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- [00:03]
Podcast Host
You're listening to A Book With Legs, a podcast presented by Smead Capital Management. At Smead Capital Management, we advise investors who fear stock market failure. You can learn more@smeadcap.com or by calling your financial advisor.
- [00:21]
Cole Smead
Welcome to A Book with Legs podcast. I'm Cole Smead, CEO and Portfolio Manager here at Smead Capital Management. At our firm, we are readers and we believe in the power of books to help shape informed investors. In this podcast, we speak to great authors about their writings the late, great Charlie Munger prescribed using multiple mental models and analysis. We analyze their work through the lens of business markets and people. Joining me to host this episode is our chairman and Chief Investment Officer, my dad, Bill Smead. Dad, thanks for joining me.
- [00:50]
Bill Smead
Glad to be here, as always.
- [00:52]
Cole Smead
And I'll give a lot of credit to our colleague Will, who came up with this book. For the Smead family, there is a legacy of poker players that have won their fair share of pots. We, like many others, think a lot about the odds of investing in common stocks. It's your hand versus all the other players, a la Mr. Market. Joining us is Michael Craig to discuss his book titled the professor, the Banker and the Suicide King Inside the Richest Poker Game of All Time. A little bit about Michael. He's a securities lawyer by background, has written three other books. He played professional poker himself and ran into a lot of the people and characters that we'll talk about today. He received his J.D. in law from the University of Michigan and a bachelor's degree in history from Wayne State University. And he is joining us here from, I believe, Mesa, Arizona. Correct. Actually, Gilbert, now Gilbert, Arizona. So thanks for joining us today. It's great to be with you.
- [01:41]
Michael Craig
Oh, a pleasure being here. Thanks for asking me.
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Cole Smead
What's the Wayne State mascot?
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Michael Craig
The Wayne State mascot is a different one than when I was going there back in the 70s. It was the tartars.
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Cole Smead
Okay.
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Michael Craig
And I think that somehow politically became something that was out of fashion.
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Cole Smead
Sure.
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Michael Craig
I'm not sure what they are today.
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Cole Smead
Okay, gotcha.
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Bill Smead
That happened to our mom. We were the fighting missionaries. And so they changed it to the name of a mountain range, which is bizarre.
- [02:10]
Cole Smead
So to kick us off, we'll get to a little bit about your own backstory with poker, which you share in the book. But did someone come to you and say, I can't believe this went on. You gotta write about this? Or how did you come into this? Just the idea of writing this book, I think, is a great starting point.
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Michael Craig
Well, it started at the Mirage, which apparently is being demolished and is going to become a Hard Rock casino. But back in 19. No, actually, this would be like 2000, is it 2003, 2004. It was a famous weekend because the illusionist, Siegfried and Roy had their show there and one of them was mauled by a tiger.
- [02:51]
Cole Smead
I remember that.
- [02:51]
Michael Craig
Yeah. That weekend I was in Las Vegas playing poker with a friend of mine, Ted, and. And we were just, you know, we were just playing different casinos in town. And when we were at the Mirage, people were palming the Siegfried and Roy chips that were in collections because they're collectors. Yeah, they were gonna be collector's items. But all the talk was about a poker game that was going on up the street at the Bellagio. And the story was that there was the son of a poker world champion was playing a billionaire, and they had $5 million apiece on the table. And that, to me, that sounded like one of those stories that gets bigger, fish get bigger. Yeah. If I go a couple properties over, it'll be $10 million on the table. And if I go all the way downtown, it'll be there were $100 million on the table. I knew a little something about high stakes poker. I read a bunch of things about it. It was something that interested me as a subject, although I was recreationally a pretty low stakes player. And I knew that the stakes that I was familiar with in the past, the guys had played for. There wasn't any through line between the stories that I heard about from the 70s and the 80s and two people playing with $5 million on the table. And so I thought it was just, you know, it was just an urban legend in the making. But after I got back home, I looked online, and again, this is ancient online times 2003. And there was a poker bulletin board where there were people were asking about rumors about this game. And one of the people who was writing on the board was a woman who had dealt at the game. And she said she couldn't talk too much about it, but she passed along a few details, and I was curious what was going on. I had read a couple of great poker narrative stories. One of them, the Biggest game in Town by Alvarez, the other one Big Deal by Anthony Holden. And I love those books. And I would have loved to have read a book about this poker game that was going on that practically nobody knew anything about. And I wanted to learn more about it. And that's kind of how I ended up writing it, because I wanted to learn it. That's great.
- [05:11]
Bill Smead
That's great. So I think back to playing nickel dime poker in eighth grade with my buddies. Again, my dad played every Wednesday night. They rented a room at the Camas Hotel in Camas, Washington. And the hotel brought a big table in and about 10 guys played. And some of the same things you describe in the book, like playing freeze out at the end of the night was going on. And so obviously I picked that up. My parents were mortified when they found out One of my 8th grade buddies was the pastor's son. And my parents thought they were going to go to hell because their son was taking his son with him. But anyway. So tell us how you started playing poker yourself.
- [05:56]
Michael Craig
Well, the strange thing is that I grew up in a gambling family. My father was a poker player. He was also a crapshooter. Horse racing better. And my parents got divorced. We had some financial troubles and there was always sort of like some sort of stain of gambling in our family. But my dad, basically his idea was, well, I'll just earn enough money so that I could continue gambling. And he and his older brother went to Vegas a lot. They went to the horse races a lot. And so we had kind of like a troubled legacy in our house. It seemed interesting and glamorous, but it also seemed like it was potentially ruinous. And then when I started practicing law, I was in an office with two guys who, whenever there was nothing really pressing going on in the office in the afternoon, would play poker against each other. And I didn't have anything to do with it. And then after that, kind of as a result of this book and another book I tried to write before, it not poker related, but I was trying to write a mainstream bestseller type book and there was no interest in the subject that I had written about. A friend of mine had started playing online poker, Ted, I mentioned him to you briefly. And so we started going to the local casinos and playing and we went to Vegas, some playing and we played some online. And I thought, well, well, I wanted to write a book, but maybe what I'll just do is I'll play poker. And while we were playing poker in Las Vegas, this is when the book hit me in the face. And so I continued playing during that time. I think I subsequently became a very good player. I should probably be less modest, although I don't really play for real money anymore. But you know, while I was working on the book, I got to meet a lot of good poker players, but we weren't talking about strategy and things like that. After this book came out, I was asked to write A follow up book, not about the story, but something else about poker. Poker was really hot at the time and I decided to. I pitched a book called the Full Tilt Poker Strategy Guide because I was close with the people who had started Full Tilt and a lot of their pros, and they seem to be interested as a promotional idea in being involved in it. And I really liked the idea, especially because I was really getting to enjoy playing online, of getting these guys to teach me how to be a better player. And so I spent a year with them working on this other book, Full Tilt Poker Strategy Guide, and I became a really good online player. And I also had some successes at the World Series of Poker and more or less stopped playing after online poker shut down in the United States.
- [08:54]
Cole Smead
I've occasionally gone when it was still illegal. It's funny to say, but it's a different world we live in today.
- [09:02]
Bill Smead
By the way, we're already hinting at what is so attractive about a career picking stocks because it's a positive sum game. Right. In other words, when you play at a table in Las Vegas, the house is raking off a certain part of the chips all the time and you are winning what's left of what the losers lost, minus the rake. And so therefore it's a different mentality.
- [09:28]
Cole Smead
Yeah, but you talk about this, I mean, you come from a securities law background, like I opened up with.
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Michael Craig
Yes.
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Cole Smead
You mentioned that poker is a capital intensive business like banking or securities trading, I guess. Can you explain that? And I think what would be the asset light way of being in the poker business? Selling poker strategy books or. You know what I mean?
- [09:50]
Michael Craig
Well, you know, there are a number of ways you could be, you know, a number of top poker players started as dealers.
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Cole Smead
Sure.
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Michael Craig
But I think they all were just dealing to make enough money to go play poker.
- [10:03]
Bill Smead
To go play.
