Card Counting (Replay)

Summary

Card Counting: Behind the Blackjack Tables

Introduction to Card Counting and Its Portrayal

The episode opens with a vivid portrayal of card counting, reminiscent of the 2008 film 21. Host Zachary Crockett sets the stage by describing a scene where an MIT student employs a card counting system to gain an edge in blackjack, amassing substantial winnings until the casino retaliates violently. This dramatization underscores the mythos surrounding card counters in popular culture.

Zachary Crockett [00:11]: "He uses this system to rack up hundreds of thousands of dollars in winnings until the casino notices his hot streak."

Crockett clarifies that while movies like 21 exaggerate the prowess of card counters, the reality is far more nuanced. The MIT blackjack team, on which the movie is loosely based, indeed harnessed card counting techniques to achieve success, but the actual process and outcomes differ significantly from their cinematic depiction.

House Edge and Casino Economics

Bill Zender, a consultant who aids casinos in maximizing profits, explains the fundamental concept of the house edge—the statistical advantage casinos hold over players.

Bill Zender [02:06]: "You're not going to put a game on the floor and let people come in and beat you. I mean, that's stupid."

Zender elaborates on varying house edges across different games, highlighting that while games like roulette and slot machines have higher house edges (ranging from 5% to 40%), blackjack offers a more favorable environment for players who employ strategic thinking. The slim house edge in blackjack—approximately 2%—creates opportunities for players to tilt the scales slightly in their favor through card counting.

Strategies: Basic Strategy vs. Card Counting

Crockett differentiates between basic strategy and card counting. Basic strategy involves following a set of predefined moves based on the player's and dealer's cards, reducing the house edge to about 0.5%. Casinos support this by providing strategy charts, ensuring that even with perfect play, the house maintains its advantage.

Ben [05:46]: "I'd say if you're playing perfect basic strategy, you can play at a 0.5% disadvantage. That's probably one of the lowest house edges there is, and that's probably why people like it."

To surpass the basic strategy, players like Ben adopt card counting—a method that tracks the ratio of high to low cards remaining in the deck to adjust betting strategies dynamically. This technique can provide a marginal edge of around 1%, turning blackjack into a volume game where slight advantages accumulate over thousands of hands.

Life of a Professional Card Counter: Ben’s Story

Ben, a pseudonym for a former professional card counter, shares his journey from novice gambler to adept card counter. Initially inexperienced, Ben struggled with basic games like craps and early blackjack attempts, which prompted him to delve deeper into the mathematics and strategies of the game.

Ben [04:08]: "You can actually learn how to play the game in a way where you take an edge over the house legally."

Through extensive study and practice, Ben mastered card counting, enabling him to maintain a consistent, albeit modest, income from blackjack. His commitment spanned 15 years, during which he never earned more than $100,000 annually from card counting alone.

Ben [09:19]: "I would say the best card counters in the world make maybe low six figures, but the majority of card counters make way less than that."

Despite the potential, Ben highlights the scalability issues and the constant threat of being identified and barred from casinos, which ultimately led him to abandon professional card counting in favor of a career in finance.

Casino Countermeasures and Their Effectiveness

Casinos employ various strategies to thwart card counters, ranging from surveillance and player profiling to altering game conditions. Zender notes that while casinos invest significantly in preventing card counting, the actual financial threat posed by counters is minimal compared to overall revenues.

Bill Zender [10:00]: "The threat of card counting is completely overblown by casino people. Everybody thinks there's a card counter lurking around the corner, and it's not like that at all."

Common countermeasures include restricting players from joining games mid-deck to prevent back-counting, increasing the number of decks used, and implementing continuous or frequent shuffling. These tactics, while somewhat effective in deterring counters, also inadvertently slow down game play, reducing the table turnover rate and overall profitability.

Bill Zender [15:06]: "The more decks you have, the less opportunities a card counter has to have a profitable situation."

Legal Implications and Casino Liabilities

While card counting is legal, casinos reserve the right to refuse service to anyone. However, aggressive tactics to remove suspected card counters—such as physical intimidation, false imprisonment, and refusal to cash out winnings—have led to significant legal repercussions for casinos. Ben recounts instances where casinos employed forceful eviction practices, resulting in lawsuits and substantial financial settlements.

Ben [14:11]: "And the settlement was $200,000 more than Ben or his friend had ever made from playing blackjack."

Such actions not only tarnish the casinos' reputations but also impose hefty costs, overshadowing the minimal financial threat posed by genuine card counters.

The Economic Trade-Off for Casinos

Consultant Bill Zender argues that the resources casinos allocate to combat card counting are disproportionate to the actual losses incurred. He contends that the money spent on deterring card counters—amounting to millions annually—is better invested in enhancing overall casino operations to attract and retain regular patrons.

Bill Zender [16:58]: "Casino people, they're very reluctant to change because sometimes if they make a change, it could backfire in the short term."

Despite these arguments, casinos remain steadfast in their countermeasures, prioritizing the prevention of card counting over optimizing game flow and player experience.

Conclusion: Is Card Counting Worth It?

