. “Unfortunately, the dealer got pulled out after about 90 minutes. Following all the tumult, the table was being watched and somebody figured out what was going on. Still, we managed to win around $100,000 that night.”
One Friday night, I accompanied the slimly built Grosjean, who wore baggy jeans, a red polo shirt and a hat with its bill riding low, as he strolled across the carpeted mezzanine of the Potawatomi Indian tribe’s Grand Casino Hotel and Resort in Shawnee. As I walked beside him, I tried to appear casual, with the tail of my untucked shirt covering the notepad in the back pocket of my slacks.
Grosjean passed an escalator and headed down a back staircase. To experienced surveillance people, he is a known advantage player; at any time he could be spotted, matched to his picture in a database of such players and asked to leave a casino.
If that happens, the security guard could also read him the trespass act, meaning Grosjean would risk arrest if he tried to return. Getting away, on the other hand, would give him an opportunity to come back on some future day and perhaps go unnoticed. So if security was waiting for him at the bottom, Grosjean needed to be able to run back up in the opposite direction with the hope of avoiding a confrontation. He couldn’t do that on an escalator.
Down below on the gaming floor, ringed by wall-mounted TV monitors silently showing a sporting event, slot machines chirped and crowded blackjack tables buzzed with action. Grosjean sidestepped a cocktail waitress and approached the casino’s only craps game, the one in which cards are used instead of dice.
Grosjean had explained earlier the reason for this quirk: The Grand happens to be located in a jurisdiction where it is illegal for dice to determine financial outcomes in games of chance.
Two sets of six playing cards, numbered one through six, one set with red backs, the other with blue backs, serve as de facto dice. A player rolls a giant numbered cube, apparently made from plastic foam. The cube determines which cards are turned over. It is a way to make the game feel like craps without dice directly producing a monetary outcome.
After that, standard rules apply. A gambler might bet, for example, that the sum of the first two cards in play will total 7 or 11. If the sum equals 2, 3, or 12, he loses. If 4, 5, 6, 8, 9, or 10 come up, a “point” is established, and he wins if subsequent cards add up to that number. If a total of 7 comes first, he loses.
Over the course of the game, players can wager on other combinations, like two 5s turned over (which pays out 7 to 1). Such proposition, or prop, bets favour the casino. After every two-card set is turned over, the cards were machine-shuffled before the next roll.
Play had been temporarily halted to accommodate another recent arrival at the felt-covered table — Richard Munchkin. Wearing a black windbreaker and a cap with the Mercedes-Benz logo, Munchkin dropped 25 $100 bills onto the gaming surface and received black chips from the dealer. Two regular gamblers, whom Grosjean had noticed on numerous occasions in Shawnee, watched in slack-jawed surprise: Patrons rarely played for such large sums there.
Grosjean bought in with a couple of crumpled $20 bills. Play resumed. Grosjean made minimum bets of $5 and appeared to be excited by the action. Dealers on the table clearly knew him — he had been establishing his presence here for the past week, getting used to the game and figuring out its subtleties — and they good-naturedly commiserated with him over his propensity for losing.
As they chattered among themselves, they failed to notice Grosjean’s hand gestures. With his right arm resting on the table’s rim, Grosjean would turn his wrist slightly or subtly flick his fingers. The motions were signals to Munchkin: With a split-second glance, he gained the statistically significant advantage of knowing numbers likely to be excluded. When Munchkin saw Grosjean’s turned-up palm and a chip between his fingers, for example, he was being informed that 2 and 3 were unlikely to hit.
“Turn off the 4 and 5,” Munchkin told the dealer. “And give me a max bet on the high/low.” He wanted to remove wagers on 4 and 5, because those numbers would be hurt by the likely absence of 2 and 3 this hand; the high/low, however — a gamble that two aces (1s) or two 6s would come up and pay off at 30 to 1 in each case — now had a higher probability of arriving.
That’s how it went throughout the evening. Munchkin was less than friendly, tipped modestly, demanded a lot of service. One dealer, rankled by the light gratuities, bluntly said to him, “We need to make some money tonight.” Another, seemingly out of friendliness but probably trolling for information, asked Munchkin’s name. “I’d rather not say,” replied Munchkin.