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Michael Craig
Right. So they could go play, you know, they were dealing the $3, $6 game, and when they made enough money in tips, they would go across the street to the other casino and play the $3, $6 game and eventually became good enough to not deal anymore. The, you know, when you get higher up in poker, I mean, it's, you know, it's expensive. I mean, you know, at different periods, the big games in poker have cost different amounts. But I mean, let's say if you're playing some kind of mixed game where the stakes are 400, 800 or 1,000, 2,000, or it's a combination of a limit game where the stakes are 1000, 2000 and then pot limit or no limit, hold them mixed in there that you know, where the blinds are lower. But you know, you could be playing that game with $100,000 or so.
- [10:50]
Cole Smead
Yeah.
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Michael Craig
And if you have a bad hour.
- [10:54]
Cole Smead
You can lose the entire $100,000.
- [10:56]
Michael Craig
And you can't just say, well, I guess I'm going to go home and start again at $3, $6. Poker, you have to have access to a bunch of money. It's a little bit of a mystery how most poker players do it because there are some poker players who are known for being very good at managing their money and they're also very good investors. I think Eric Seidel is a wealthy poker player, wealthy from poker and wealthy from investing. Chris Ferguson likewise, and definitely a bunch of other ones. But the people who become poker players because they're action junkies and poker is something they can happen to win.
- [11:40]
Cole Smead
And then you're kind of teeing up the first character of your book. Which do you want to jump to? The first question?
- [11:44]
Bill Smead
Well, Jesus, Ferguson. Jesus. Because of his long hair.
- [11:47]
Michael Craig
Yeah, yeah.
- [11:49]
Bill Smead
Okay, so let's talk about Ted Forrest. As you do to open your book, teach our listeners about how Chip Reese and Ted Forrest came across. Andy Beal, maybe with a little background on who Ted is.
- [12:00]
Michael Craig
Well, sure, Ted Forrest and I haven't been in touch with him in the last few years, but Ted Forrest, during the time of, you know, when I was involved in poker and when I was writing this book, was one of the, one of the best poker players in the world and considered a very good all around player. He had some sort of reputation that he wasn't really a no limit holder player, but he was considered, you know, the best or at the very top of the short list of RAZ players, seven card stud players, stud high low players.
- [12:29]
Cole Smead
And he's the suicide king of title sake.
- [12:31]
Michael Craig
Yes. And you know, and he, you know, and he just like bounced from game to game. I mean he would, you know, he, he was playing in a game with Larry Flint in Los Angeles and so he would drive from Las Vegas to Los Angeles and play in this game at Larry Flynn's casino, although it was originally at Larry Flynn's house. And he might play in that game for like a day or a day and a half. And when that game would break up as he was driving back to Las Vegas, he would call the poker room at the Bellagio and say, you know, what's the biggest game going on? And even though he had driven four hours to LA, had stayed up 24 hours in a row playing and was now driving back four hours. If they said there's, you know, you know, there's, you know, a 2000, 4000 game and blank is in it. You know, blank being like, you know, somebody, a big name. Yeah, yeah. You know, somebody, you know, like, you.
- [13:25]
Cole Smead
Know, Alex Rodriguez is in the game.
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Michael Craig
Or George the Greek or, you know, like, you know, a guy who'd drop in every so often, bring a lot of money, and wasn't necessarily very good, a good player. Yeah, you know, he would go right to the, he would go right to the Bellagio and play. And as I got to know him better and I got to learn more about his life and a lot of those stories are reflected in the book. There was one time he got into a game, he was playing heads up with former world champion Hamid Dastmalchi, who was also a high stakes player. And they played for 100 hours straight. And this was back when you, this was back in the Mirage days. And this is also back when you could smoke at the table. And so Ted said to me, he said, said Hamid smoked. He smoked 10 packs of cigarettes a day because they were playing 24 hours a day.
- [14:19]
Cole Smead
Gosh, what a good customer for the tobacco company.
- [14:22]
Michael Craig
So he smoked 40 packs of cigarettes. And then Ted said to me, but he only used one match.
- [14:29]
Bill Smead
Now you know why Peter lynch made so much money on Philip Morris.
- [14:33]
Cole Smead
So do you want to jump to the next one too?
- [14:37]
Bill Smead
Teach our listeners about Andy Beall's background, what brought him to Vegas and how did he win his first 100,000?
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Michael Craig
Andy Beall went to Michigan State University. He had dropped out. He had gotten involved in kind of like doing some rehabbing of houses and things like that. And he was like, he was looking to use some sweat equity, turn around some houses for a profit and get into something bigger. He had built up a little bit of money. I think this was during the original SNL crisis. There was a lot of foreclosed properties.
- [15:21]
Cole Smead
A lot of distress.
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Michael Craig
Right. He was able to bid on something, I think in Plano, Texas. I could have the city wrong, but it's in the book. He ended up winning the bid. I think he was the only one bidding. And that was how he got started in real estate and building, improving, trading, looking for good times to get in, and became quite wealthy. None of his companies were public and so he was usually flying below the radar. But around the time, maybe even a few years before, the professor, the banker and the suicide king, he had become so successful in Texas that he was starting to make the Forbes 400 list that he'd come to their attention for Beale Bank.
- [16:15]
Cole Smead
His bank?
- [16:15]
Michael Craig
Yes, Beale Bank. When I got to be friends with him later on, in fact, actually after writing the book, kind of an excuse for me to stay in touch with him is when the new Forbes list would come out each year, I would call him up and I'd say, I've got bad news for you and bad news for me. The bad news for you is you're on the list. Bad news for me, I didn't make it again.
- [16:39]
Cole Smead
Yeah, that's funny. So he shows up the first time. Was it, I'm trying to remind myself, was it Chip Reese or Lang that brought him, that he was friends with? And so he kind of was starting to float a little bit around the poker table.
- [16:51]
Michael Craig
He was, you know, he was kind of a stranger to the games. What happened is he had some. He had some. You know, I don't know if he was in town at the time for something banking, but he also had like a Nevada corporation that he did some things through. So he was in Nevada some, but he was there. And he used to be a blackjack player.
- [17:18]
Cole Smead
Gotcha.
- [17:18]
Michael Craig
And I think he got tossed out of some casinos for counting. But it wasn't something.
- [17:25]
Cole Smead
But that was the kind of intelligence. He was a mathematics minded person. And this is early 01, I think is the first time he made. He won about $100,000.
- [17:33]
Michael Craig
Yeah, he went into the Bellagio poker room and just kind of like looked around. You know, I think the game that, that was going on, that seemed like it was the highest one was a 75, 150 limit, hold them game. And so he started playing in that and you know, it just, you know, he was kind of enjoying it, but it's like the stakes weren't. The stakes weren't enough.
- [18:01]
Bill Smead
It wasn't enough to matter.
- [18:02]
Michael Craig
Yeah, you know, it's like he wanted it to matter. He wanted to motivate himself to play his best, but it really didn't matter. And he met a guy named Mike Lang at the table. Mike Lang was a sort of a legendary kind of like, I don't want to say typical Vegas guy, but I mean, this is like a guy who plays for however much money he has, plus a little bit more, and has won in a lot of big times, but is always broke.
- [18:38]
Bill Smead
Yeah.
- [18:38]
Michael Craig
And this was right after Mike Lang had won a World Poker Tour event. And when I talked with the other people playing at high stakes around that time, they said that, you know, Laing was Always out of money. But he won so much money in this event that his safe deposit box at the Bellagio couldn't hold it all. And so, like Jennifer Harmon said, he asked if he could park some of his money in my safe deposit box because he didn't have any more room in his.
- [19:07]
Cole Smead
Yeah. And again, these are people not putting in the bank, they're keeping it at the casino.
- [19:11]
Michael Craig
Right. Well, this is, you know, and this is the thing. It's hard to take money off the table because the, I mean, ideally, you know, as you're making profits, you know, you're, you're investing it in businesses or you're investing it in stocks or just saving some in the bank. Yeah, obviously it's pretty liquid if it's in the bank, but the, you know, if you're used to making poker type returns, that's a little bit too boring. Yeah, I mean, you know, most poker players don't have that much money in the bank. And you know, the ones that have been successful in investments have been successful in fairly high risk investments or big return investments. But then, you know, the ones that aren't successful end up giving their money to a guy who said he's got like this, this new type of water.