Ultimately, the episode paints card counting as a challenging and often unrewarding endeavor. The marginal financial gains are outweighed by the constant vigilance required to avoid detection and the potential legal ramifications of aggressive casino countermeasures. Most card counters, like Ben, find the pursuit unsustainable and transition to alternative careers, recognizing that the economic benefits do not justify the risks and efforts involved.

Ben [17:35]: "It's just really not that scalable. And that's why I stopped. Once you get, like, known and you start getting thrown out and put in databases, like, pretty much the game's up."

Crockett concludes by emphasizing the broader economic context, where the negligible impact of card counters on the $60 billion U.S. casino industry renders the fear of card counting largely exaggerated.

Zachary Crockett [10:00]: "In the US casinos are a $60 billion a year business. When you think about the context, the financial threat from a couple hundred card counters is almost laughably small."

Notable Quotes

• Zachary Crockett [00:11]: "He uses this system to rack up hundreds of thousands of dollars in winnings until the casino notices his hot streak."
• Bill Zender [02:06]: "You're not going to put a game on the floor and let people come in and beat you. I mean, that's stupid."
• Ben [05:46]: "I'd say if you're playing perfect basic strategy, you can play at a 0.5% disadvantage. That's probably one of the lowest house edges there is, and that's probably why people like it."
• Ben [09:19]: "I would say the best card counters in the world make maybe low six figures, but the majority of card counters make way less than that."
• Bill Zender [10:00]: "The threat of card counting is completely overblown by casino people. Everybody thinks there's a card counter lurking around the corner, and it's not like that at all."
• Ben [14:11]: "And the settlement was $200,000 more than Ben or his friend had ever made from playing blackjack."
• Ben [17:35]: "It's just really not that scalable. And that's why I stopped. Once you get, like, known and you start getting thrown out and put in databases, like, pretty much the game's up."

Final Thoughts

"The Economics of Everyday Things" episode on card counting provides a comprehensive exploration of the practice's intricacies, the economic dynamics between players and casinos, and the real-life implications beyond Hollywood fantasies. Through engaging narratives and expert insights, listeners gain a nuanced understanding of why card counting, despite its allure, remains a challenging and often unprofitable pursuit in the high-stakes world of casinos.

Transcript

[Unknown Speaker]

10. It's minus one counts. Plus 15. Five. The count's 16.

[Zachary Crockett]

This is a scene from the 2008 film 21. An MIT student is playing blackjack at a casino in Las Vegas. He's assigning a value to each card that hits the table. And he's keeping a running count in his head that somehow gives him an advantage.

[Unknown Speaker]

Jack, plus 12. Nine. Still plus 12.

[Ben]

Blackjack.

[Zachary Crockett]

He uses this system to rack up hundreds of thousands of dollars in winnings until the casino notices his hot streak. At that point, security guards take him into a backroom, beat him up, and threaten to kill him if he ever comes back. That movie was very loosely based on the story of the MIT blackjack team, a group of students and recent graduates who taught themselves the technique known as counting cards. In movies like 21, card counters are often portrayed as mathematical savants who rob casinos blind until they're caught. Casinos have bought into this mythology. They've taken drastic measures to stop card counting. But those measures have come at a steep cost.

[Bill Zender]

A lot of the casinos spend so much time and effort to try to deter card counting, they actually cut their own throats. They're pissing away their dollars to try to save pennies.

[Zachary Crockett]

For the Freakonomics radio network, this is the economics of everyday things. I'm Zachary Crockett. Today, card counting. When you walk into a casino, you're probably going to leave with less money in your pocket. You can get lucky in the short term at a slot machine or at the roulette table, but over the long run, the house is always going to win.

[Bill Zender]

You're not going to put a game on the floor and let people come in and beat you. I mean, that's stupid.

[Zachary Crockett]

That's Bill Zender. He runs a consulting firm that helps casinos make more money. He says that the casino has a mathematical advantage over you. It's called the house edge, and it's expressed as the percentage of your bets that you're going to lose over time.

[Bill Zender]

The house hedge changes from game to game, of course, and let's say you've got a game like roulette. For every dollar I wager, in theory, I expect to lose 5.26% of that.

[Zachary Crockett]

For slot machines, the house edge is generally anywhere from 5 to 15%. Lottery type games like Keno can be up to 40%. Those games are pure chance. But some gamblers want to feel like they have a little more control over their destiny, and they tend to head to the card tables.

[Bill Zender]

A game like blackjack's a little bit different. Blackjack is based on the rules.

[Zachary Crockett]

In blackjack, you're playing against the casino. You and the dealer are each trying to get as close to 21 points as possible without going over. She deals two cards to you and two to herself. You can take more cards one at a time until you decide to stop. Each card is worth a certain number of points. A six is worth six, face cards are 10, aces are one or 11. You can play them either way. It can get a lot more complicated than that, but those are the basic rules. Even if you have zero experience playing blackjack, the house edge is only around 2%. That slim margin means that if you can find a tiny advantage, you might come out ahead.

[Bill Zender]

There's a small portion of the gambling public that has the ability to beat the casinos counting cards on a long term basis. I call those people professional card counters.

[Ben]

I spent about 15 years of my life as a professional card counter.