“Come on,” the dealer said. “We need to call you something.” “OK. Little Joe. Call me Little Joe.”
Despite Grosjean’s signals, Munchkin went on a bad streak, losing more than $8,000. At one point, when he pulled yet more cash from his money belt, another player at the table said, “I think Little Joe’s printing $100 bills in his pants.” A barrel-chested pit boss piled on: “Looks like Little Joe’s gonna be going home by bus tonight.” He would, in other words, end up losing his car.
Grosjean was frustrated. His signalling had not been perfected yet — some gestures were being missed. That, combined with a bit of bad luck, had put Munchkin into a difficult situation. Their scheme, their play against the casino, was perhaps too complicated to pull off, Grosjean would later concede. Still, he kept feeding Munchkin information about the cards.
Slowly, as the night grinded on, some of the high-returning prop bets started to pay off. Signalled that ace, 2, and 4 all had a high likelihood of exclusion before one turn of the cards, Munchkin threw a $100 chip across the felt and said, “One hundred, Yo!” which was a bet that the next two cards would add up to 11.
When they came up, Munchkin shot a fist in the air and shouted. The wager paid 15-to-1, for a quick $1,500.
The thrill was feigned. An observant dealer, a man who appeared to be in his early 30s, discerned something fishy. Maybe he had noticed the discreet glances at Grosjean. Or perhaps it was something about Munchkin’s overall demeanor.
But after Little Joe hit a second Yo prop bet, the dealer looked up to the ceiling, possibly hoping to catch the eye of someone monitoring a surveillance camera, and said in a singsong, “Card counter”. Glances were exchanged among employees running the game, but nobody else seemed to take the claim seriously — nor did they realise something potentially more profitable and innovative than card counting was going on. After all, Little Joe was bleeding money.
Grosjean and Munchkin were undaunted by their losses — roughly $7,000 on this weekend-long trip. That’s part of perfecting a play and part of life as an advantage player. On a previous trip, with another team, I watched losses reach $40,000 over a weekend; conditions were good but luck ran cold.
At the Grand itself, years earlier, playing a previous incarnation of this very game, Grosjean says his confederates were down $60,000 before netting $90,000. The best and most important outcome from tonight’s experience, Grosjean would tell me with relief several days later, was that the dealers failed to associate him with Little Joe.
He learned as much when he spent the next two days gambling on his own. Betting $5 chips and signalling into the air, Grosjean aroused no suspicions. He could come back any time and plug a fresh partner into Munchkin’s place to do the big betting. “I think this game can be worth $150,000 before they shut me down,” Grosjean told me.
A month later, I met with a woman notorious for having won over $20m from casinos in less than five years. Her name was Cheung Yin Sun. Elite Western gamblers and rattled casino bosses know her as Kelly, a fast-talking, sunglasses-wearing advantage player in her 40s.
Her father, now deceased, was a wealthy factory owner in Hong Kong. She says she lost $20m of his money playing baccarat and slot machines. She claims to be unbothered by having blown a fortune in gambling dens around the world. In fact, she all but brags about her losses.
But when Sun was arrested in 2007 for a $93,000 gambling debt owed to MGM, she vowed revenge. “I was in jail for three weeks,” she told me while seated in a back booth in the coffee shop of SLS Las Vegas, a casino on the north end of the Strip.
Sun wore a neon green approximation of a tennis dress. “Women attacked me, and the guards wouldn’t let me wear my own underwear. I lost 25 pounds in jail and didn’t get out until a relative flew here with $100,000 for the casino. I decided that one day I would get back the money by playing at MGM properties.”
Upon her release, Sun visited several Las Vegas casino gift shops and bought souvenir decks of playing cards. They look identical to those used at the gaming tables but have holes punched through their centres to prevent cheaters from slipping a souvenir ace of spades, say, into a poker game. Sun had no such intention.