- [19:56]
Cole Smead
Yeah, that has a penny stock.
- [19:58]
Michael Craig
Yeah, yeah. That has like a completely safe type.
- [20:00]
Bill Smead
Of caffeine near death experience investing.
- [20:04]
Cole Smead
Hi, I'm Cole Smead, CEO and portfolio manager here at Smead Capital Management and host of this podcast. If you enjoy this podcast, I'd like to invite you to check out smeadcap.com at our firm. We are stock market investors. We advise investors who fear stock market failure with a discipline that has proven success over long periods of time. Learn more about our funds@meadcap.com past performance is not indicative of future results. Investing involves risks, including loss of principal. Please refer to the prospectus for important information about the investment company, including objectives, risks, charges and expenses. Read and consider it carefully before investing speed. Funds distributed by UMB Distribution Services llc. Not affiliated.
- [20:48]
Andy plays, makes a little bit of money and he goes back to Dallas and he and you talk about in his book how he really studied a different game of poker because he's a mathematically minded person. You're pointing a card, card count, which is a skill in itself.
- [20:59]
Michael Craig
Right.
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Cole Smead
But he's not practicing, like, how do I, you know, get better at poker in general? He's really playing for a certain type of poker, which is like more of a heads up or shorthanded poker as you make the case.
- [21:12]
Michael Craig
Right. And to Some degree. It was, you know, it was just for, you know, a sense of excitement as well as having some more control over the game. The first time he was in Las Vegas, after playing the 75, 150 game for a while, he had run out of chips. And Mike Lang had a bunch of stacks of chips, and they got into. They were flipping a coin. I think the chips might have been. Let me think here. There might have been like $4,000 in chips in each rack. They were flipping a coin, you know, like, Andy wanted to buy the $4,000 in chips, you know, a rack of chips. And they flipped a coin for it. And, you know, and they did that several times. And, you know, just, you know, you know, it's just like a fun, weird, Vegas type thing. And so Andy was somewhat friendly with Mike and said, are there any bigger games around here?
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Cole Smead
Yeah.
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Michael Craig
And.
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Cole Smead
And for Mike, it's like, what'd you say?
- [22:14]
Michael Craig
Yeah. And so the, you know. And so Lang told them, upstairs, there's the way the Bellagio was set up then. The room was kind of like a square rectangle, and then in one corner, there was on a riser, like one or two steps up, an area of four or five tables. And that was upstairs. That was where they had the highest level games. And so I don't think there was anybody playing there at the time. But, you know, Lang said, you know, if you want, I could, you know, I could make a call and see if anybody wants to play if you're going to be in town for a couple days.
- [22:55]
Bill Smead
Sure.
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Michael Craig
So Beal played in a, you know, a ring game, of course, you know, because this is like a guy who nobody ever heard of before.
- [23:04]
Cole Smead
He's an outsider.
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Michael Craig
Yeah, he's an outsider. And, you know, by definition, they knew he couldn't be that good. And so there was, like, the table was filled up to play the 1000, 2000 game. And then there was another game of all the people who were waiting to get into this game playing, I don't know, like 500 and 1,000, hoping a seat would come open in this game. And they played. And so they played limit, hold them 1000, 2000, and played for several hours. And Beal enjoyed it. He was a little bit bored by it.
- [23:39]
Cole Smead
Sure.
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Michael Craig
You know, he didn't like playing, you know, where there are eight or nine. It's like, you know, you don't get, you know, in blackjack, there's a lot.
- [23:46]
Cole Smead
More competition for hands.
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Michael Craig
Yeah. You know, in blackjack, you get to play every hand.
- [23:50]
Cole Smead
Yeah.
- [23:50]
Michael Craig
In poker you know, a lot of the skill is that you only have to play some or you shouldn't.
- [23:57]
Bill Smead
Patience waiting for good cards.
- [23:58]
Cole Smead
So you also, in your book, you do a really good job of telling kind of the history of the poker business in Vegas, which, you know, like, I was born in 83. You know, poker, from what I understand based on society at one point, this is a faux pas subject in general.
- [24:12]
Michael Craig
Right.
- [24:13]
Cole Smead
You were kind of like a. Kind of a bad person, if you're into gambling.
- [24:16]
Michael Craig
Right.
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Cole Smead
It was a vice business is how it was looked at. Then you go from that era to where, like, as I'm getting out of college, that's, you know, this is like right when I'm in college. And now today it's like gambling just an accepted part of American life.
- [24:29]
Michael Craig
Yes, yes. And, you know, and the period in which the book was written was, you know, was one of the turning points in that. That, as I told you, to me, the classic books about high stakes poker are Anthony Holden's Big Deal and Alvarez's the Biggest Game in Town. Those were written about periods in the late 80s and late 70s, respectively. And the, you know, those books, like, shed light on this world that, you know, people barely knew existed.
- [25:06]
Cole Smead
Yeah, it was a dark corner.
- [25:07]
Michael Craig
Yeah. And I mean, I was sort of familiar with it because when I went to Las Vegas, I was traveling to Las Vegas a lot. Both the playing blackjacker craps and then also learning to play poker a little bit. That there were a couple of gambling bookstores of gambling books. And I would, you know, I would get. I would buy books there because, like, you guys, I think reading is important. And then also they had VHS tapes of the final table of the World Series from past years.
- [25:42]
Cole Smead
Yeah. Which is like, this is like, I mean, like, no one has this stuff.
- [25:46]
Michael Craig
Right. And. Yes. And, you know, and this was, you know, this was before they had hole card cameras or anything like that.
- [25:51]
Cole Smead
We'll get to that later. By the way, it's all good stuff.
- [25:53]
Bill Smead
Wide World of Sports, I think you used to broadcast it in the early years.
- [25:57]
Michael Craig
Yeah, sometimes it was Wide World of Sports. There were a few years where the Binion family, because the World Series of Poker was at Binion's Horseshoe, that they would just pay somebody to record it and do voiceover, and then they would try to sell it someplace. So there were. Sometimes it would go on some sort of regional sports network months and months after. But I got a bunch of those tapes and so, you know, you know, got to watch, you know, again, it's, you Know, without hole cards and stuff like that, the. And, you know, very spotty kind of coverage. But it was just. It was just fun. It was fun to see. And that was, you know, you know, that was. That was how I was learning about poker. Not even so much how to be a great player, but just what, you know, the lore and the history of the game. And of course, you know, the, you know, when poker went online, that caused a big bump, which led to more interest in the World Series of Poker being covered. And of course, in 2003, when an online amateur player, Chris Moneymaker, won the main event, that got a gigantic amount of publicity because then anybody could do it.
- [27:11]
Cole Smead
You just need a chip and a chair. Right, right.
- [27:15]
Michael Craig
That fueled both online poker tremendously, as well as televised poker. And so the, you know, all of a sudden, you know, poker players became TV stars.
- [27:26]
Cole Smead
Yeah. And we'll come back. So let's. You want to jump to that?
- [27:29]
Bill Smead
So since we're doing the history, let's go. Right. Teach us about Doyle Brunson. Give us a little background on Doyle and then take that into what his role in March of 2001 was for building a cartel to play Andy Beale.
- [27:43]
Michael Craig
Okay. Doyle Brunson. Doyle Brunson passed away last year, and I believe he was either 87 or 89. One of the great things about Doyle, countless great things, is that based on health problems he had over the years, he made bets with a lot of people for how long he would live. And he always took the over and apparently made a small fortune on people who thought he would be dead before he would be.
- [28:15]
Cole Smead
I got bet.
- [28:20]
Michael Craig
Doyle was a gambling man. He was an athlete when he was young. He was a basketball player in the early 50s. I think he might have gotten drafted by the NBA, but suffered a serious knee injury that left him with the limp for his whole life and tried to become a schoolteacher, but then got involved in playing poker games. And I want to say Fort Worth, but it could have been somewhere else in Texas.
