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+ - The Blackjack Player Who Broke Atlantic City

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Hugh Pickens writes writes "Mark Bowden writes in the Atlantic about blackjack player Don Johnson who won nearly \$6 million playing blackjack in one night, single-handedly decimating the monthly revenue of Atlantic City’s Tropicana casino after previously taking the Borgata for \$5 million and Caesars for \$4 million. Johnson doesn't just walk into a casino and start playing, which is what roughly 99 percent of customers do. This is, in his words, tantamount to “blindly throwing away money.” How does Johnson do it? First with Johnson, it’s all about the math, and Johnson knows it cold. But that's not enough to beat the house edge. As good as Johnson is at playing cards, his advantage is that he's even better at playing the casinos. When revenues slump as they have for the last five years at Atlantic City, casinos must rely more heavily on their most prized customers, the high rollers who wager huge amounts and are willing to lessen its edge for them primarily by offering discounts, or “loss rebates.” When a casino offers a discount of, say, 10 percent, that means if the player loses \$100,000 at the blackjack table, he has to pay only \$90,000. Two years ago, Johnson says, the casinos started getting desperate and offered Johnson a 20 per cent discount. They also offered playing with a hand-shuffled six-deck shoe; the right to split and double down on up to four hands at once; and a “soft 17". By Johnson's calculations, he had whittled the house edge down to one-fourth of 1 percent so in effect, he was playing a 50-50 game against the house, and with the discount, he was risking only 80 cents of every dollar he played. Johnson had to pony up \$1 million of his own money to start, but, as he would say later: “You’d never lose the million. If you got to [\$500,000 in losses], you would stop and take your 20 percent discount. You’d owe them only \$400,000.”"
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