She scrutinised the backs of the cards. Some had crisscrossing patterns that went right to all four edges. The patterns on these cards, as a consequence of the manufacturing processes, were trimmed slightly differently on top and bottom, resulting in uneven margins of 1/32 of an inch or less. She spent around a thousand hours, over four years, training herself to recognise the minute variations on particular cards.
Sun figured out how she could leverage these differences that were almost imperceptible and acceptable by industry standards. She wasn’t the first to recognise this vulnerability and capitalise on it. But she expanded on the strategy of exploiting unmatched trims, a ploy that has long been known as “edge sorting”. Sun applied it to a baccarat spinoff called mini-baccarat and earned herself a nickname, the Queen of Sorts.
Mini-baccarat is played with eight decks of cards. To begin, four cards are dealt face down onto the table. Two are for the banker’s hand and two are for a player. Patrons never touch the cards. Before the cards are dealt, gamblers bet on banker or player (or a tie). Whichever side gets closer to 9 is the winner. Tens and picture-cards count as zero; aces count as 1. If the sum exceeds 9, then only the second digit is recognised (for example, a 9 and 6 add up to 15 but count as 5). Based on the opening sum, one additional card may be drawn for each hand, but, for Sun’s purposes, it would be the first four cards that really mattered.
From her years as a losing high-stakes gambler, she knew that casino executives will accommodate even outlandish requests from customers who wager huge sums of money. She also believed that Asian gamblers were viewed as superstitious.
In October 2011, having trained herself to edge-sort, Sun decided to exploit both the servility and the stereotype. She had a Chinese partner from Los Angeles deposit $100,000 with Aria Resort and Casino, a high-end property in Las Vegas owned by MGM and Dubai World.
On the appointed day of their play, Sun’s partner entered Aria accompanied by what seemed to be a retinue of friends: Another man, a woman, and Sun. At a reserved table, they played mini-baccarat straightforwardly, as typical high-stakes gamblers might. They lost the entire $100,000.
A day later, they returned to the casino and deposited $500,000. But they had a request: To be allowed to make their bets after the four cards used in each mini-baccarat hand were dealt. Sun described this as “Macau style”. They also wanted a dealer who spoke Mandarin and Cantonese. Casino representatives approved the requests. On that second day, Sun pulled a rolling Louis Vuitton suitcase behind her.
Once play began, they instructed the dealer to turn certain cards half a rotation. The man, claiming to be superstitious, insisted this was “for good luck”. The dealer complied; nobody wanted to rattle the money-leaking players by refusing them.
Luck, of course, had nothing to do with their request. Sun and her team needed the turns so that mini-baccarat’s most important cards — 7s, 8s, and 9s, which often determine which hand wins — all had the short trims facing away from them. “I didn’t care that we dropped $100,000 the day before,” says Sun. “I knew that we couldn’t lose.”
The next time through the dealing shoe, now that the key cards with short trims had been set up properly, they went on a long winning streak. As the casino’s racks of $5,000 and $25,000 chips were being depleted and refilled, phones rang in the gaming pit. Edgy casino personnel crowded the table. Sun recalls six men in suits watching her intensely.
When a partner failed to bet quickly enough, she grabbed his chips and made the wager herself. Sun wanted to get through the eight-deck stack of 416 cards before Aria personnel could recognise what was going on. To ease her nerves, she says she rubbed a finger along the outline of a freshly inked jaguar tattoo on her right thigh.
“I went to Maui and got it for good luck,” she told me later. “Jaguars are the most powerful animals in the jungle.”
After 40 minutes, though, with three decks remaining to be dealt, she feared their play would be discovered and “that they wouldn’t let me cash my chips”. Sun ended the game prematurely — but ahead by $1.1m. At the cashier’s cage, she pressed the casino employees, whose hands she says were trembling, to hurry and convert the chips to dollars. Few gamblers take such substantial sums in cash, usually preferring a check instead.
Sun and her team disappeared into the Las Vegas dusk with their winnings in the suitcase. According to a surveillance officer who witnessed the play, Aria employees spent two days piecing together what had happened. They later dubbed the incident the “Million Dollar Shoe”, referring to the plastic, rectangular container from which the decks of cards are dealt.