- [28:48]
Cole Smead
Again, these are back room kind of games. These are not like where you sit.
- [28:52]
Michael Craig
Down and tell your parents 1953 and poker. It's like some sort of gambling is legal just about every place now. But it hasn't even been until the last few years that it was considered legal to play a poker game in Texas, even with Texas historic role in, you know, in poker. And so the, you know, these were, you know, you know, these were, you know, underground games. And, you know, and, you know, it was a rough time. You know, you had to worry about getting cheated. Then you also had to worry about the game being broken up by the law or other players in the game tipping off the law to when they get behind and you know, and you know, and you know, and take the money off the table. And so it's like you needed to be way, way better than the game just to make a living. Because if you were playing it fairly regularly, it just wasn't that unusual thing that somebody would come and hold up the game or the cops would seize all the money on the table. And so Doyle Brunson became an extremely successful poker player with a few other players in that same circuit. And around, I think around 1970, he moved to Las Vegas. And this was more than a decade after a friend of his, Benny Binion, had moved to Vegas and started Binion's Horseshoe. Brunson came to Vegas because he was starting to have difficulties as a high profile gambler not in Vegas.
- [30:35]
Bill Smead
And so to find a game.
- [30:37]
Michael Craig
Yeah, I mean, the story with both those guys that I hear in various forms is they got sentenced by judges to move to Vegas because they were getting, they were running and follow the law. And they both ended up making their way out to Las Vegas because it was legal there. And Brunson became, he was a big sports bettor and he was a big poker player and supposedly made and lost several fortunes and was during the 70s considered the best of the high stakes players and really before then as well, and his contemporaries had long passed away or as they got older, became mediocre players. He was playing, you know, pretty high stakes until the very end of his life. Yeah, the. I mean, you know, and, you know.
- [31:33]
Cole Smead
And I think you talk about where they thought he was like he's had Alzheimer's and like where I think you even commented that he had trouble maybe. Was it recognized you recognized someone else?
- [31:41]
Michael Craig
Yeah.
- [31:41]
Cole Smead
And then he goes in and wins like a massive game, like a day later.
- [31:45]
Michael Craig
Yeah. Oh, this was remarkable. The. When I was working on the book through and actually Doyle helped put me in touch with Andy Beal. And Doyle was also helpful in getting me in touch with some of the other players in the game. And it's kind of like, you know, Doyle was like a calling card. If I was talking to somebody I didn't know and I said, do, I'm working on this book. And they said, I don't know, I don't really want to have anything to do with any book. And I said, well, you know, Doyle's helping me on it.
- [32:17]
Cole Smead
That was your goodwill?
- [32:18]
Michael Craig
Yeah. So that was my calling card. The Doyle was, you know, the Doyle was helpful to me. And I saw him at several tournaments over the course of the summer in, I think this is 2003, although it might have been 2004. And, you know, we would always, you know, I interviewed him a couple times and, you know, a few times, you know, we just kind of like, you know, saw, you know, I would just see him in the hallway and say hello. And one of the times before a tournament in Los Angeles, I forget whether it was the Bicycle Club or the Commerce, but it was a World Poker Tour event. I saw him and I said, Doyle, I had a few follow up questions I wanted to ask you. Is there a time this weekend when you're not playing when I could just have a few minutes of your time? He looked at me, he wasn't exactly sure what I was talking about. And he says, you're writing a book. I said, yeah, you know, the, you know, the Andy Beale game. Remember you introduced me to Andy Beal? And he said, he said, oh, I don't want anything to do with that. You know, that's just gonna be, you know, everybody talking about how we all cheated him or how we're all a bunch of crooks or something like that. I'm not having anything to do with it. He was up to that moment and after that moment, always super friendly with me. Yeah, but I thought, oh my gosh, here, here, he's, you know, he's playing in this World Poker Tour event and they're playing these high stakes games at night and this guy's just completely lost his mind. Well, he ended up winning that World Poker Tour event that weekend.
- [33:52]
Cole Smead
There's a fine line. We've now learned there is a fine.
- [33:54]
Bill Smead
Line between genius and insanity.
- [33:56]
Michael Craig
Yeah, well, I, you know, when I started playing in World Series events, I was, I sat at a table several times with Doyle during events and we were playing this one event. It started. They have events that start at noon, then they have ones that start at 5pm and the ones that start at 5pm tend either be the higher buy ins or the ones that are other than, no limit, hold them. And so I think this was a horse. I forgot it was horse or stud high low, but it started at 5pm and they had a dinner break like at 7, and then it went until 3am and so we, you know, like we just started playing and then there's a dinner break and we get back from the dinner break and Doyle's grumbling and he says, I Don't know, like, I don't know why we play for 45 minutes and we have a dinner break now. I spent a half an hour eating. I feel like I just want to go to sleep now. And it's good natured grumbling, but he's grumbling, complaining, anybody who will listen. And he starts yawning. And you know how yawns are contagious. And so at our table, everybody's getting tired.
- [35:10]
Cole Smead
Yeah.
- [35:11]
Michael Craig
He cleaned up for the next three hours.
- [35:13]
Cole Smead
Oh, that's funny.
- [35:14]
Michael Craig
And, you know, maybe it was a coincidence, but I think he planted the seed that way. Yeah, he was crafty.
- [35:23]
Bill Smead
So Doyle helped kind of get the cartel together. And Beal shows up three weeks later. This time there's a wait list. Johnny Chan, Barry Greenstein and others are there. Teach our listeners about Barry as a picture of the intelligence that's floating around in these high stakes games.
- [35:42]
Michael Craig
Okay. Well, the, well, the, you know, the first time Beale had played, and I apologize because I don't remember from. It's like, I know that book like the back of my hand, but I don't know the back of my hand so well anymore. But the. I don't recall whether Andy played some in the thousand 2000 game during his first time out after Mike Lang introduced him to some, you know, some of the high stakes players, or whether he came back and with the expectation that he was coming back. That's when they played the game. But, yeah, there was, as I mentioned before, when he first started playing, it was a ring game. You know, it was eight or nine seats, and all the seats were taken, and all the seats were taken at the next game at half stakes, waiting for one of these seats to come open. And Beal actually won in this game, but it was, you know, it was boring to him.
- [36:39]
Cole Smead
Yeah.
- [36:39]
Michael Craig
And, you know, and you know, and also he, you know, he had a dose of skepticism, like, you know, these guys all know each other very well.
- [36:51]
Cole Smead
Are they up against me?
- [36:52]
Michael Craig
Yeah. And so, so the combination of being able to get into a game where he could play every hand, like heads up and where he didn't have to worry about some possibility that.
- [37:07]
Bill Smead
Coercion.
- [37:08]
Michael Craig
Yeah. That these guys who were experts were trading some sort of signals or something like that that he wanted to play heads up and then that was. He had, he had talked, I think, with Doyle about it. The. Or it might have been Chip Reese. Andy was, you know, it's like, you know, the two biggest names in Las Vegas, in poker, you know, in poker history. Then to Some degree now, you know, or Ted, I'm sorry, Chip Reese and Doyle Brunson. And while Andy played a lot of high stakes players and had some great matches with them, to him it was always like, you know, get me to the end. Yeah, yeah, I got to play Chip Reese. I got to play Doyle Brunson, you know, who's a little bit of a fan that way. And so he'd gotten it worked out with Chip Reese where he was going to come and they were going to play. They were going to play heads up at the Bellagio and to keep other people from playing in the game. And this is why, this is one of the reasons that the group was formed so that people wouldn't flood the game because, and I understand it might be a little bit different in Las Vegas now, but back then the ethic was if the game's open to the public, anybody can play. Obviously, if it's a 10,000, $20,000, no.
- [38:35]
Cole Smead
Limit hold'em, there's certain people that won't want to play.
- [38:38]
Michael Craig
Right? Yeah. You and I aren't gonna walk into that.
- [38:41]
Cole Smead
Yeah. We're not gonna be like, hey, I want to lose 500,000.
- [38:44]
Michael Craig
Right. But the point is that while that was higher than anybody who was playing at the time, they couldn't really assure that somebody wouldn't come into the game. So what happened is a group of players, about eight players, pooled their money together and they decided they would take turns playing him. And they didn't formally decide they were freeze outs. The point is, if you were winning or losing, you could quit at any time. But the idea was that more or less they're playing, you know, they would play until one of them, but they'd.
- [39:14]
Bill Smead
Be fresh all the time.
- [39:16]
Cole Smead
Well, except I wouldn't say that. Well, here's the other thing too is like I thought, because I thought about how he changes poker playing. So he plays this, you know, format to your point, and then he goes home. And you talked about how he was trying to think about, okay, how am I going to. So he, you know, read a lot of poker books on, on playing shorter hand. But then he went out and this I thought was really interesting. You talk about in your book questions. So he went out and had. He wrote his own poker program in basic. I thought this was great. So he asked some certain questions because again, he's trying to ask like, how can I get an edge or continue to self give myself an edge.
- [39:50]
Michael Craig
Right.
- [39:51]
Cole Smead
So here are the questions he asked. What is the lowest high card you can have in your hand, expect to win more than half the time regardless of second hand or second card. Pardon me, what is the unpaired unsuited hand with the lowest high card that could win more than half that time? Because again, you think about like an, like a ten handed game is a vastly different game than a three or four handed game. The other questions he asked is what is the lowest suited hand that would win more than half the time? Fourth was what are the highest suited hands that would win, not win half the half the time. And lastly, what are the worst hands that would win more than half the time? So just asking yourselves, what is likely to win that you wouldn't normally play in a ten handed game.
- [40:31]
Michael Craig
Right.
- [40:31]
Cole Smead
But in a shorthand situation, you need to know the odds of winning.
- [40:34]
Bill Smead
Where's their value?
- [40:35]
Cole Smead
Yeah.
- [40:35]
Michael Craig
Right.
- [40:36]
Cole Smead
And so like again, I was like, after I got done with your book, I was like, oh, king deuce off suit. I would, I would never like. If we're playing typically games ten handed, you never touch it, Never three handed. You got a majority winner.
- [40:48]
Michael Craig
Yeah, I mentioned before we started, I'm not playing for real money these days, mostly because I'm too lazy to leave my house to go to a casino and I can play online.
- [41:01]
Cole Smead
He's not there yet. I was just teasing. Right. Because you played last night, I thought.
- [41:07]
Bill Smead
Gosh, if I'm going to talk about this book and talk with you, I need to be reminded of what this is like.
- [41:15]
Cole Smead
We hope you're enjoying the podcast. You know, we work hard putting together this show, but we work even harder for our investors at SMEAD Capital Management. At smead, we believe in disciplined investing, which is why the SMEAD funds have a proven track record of long term outperformance. If you're an investor who fears stock market failure like I do and want to invest in wonderful companies to build wealth, we invite you to visit smeadcap.com Past performance is not indicative of future results. Investing involves risks, including loss of principal. Please refer to the prospectus for important information about the investment company, including objectives, risks, charges and expenses. Read and consider it carefully before investing. SMEAD Funds distributed by UMB Distribution Services llc. Not affiliated.
- [42:00]
Your book has a lot of touches of an era of an American history. Okay. Think of what we talked about in the chronology of poker and gambling. That is its own history.
- [42:11]
Michael Craig
Yes.
- [42:11]
Cole Smead
Secondly, you start, you know, this is starting in early 01 and obviously by September 11th of 2001, the world was changing quickly. So Beal is coming back later in 019, 11 attacks had happened. What was the mood and the atmosphere in a place like Vegas?
- [42:30]
Michael Craig
It was gloomy. I mean, I guess more recently, you could. The pandemic, you could analogize it a little bit to the pandemic that the, it's like, you know, you know, no.
- [42:43]
Bill Smead
One'S going to want to go there anymore.
- [42:45]
Michael Craig
Nobody's going to, you know, you know, Vegas is dead either because people didn't want to fly or because Las Vegas would be such an obvious target.
- [42:51]
Cole Smead
Yeah.
- [42:52]
Michael Craig
You know, for terrorists. And so, you know, you know, of course, the economy, you know, with all the uncertainty at that time, you know, was also hurt. And so the, you know, the pros in Vegas were, you know, they're pretty much like shuffling their money among each other.
- [43:11]
Cole Smead
Well, yeah, all the suckers are not showing up.
- [43:13]
Michael Craig
Right. And I, you know, and I don't think of this so much as that these guys are teamed, you know, that it's the pros against the suckers. And if you're unlucky enough to be the sucker, then you don't have a chance because the pros are ganged up on you. It's just that, you know, if you, if you got it, you know, if you're a pro player and you got it, you know, and you're in a game and there's like three of the best players in the world, but then there are two players that are just like big money tourists, that's a good game for you. That doesn't mean you're not going to be in hands with the top players that are in the game, but your positive value is greater. And these players are all very proud. I remember talking with Eric Drake, who was longtime manager of the poker room at the Mirage in the early days and director of the World Series of Poker back in the 70s, and he said that if you ask, if you get eight players in a game, a high stakes game, and you ask them all what their edge, what they think their edge is, they all think they're 50% likely to win. And so the, you know, it just, you know, it's a much easier living, you know, like, I mean, you know, they'll play against each other and they think they're all better than each other. But, you know, you toss in a couple of people that, you know, that are just, you know, like high stakes gamblers that, you know, enjoy poker a little bit, that, you know, that that changes the equation quite a bit. And so, you know, it makes the games much better. So the games in Las Vegas were terrible. You know, There was, you know, there was like, you know, there's like no chance to win a whole bunch of money off somebody.
- [45:05]
Cole Smead
Yeah. Well, you're going to take it from one of your longtime professional colleagues. Do you want to jump to the Johnny Moss? Because I love this one.
- [45:11]
Bill Smead
Yeah. A lot of this book is about risk, which, again, we like positive, some risk. But can you tell our listeners the story of what the late Johnny Moss told his wife one time about the house?
- [45:22]
Michael Craig
Oh, yeah. Oh, yes, of course. I apologize. I'm thinking about the one where they got married and on his honeymoon, he went somewhere where there was a poker game and she was sitting next to him and the, and she was holding his hand and she noticed he wasn't doing so well in the game. And at one point she started. He started tugging at her hand. He was trying to take her wedding ring off. I was thinking of that story. I don't think that one in the book. But Moss had a big win or a series of big wins, and he had won a significant amount in a short time and went back home to, I believe it was Odessa, Texas, which is where his wife lived, and said, I want you to take this money. And again, I don't know if it was 50,000 or 75,000 or 150, but we're talking about like, good sum of money, and it's in like the late 40s or something like that. So, you know, you could buy a nice house for a lot different amount than you can now. But he said, you know, I, you know, I'm going up and down in money. I can't promise you we'll ever have money or not have money, but take this money and buy a nice house and that'll be yours. And then no matter what happens with me, you'll always have this house. And so he gave her the money in cash, like in a bag. And she said, I don't feel comfortable carrying this money around. Let me go look around for a house and then I'll come back to you. And so she went with a friend, and they just had a blast because she didn't come from money.
- [47:17]
Cole Smead
Yeah, it's first world living she's doing now.
- [47:18]
Michael Craig
Yeah. And, yeah, and he was making money, but most of it was going back into poker. This was like baby's day out. I mean, she's going and looking at houses and everything's in their price range based on the amount of money she has. And she spent a week or so touring all the houses in the area, and she finally picked out the one that she wanted. And she said to John, can you give me the money? And John said, she's not around anymore.
- [47:52]
Cole Smead
Yeah, it's no longer there. So let's keep on going on that with these people, because, I mean, these people just love taking risk. I mean, there's something about it that really drives them.
- [47:59]
Bill Smead
I'm compelled.
- [48:00]
Cole Smead
So you talk a lot about the person. Like, there's these side bets. I love these side bets. These are all just great. So, like, can you explain, like, Huck Seed and Howard Letter's personal side bet they made with each other, for example?