“It was great to see something like that,” the surveillance officer told me. “I’ll probably never see it again, and that education cost Aria only a million dollars.”
Over the coming week, Sun and her highly organised group used the same strategy to beat more Las Vegas casinos, including Treasure Island and Caesars Palace. They made a trip to Foxwoods Resort Casino in Mashantucket, Connecticut. Eventually Sun recruited the celebrity poker pro Phil Ivey, also known as a high-stakes craps and baccarat gambler.
During the next year, he wired seven-figure sums to various casinos and did the betting. Sun did the edge-sorting of the cards and tipped off Ivey whether to wager on banker or player. Their combined winnings in Atlantic City, London, and other places were in the eight figures. Over the course of four sessions of gambling at private tables at Borgata Hotel Casino and Spa in Atlantic City alone, the pair won $9.6m.
Recently, I spoke to Sun on the phone. She told me she was in Macau, presumably beating baccarat games there. But her success has exacted a price. She is currently linked to three lawsuits with casinos that insist she used deceptive practices.
Ivey is appealing a case in London against a casino that withheld their winnings. A similar dispute (not involving Ivey) with Foxwoods is also under appeal. The Borgata case is in a pretrial phase: The casino accuses her and Ivey of cheating and seeks to recoup $9.6m; their lawyers maintain that what they did was perfectly legal.
Ted Whiting, who works for MGM, one of the owners of Aria, will not comment on her. As for edge-sorting at mini-baccarat, he says, “It is not against the law in Nevada, and I do not consider it cheating.”
He adds that the casino is planning to soon start using software that makes various advantage plays more difficult to pull off.
When I last saw Grosjean in action, he had returned to Shawnee and was passing himself off as AJ. “In my mind,” he said, “it stands for Ace, Jack.” He had done some more computer programming and come up with a simpler, less volatile system. “Part of the problem with the Munchkin approach was that we would have small losses that nobody noticed and big wins that everybody noticed,” said Grosjean. “It’s the exact opposite of what you want to do.”
He would try out his refined approach with long-time partner Bobby Sanchez. Big-boned and sporting a freshly trimmed businessman’s haircut, Sanchez acted friendly and, when asked, let casino personnel know he was in the midst of opening a legal-services business in Oklahoma City. The cover story explained why a newcomer would suddenly show up and spend multiple nights in an out-of-the-way casino, gambling more money than anyone else in the place.
Sanchez bet aggressively, tipped generously, and never missed a signal. “The first seven or eight sessions went smoothly,” he says. “Dealers there loved me, they bought my story, and I had big wins as well as a significant loss. One night I dropped $30,000 and acted like I didn’t care.”
The play ended on a night when Sanchez was ahead $9,000 and a supervisor stepped up to the table and requested his ID. “I asked him if he was joking and made another bet,” Sanchez told me.
“The guy apologised and said that he wasn’t. I kept playing as if I didn’t believe him. Then he told me that if I don’t show ID, I can’t continue to play. I told him I’d think about it.”
But no thinking was required. Before tips, they had made $100,000. That night he told his partners: “I guess I’m done with Oklahoma. Time to move East.”
Grosjean told me recently that he has been finding profitable situations throughout the US, though he won’t say where. Meanwhile, the card-craps table in Shawnee continues to simmer. The casino has taken several procedural measures, like extra shuffling by hand, that makes its craps iteration more difficult to beat.
Grosjean acknowledges that it won’t be as profitable as it once was, but he still intends to go back and beat it one day.
“Some people think of all these games as an unlimited resource,” he says. “I view them more like oil wells. If you have a well producing a billion barrels and another one producing only 50m, you still pump the smaller well because eventually the big one will run out of oil. So if a game is still dumping out money, we’ll keep on playing it. I’m fine with winning a few thousand dollars over the course of a weekend.”
Plus, he adds, there would be something satisfying about extracting money from the third version of this game. “A hat-trick!” he says. “That would be really great.”
Michael Kaplan is a senior features writer at the New York Post and the gambling columnist for Cigar Aficionado magazine. He last wrote for the magazine about a poker machine with AI.