- [48:10]
Michael Craig
Yeah. Ted Forrest was involved in a lot of these, and John Hannigan, one of the bets. I don't think this one made it in the book, because I was told about it later on. But Huxed and Ted Forrest were working out a proposition bet where, for a million dollars, Huxed would live in a closet in Ted Forrest's house for a year. And, you know, and they were, you know, and they got close to doing it, but eventually, you know, and Huck was ready. You know, he was ready to live in a closet.
- [48:50]
Bill Smead
Pretty tall, wasn't he?
- [48:51]
Michael Craig
What?
- [48:52]
Bill Smead
He was pretty tall, wasn't he? Yes.
- [48:53]
Michael Craig
Yeah, he was, like, 6, 7.
- [48:55]
Bill Smead
It's got to be a sizable closet.
- [48:56]
Michael Craig
Yeah. Yeah. Well, Ted had a nice house at the time, so it probably was, but. But what happened is that Ted decided he didn't want Huck living in his closet for a year, so he ended up not doing it. But there was a version of that bet that a number of guys were involved in, and this is one. This has even happened in more recent years where guys would bet whether you could live in a bathroom for a.
- [49:23]
Cole Smead
Month or, like, Ted Forrest. It was a Ted Forrest bet was to run a marathon with someone, and then, like, he runs it in the dead of, like, a Nevada summer at the UNLV track, and he almost kills himself.
- [49:39]
Michael Craig
Yeah, he told me that story, and I reminded him of it a couple years later, and he said, oh, yeah, that's a time when my then girlfriend tried to kill me. Because what happened is she was supposed to meet them there with water.
- [49:58]
Cole Smead
Yeah.
- [49:58]
Michael Craig
And she never shows, never woke up. And so they ended up. There was some guy who was walking by, and they ended up, like, you know, bribing him to bring them water, but, you know, like, they didn't get nearly enough water. The. That was. Yeah, that happened. The bathroom one was. And I think this was done more recently, where a couple guys rented a room at the Bellagio for a month. And then one of the guys lived in the bathroom of this room for a month for, I think it was $300,000 or something like that. The original version of it, which wasn't in Las Vegas and it was older, it was like for $25,000. And the guy whose apartment it was, who was betting was trying to influence the outcome to get, you know, this, you know, the guy who was betting who was living in the bathroom out is that he was. He was bringing people by to use the toilet.
- [51:03]
Cole Smead
Yeah.
- [51:04]
Michael Craig
You know, in the room.
- [51:05]
Cole Smead
The other really famous bet. And we'll jump to another question here, but you know how you talked about Howard Lederer, he's like a vegetarian.
- [51:13]
Michael Craig
Yeah.
- [51:13]
Cole Smead
And so there's this bet that he won't eat a burger.
- [51:16]
Michael Craig
Yes.
- [51:16]
Cole Smead
Right. And what was. I can't remember what he got paid, but he said during the book you write about, he says, order the burger. He eats the burger, and they're expecting he won't be able to take it in. His body will give it up. And in my mind, I'm thinking Lederer's mind is saying, I hate the burger, but I love cake.
- [51:34]
Bill Smead
Hopefully it was in and out, because that's pretty close to the strip there.
- [51:37]
Cole Smead
Yeah.
- [51:38]
Michael Craig
It was David Gray, who is a regular high stakes gambler, poker player in Las Vegas and a good friend of Lederer's. And it was just one of these idle things because they had food service at the tables. The poker director called somebody from one of the restaurants to bring menus to the table, and they would order and the food would be brought over. And Gray said, I'll bet you won't eat a cheeseburger for $10,000. And Howard says, I don't want to eat a cheeseburger, so I don't want to bet you. But if you're saying you're going to give me $10,000 to watch me eat a cheeseburger, I'll take it. And so David said, let's order it. And so they ordered it. And Howard said, you don't have to go through with this. This isn't a two way.
- [52:33]
Bill Smead
They thought he'd get a couple bites into it and bail.
- [52:35]
Michael Craig
Right. But it wasn't. It wasn't strictly speaking a bat. It was David paying to watch Howard eat it. And he was hoping that Howard would get sick, not because that would somehow invalidate the bet, but just because to him that he was winning.
- [52:56]
Cole Smead
Let's jump to Lyle. Let's jump to the question on Lyle right below, because I think he was super important.
- [53:02]
Bill Smead
Okay, so how fundamental was Lyle Berman to the transformation and explain how these poker kings and queens turned into stars?
- [53:10]
Michael Craig
Well, Lyle Berman was a longtime player in the World Series and a high stakes poker player. He was, I believe he started a leather store that swept malls across the country. It was like a reasonably priced leather store and he had hundreds of locations and he had sold it. And so he was, he was a high stakes amateur, but considered a very good player. I mean, one of the things is that if you play against the best players in the world and you show up pretty often, you're going to become pretty good. So even if we talk about, oh, this guy was no good, he was donating to the games, the point is that, you know, these guys who like to play the best players in the world, they recognize that they're, you know, they're not necessarily getting the best of it. That if they, if they move down a couple levels, they would clean up on everybody else. And I think the common understanding when the top players talk about, you know, you know, you know, somebody who's like an amateur who joins their game, you know, that this, you know, oh, this guy stinks. That, that means he's really a bad player. He's actually better than everybody except for the people he's playing against.
- [54:31]
Cole Smead
Except for the best.
- [54:32]
Michael Craig
Larry Flint, the late Larry Flynt was like, that was an outstanding seven card stud player, but he only wanted to play against people like the caliber of Ted Forrest.
- [54:45]
Cole Smead
Yeah, that way he said, who did I lose? So I lost the best players in the world.
- [54:48]
Bill Smead
Which means he was an excitement junkie is really what that amounts to. So we're going to jump ahead. Doyle's son Todd, who himself was a well respected professional.
- [54:59]
Michael Craig
Yes.
- [55:00]
Bill Smead
Busted Andy up pretty well, as did Jennifer Harmon. Kind of interesting. Brings back to watching this stuff on TV in the spring of 2003. Teach us about Todd's background. I happened to work with my son. Was Todd success foreknown?
- [55:18]
Michael Craig
Not really. I mean, it's possible that, you know, I mean, I got the story from the horse's mouth and you never know exactly how good that is. But I mean, Doyle said that when Todd was growing up, they never played poker, they never talked about poker. I kind of think Doyle was to some degree an absentee parent because he was on the road a lot playing and Todd. So I don't know. Todd said he played in local games, but he went off to college. And the first year he won enough money playing poker, his first year in college, where he didn't go back for the second year. And that was, you know, that was kind of how Doyle learned that his son was playing poker.
- [56:04]
Bill Smead
Probably disappointed, in a way.
- [56:06]
Michael Craig
Yeah, yeah. It's like the Godfather thing. It's, you know, the, you know, you work your way up so that the next generation has it easier and the next generation doesn't have to get their hands dirty the way you did. And so his son was like, you know, going to be following in his footsteps, which he didn't necessarily want.
- [56:24]
Cole Smead
But to quote Don Corleone, I apologize. I spoil my children.
- [56:31]
Michael Craig
Yeah.
- [56:32]
Bill Smead
So Beal leaves Las Vegas having lost millions in late 03 on a commercial plane. Why was he disgusted? And why was he flying coach.
- [56:45]
Michael Craig
Subsequent times? I think Beale was, you know, because they played some more after I wrote the book. And I was. And it actually would be a subject for an even better version of this book I had written about, because I was allowed to sit at the table while they were playing. And I was, at least unofficially, an intermediary between the two sides. Everyone, you know, when one say, you know, Beals being unreasonable, the players think Beal's being unreasonable. They'd say, how are we going to get. Is Beale really serious about wanting to play this amount? Or something like that? Or is he really serious that he won't let us sit at the. He's letting you sit at the table, but he won't let one of us sit at the table and watch. And so it was a phenomenally interesting set of games. I couldn't get the publisher interested in doing a second book or doing an expansion of this book. But. But they played again back in 06. But in 03, I guess the thing I would say is that Andy's problem as a poker player, and this is one of the reasons why I. In my own tournament playing in my own poker playing. I prefer playing in tournament formats than cash game formats, is that Beal's two biggest problems were he didn't know when to quit when he was winning, and he didn't know when to quit when he was losing. And this is a highly underrated skill.
- [58:16]
Bill Smead
Sleep or take a nap. I mean, didn't he go without sleep?
- [58:19]
Cole Smead
Well, but he'd set rules up, I think you talked about. He'd set rules where he'd say, I'm not gonna play in this situation where I get tired.
- [58:25]
Michael Craig
Yeah.
- [58:25]
Cole Smead
And then he'd still play, and he'd.
- [58:26]
Bill Smead
Play through being tired and make mistakes.
- [58:28]
Michael Craig
Right. And the, you know, and, you know, and he, you know, and he tried to you know, he tried to tilt things in his favor where he could. He always wanted to play early in the morning. And poker players, they play late at night. And so it was usually, you know, one of the reasons people were so reluctant to. I mean, you know, it's like they were reluctant to play him because they weren't used to playing with other people's money, but they were also reluctant to play him because they didn't like getting up at 8 o'clock in the morning.
- [58:57]
Bill Smead
As a business person. Business people are morning people. Poker players are nighttime.
- [59:02]
Michael Craig
Absolutely.
- [59:03]
Cole Smead
Hey, I want to give a big shout out to everyone who's been working so hard on the show. You know, we recently hit the top 10 investing podcasts on Apple Podcasts and even number one in the business category in several countries, as you may know. This show is brought to you by Smead Capital Management. Smead Capital Management understands how frustrating and illustrating logical the stock market can be. If you are searching for funds with a proven track record, give the Smead funds a look. Or better yet, reach out@smeadcap.com and don't forget to mention that you're a fan of the podcast. Past performance is not indicative of future results. Investing involves risks, including loss of principal. Please refer to the prospectus for important information about the investment company, including objectives, risks, charges and expenses. Read and consider it carefully before investing. Smead funds distributed by UMB Distribution Services llc. Not affiliated.
- [59:56]
Bill Smead
Beal was creating max pressure through not just the blinds, but also other events in Vegas at the time. Was distraction one of the other plays that he made beyond the stakes. In other words, he wanted to up the ante on the stakes. He was trying to find ways to give him an advantage over these.
- [60:15]
Cole Smead
But at the same time, this is like 2004, the World Series of Poker has taken off World Poker Tour. I mean, these are celebrities in American culture. And so, you know, he's coming into town out of nowhere, right? Saying, here's my high limit stakes. And oh, by the way, you need to get out of your World Series of Poker event to come play me.
- [60:33]
Michael Craig
Yeah, and it's, you know, and it's kind of a conflict, conflict among individual players and almost a conflict among generations. Is that the, you know, part of the ethic, you know, of poker players, you know, high stakes players, and there's really not just one, but, you know, part of the ethic is, you know, we make our living off of amateurs that come into our games. And so we don't ever want to turn those people down and we don't even want to turn them down when they beat us, because they'll be back.
- [61:04]
Bill Smead
They'll be back.
- [61:04]
Michael Craig
They'll be back, they'll be back or something like that. You know, the word that, you know, some nobody came and won a million dollars off.
- [61:10]
Bill Smead
They're going to tell everybody.
- [61:11]
Michael Craig
Yeah. And so it's like, never turn down a game. On the other hand, it's kind of like the more modern view is, no, we should play. Let's play when we have the edge and not play when we don't have the edge. And maybe you could argue, well, we always have the edge because we're the pros, but let's not play them at these highest stakes. If we've got. If we have to bring a whole bunch of people in to get us enough money to play, and we're worried our bankroll's not enough, let's not play at those stakes. There wasn't any. It wasn't so much that they were afraid of the stakes or there was fear of being ruined, because one thing is poker players don't really care that much about being ruined.
- [62:05]
Cole Smead
That's part of the swings, though.
- [62:07]
Michael Craig
Yeah, Most poker players go broke. Many times I remember hearing stories about guys in the book who I'd heard about these big mansions that they had. And when I was following poker five years later, I would see him and I'd say, do you still have the home next to the Pacific? And he said, you know, I said that, you know, lost a couple million Chinese poker to Dead Forest, and I had to sell that house.
- [62:38]
Cole Smead
Oh, man. You know, so, yeah, so. So they sit down for this, you know, really the biggest game of all time. Andy has his runs. During the game, he was down by 7 million and then up by 8 million. And then in the middle, he, like, breaks for lunch with Steve Wynn, which is like, I mean, this has just got to be such a fun and interesting time in the game of poker.
- [62:56]
Bill Smead
Yeah.
- [62:57]
Cole Smead
Because it was still. It was cloistered enough that they were very tight relationships. Not as big as it is and wide as it is today. So, you know, he takes over 6 million. In the end, he was back two weeks later playing Phil Ivey, another big name, very successful player. Phil, you know, side note for our listeners, if you want to go look into, like, playing the games you want to play, there's obviously his game in London that he set and he brought the lady along. And he's very famous.
- [63:21]
Bill Smead
Tiger woods of poker.
- [63:23]
Cole Smead
Tiger woods of poker. And Howard Letter is the other player. He plays after Letter ends up taking him for 9 million. And obviously letter's sister, Annie Duke, is a famous poker player in her own right with many books. As we talked about before, Beal says he would never be back. I was trying to think about what's my takeaway from your story because it's terribly intriguing. All the dynamics of these interesting people, their education, whether it be Andy Beal or Harmon or Lederer for their education, they're terribly interesting people. You know, one of the conclusions I wanted to ask you about is there's been a lot of research on humans in that, you know, we have all this logic and then we just do things for doing them.
- [64:05]
Michael Craig
Yeah, right.
- [64:06]
Cole Smead
We don't do them for logical reasons. Is that your kind of takeaway from Andy Beal or do you draw away something else from Andy Beal, like, you know, he likes risk and he's just gonna be driven to find risk even. It doesn't make a lot of sense.
- [64:18]
Michael Craig
Yeah, I mean, that's part of it. Also part of it that the times when Andy was most involved in and poker back then tended to be periods where there wasn't a lot of. There weren't a lot of good deals in the type of banking he was doing.
- [64:34]
Cole Smead
He got bored.
- [64:35]
Michael Craig
Yeah. And so the, you know, one time I was visiting him in Texas and, you know, we were talking and, you know, I was trying to ask. He didn't really answer deeper questions like when I asked him, why are you doing it? I didn't really get real thoughtful answers. But he would say things like, what am I going to do? Go to work, go home at 1 o'clock in the afternoon, go to sleep at 7. It's like he was bored by some of the stuff he was doing. Now that goes in ebbs and flows. Obviously suddenly there's a shift in the market and that's by far the most exciting thing.
- [65:16]
Bill Smead
I don't. No. Didn't know much about Andy Beale before I read your book. Reminds me a lot of Mark Cuban. That's the first thing I thought of.
- [65:23]
Cole Smead
No, not. But way more private. Not, not even. I would say, no, way more private.
- [65:26]
Bill Smead
But you get what I mean. In other words, seeking thrills in other ways.
- [65:30]
Cole Smead
Yeah. Why? I just say because, like, why don't you mention to. What do you mention to Michael what your picture of heaven would be on the craps table? Because I think it's a better way of thinking about what you're saying.
- [65:40]
Bill Smead
Now you're asking me about something I haven't thought of for A long, long time.
- [65:43]
Cole Smead
Okay, let's you say heaven would be like having an infinite amount of money to sit the cold streaks at the Craft Stadium.
- [65:50]
Bill Smead
That's right. That's what it was.
- [65:52]
Cole Smead
And Andy had the money to sit through the cold streaks, to your point.
- [65:54]
Bill Smead
Yeah, he could sit through the cold streaks. And that's basically in our positive sum game that we participate in investing. You sit through the cold streaks. Right. Our discipline works most of the time. A lot of the time it doesn't work. Sometimes the guys that are playing the worst poker in the investment world are hot as a pistol. And by the way, kind of reminds me, everybody worried about somebody getting drunk and on a hot streak because nothing was more damning than a dangerous drunk, than a dangerous drunken. And that same thing happens in the investment world that the people buying the most aggressive stuff. By the way, that's kind of happened for the last 15 years. That momentum has been the best trade.
- [66:36]
Michael Craig
Right?
- [66:36]
Cole Smead
Yeah. So let's see, there's a lot we didn't talk about. I was just going through my notes. You know, first off, I'm really glad that the movie Rounders never came up. I consider that a badge of honor for all of us because obviously Johnny Chan is pretty famous in that movie for him winning the World Series of Poker. We didn't go into a lot of the history of the Binion family, which I think you did a wonderful job of teaching people about the history of the Binions, the breakup of the Binion family with Benny and his son and the family, and it's a great history. We didn't go much into Harmon's background, but again, really good stuff. I was trying to look to see if there's anything else. We didn't talk about Jennifer's husband. Now, that would suck to be married to a professional poker player, but I just want to ask, kind of put it out to you. Is there anything else that comes to mind that you would like to mention to our audience?
- [67:24]
Michael Craig
Yeah, this is the most trivial thing I can think of, but one of the ones that always brings a smile to my face. David Gray, consummate gambler. I mean, you know, play, you know, and yes, it's like I talked to a bunch of high stakes players and they'd say, oh, you know, the guy we least wanted playing with our money was David Gray. David Gray sucks. Well, David Gray was a successful player for decades and successful in every sort of game and in every sort of gambling and a great storyteller. And he told me a story when he was when he was first starting as a gambler, he was betting on horse races in New Jersey. And there was, like, other group of horse players that, you know, that, you know, you kind of get to know the same people. And most of them were bigger betters than him. But, I mean, he was, like. He was guarding, like, a few thousand dollars, trying to grow it. And after the race, like, the races would end at night, and they would, you know, they'd go to dinner or something like that. Well, one night they went bowling, and there was this one guy in the group, Ira the Whale, who was a great bowler, and as David says, a whale.
- [68:33]
Cole Smead
I love the name.
- [68:34]
Michael Craig
And after they bowled for a while, they decided to get something to eat. And based on the time and the neighborhood they were in, the only thing that was available was White Castle. And so they got into this discussion about whether Ira the whale could eat 100 White Castle hamburgers.
- [68:53]
Cole Smead
Oh, my gosh.
- [68:55]
Michael Craig
And what happened? This is a group of, I don't know, 10 or 12 guys. And they were talking about different numbers. And when they finally got to 100, they said, oh, there's no way the whale could eat 100. And just about everybody agreed. The Whale said he could do it, and David thought he could do it. And so they set up a bet. And I think.
- [69:18]
Cole Smead
Did they take odds on it?
- [69:20]
Michael Craig
No, I think it was straight bet. Yeah, it was a straight bet.
- [69:22]
Bill Smead
Wow.
- [69:23]
Michael Craig
And David said that at the time, $20 to bet on a horse race was a lot for him. And I think he said he had $2,000 with him, which was a substantial amount of all the money he had. He bet $2,000 on Ira the Whale. Ira the Whale, I think, bet 10,000 on himself, and then everybody else took a piece of the other side. And David told me that they went into the White Castle, and Ira went to order, and he was afraid about him getting cold, so he ordered. He was going to order him 25 at a time. So he said, 25 White Castle cheeseburgers, and I'll take a large order of fries and a chocolate shake. And David said to me. David said to me, that was the moment that I knew I was a locked.
- [70:15]
Cole Smead
Yeah, I knew I was a locked. Okay, so I have another idea for you. So I just. I was thinking of this whole story. Cause it's like. It has a feeling of, like, a Hollywood movie where it's like you got the outsider coming in to play the pros, and it just. It's, you know, you got this billionaire. Have you ever had someone come to you to say, like, can we turn this into and make a movie out of this?
- [70:37]
Michael Craig
Oh, like every year. Every year. And what's happened is the people who have, like, the best ability to get a movie made haven't expressed interest. It's mostly been people that have been either amateurs to filmmaking.
- [70:51]
Cole Smead
Yeah.
- [70:52]
Michael Craig
Who were avid fans of the book and had some money or people who were involved in production companies. But it wasn't Universal Studios or Sony Pictures or anything like that. It had been optioned several times. People have expressed interest several times. But none of those projects has ever gotten off the ground. There's one, I think I still. There's somebody has an option on it currently for, I don't know, another six months or another year. And I don't think it's going to go anywhere.
- [71:24]
Cole Smead
Well, because I also think, like, that taking your book and then kind of using as a storytelling of, you know, poker in America, you know, because it touches so much of that history. I was trying to think about, like, who would play Andy Beal. And I was like, well, I mean, I think of. I think of, you know, like a Matt Damon or someone like that showing up to play like an Andy Beal. And at the same time, you could have like a. I'm thinking of who played in Barbie. But you'd have someone sitting there dialoguing about the story of all this. And then here's what happened. And then he walked in and then Johnny, you know, I mean, you could see all this playing out.
- [71:56]
Bill Smead
I think Rob Reiner should make it because he looks a little bit like Rob Reiner.
- [71:59]
Cole Smead
Yeah. So I was gonna ask you, Michael, where can people follow you going forward on either any of your books or just your thoughts on life?
- [72:07]
Michael Craig
And, you know, I, you know, I, you know, I keep in circulation, but I tend to not leave my house that much. I am working with Annie Duke, and so all the writing that I do is really researching and editing for her books and her posts on Substack and when she had a blog, her blog. I'm mostly working with her. I'm on Twitter, but I don't even think I updated the software when X took them over. So I'm not even sure if I'm available. If somebody wants to reach me, I'm reachable. My email address is write. That's w r I t e. Michael craigmail.com. so you just write michael craigmail.com.
- [72:57]
Bill Smead
It'S been too hot to go outside lately.
- [72:59]
Cole Smead
Yeah, it's been pretty hot.
- [73:00]
Bill Smead
Yeah.
- [73:00]
Michael Craig
Well, that's the other thing too is that it doesn't seem like the summer's ever going to end. I'm hoping. I mean, I, I do look somewhat like Rob Reiner, but I want to look like Rob Reiner from early days of, from the early days of all in the Family by walking more outside. But I haven't been able to do it.
- [73:23]
Bill Smead
He's trying to build studios here in Arizona.
- [73:25]
Cole Smead
Yeah.
- [73:26]
Michael Craig
Good for him.
- [73:26]
Bill Smead
Yeah.
- [73:27]
Michael Craig
I'll have to find out if he's interested in the book.
- [73:29]
Cole Smead
Yeah. Well, let's see. First off, thank you for joining us. This is like total treasure and I'm trying to think. You are our second in studio guest. So it's just nice to have a fellow native Arizonan to come in and, and talk about their work and discuss this with you. Bill, thanks for hosting me alongside of this. Michael. Your book reminds me, makes me think a lot about risk, money, the value of time. Was this worth Andy Beal's time? Is what I kept asking myself as an example. And it was worth the players, no question, because they could make a lot of money off him. I also think about the randomness of life that we try to find meaning in, but as we know from Andy, there might not be any. Our listeners should go out and buy a copy of the professor, the Banker and the Suicide King to think of a world inside the mind of a billionaire. Really against the pros. If you enjoy this podcast, go to Apple, Spotify, YouTube or wherever you listen to A Book with Legs, give us a review, tell others about the books and great authors like Michael Craig that we have the opportunity to understand and study the world with and through for our tribe. If you have a great book you'd like to recommend, email podcastmeadcap.com that's podcast meadcap.com you can also send your suggestions to us on X. Our handle is Meadcap. Thank you for joining us for A Book with Legs podcast. We look forward to the next episode.
- [74:46]
Podcast Host
Thank you for listening to A Book with Legs, a podcast brought to you by Smead Capital Management. The material provided in this podcast is for informational use only and should not be construed as investment advice. You can learn more about Smead Capital Management and its products@smeadcap.com or by calling your financial advisor.