[Zachary Crockett]

That's a guy I'll call Ben. He does not want to use his real name because card counters are not welcome in Vegas and blackjack.

[Ben]

You can actually learn how to play the game in a way where you take an edge over the house legally.

[Zachary Crockett]

Ben grew up in Detroit in a pretty strait laced household. His parents hated gambling. So of course, as soon as he could legally do so, he went to a casino.

[Ben]

I had no idea what I was doing. I think the first table I walked up to was a craps table and I gave them the 20 bucks. They're like, here, roll these dice. And I rolled them and they were like, you lost everything? I was like, oh, awesome. So then I went to a blackjack table with my friends. I was just like, okay, how hard could it be? So I started playing and I was just doing really poorly. One of my friends looked at the dealer and said, oh man, you're really killing my friend. And the dealer went, no, he's killing himself. I went home and I was like, well, I gotta figure it out.

[Zachary Crockett]

Ben joined blackjack forums on the Internet. He read books with names like black belt and blackjack. He studied the history of the game and learned that math wizards and MIT professors had been enthralled with it for decades. The rabbit hole was deep and Ben went all the way down it.

[Ben]

What's it called? I have a very, like, addictive personality. So I'll learn something and then get really excited about it.

[Zachary Crockett]

The first thing Ben came across was a basic strategy chart. It shows you every possible combination of your cards and the dealer's cards and says what to do in each Situation.

[Ben]

I'd say if you're playing perfect basic strategy, you can play at a 0.5% disadvantage. That's probably one of the lowest house edges there is, and that's probably why people like it.

[Zachary Crockett]

Casinos welcome the use of basic strategy. They sell little cards with those charts at their gift shops, because even when the player follows the chart flawlessly, the casino still has an advantage. To do any better, Ben realized he'd have to learn how to count cards.

[Ben]

They actually is quite simple. You're trying to figure out the percentage of. Okay, you're trying to. You're trying to figure out kind of what's left. 10, Jack, King, Queen, and ace. So you're keeping track of the low cards and the high cards. And then, like the neutral cards, 7, 8, and 9. If a 5 comes out, that's another plus 1. So you add a plus 1. So you were already at 1. So now you're at. If a 10 comes out, that's minus 1. 3, 4, 5, 6, 7, 8, 8, 9, 10, 11, 12, 13, 14, 15, 16, 16. So this sounds insane. It sounds impossible. It's a bit confusing, but essentially, I kind of got lost in my train of thought here. Yeah, the game is quite complicated now that I have to explain it.

[Zachary Crockett]

Okay. Properly explaining card counting strategy would require a miniseries, but in the simplest terms, it's a way of keeping track of what cards have been dealt and what's still in the deck. You don't try to memorize every card. You just assign a value to each card that's been placed on the table.

[Ben]

Whenever you see a 2, 3, 4, 5, or 6, you add a plus 1. If you see a 7, 8, and 9, they're worth 0. Then a 10, Jack, King, Queen, and Ace are worth minus 1.

[Zachary Crockett]

You keep a running count of the total in your head for all the cards played over many rounds. A higher count means there are more face cards and aces left in the deck. That gives you a better chance of getting 20 or 21. So when the count is high, you place bigger bets. When the count is negative, you back off.

[Ben]

When you learn how to count cards, basically you do it alone in your room with a deck of cards. You just have a deck and you just start flipping cards and you're like, plus one, minus one, plus one, minus one, zero, zero, plus one. Eventually, you get really good at it, and you're like, you know what this is really like, not that hard.

[Zachary Crockett]

But pulling it off in a crowded casino is a different story.

[Ben]

There's people screaming. There's the Dealers yelling at you. And then the waitress comes up and is like, oh, you're drinking $17? You're like, wait, I hit 18? Or was it 17? And then you forget and you're like, wait, was it plus five or minus five? It can really get away from you quickly.

[Zachary Crockett]

If you manage to keep track of the count without a single error, you can end up with a very slight advantage over the casino.

[Ben]

People think, oh, wow, you're a card counter. You must win every time. Like, you must be so rich, it's wonderful. But your edge on average is probably around like, maybe 1% over the house, which is really low.

[Zachary Crockett]

That 1% edge turns blackjack into a volume proposition. If you want to make any real money, you have to play tens of thousands of times over hundreds of hours. Ben played full time for 15 years, and he says he never made more than $100,000 a year from card counting.

[Ben]

I would say the best card counters in the world make maybe low six figures, but the majority of card counters make way less than that.

[Zachary Crockett]

So an expert full time card counter costs a casino 100 grand a year, which might be a decent living for the card counter. But if you're a casino, is it really that big of a deal?

[Bill Zender]

The threat of card counting is completely overblown by casino people. Everybody thinks there's a card counter lurking around the corner, and it's not like that at all. There's probably less than 200 in North America, and nobody's getting rich on this.

[Zachary Crockett]

In the US casinos are a $60 billion a year business. When you think about the context, the financial threat from a couple hundred card counters is almost laughably small. But casinos treat it very seriously.

[Bill Zender]

Card counting costs the industry millions of dollars a year, but it's not the guy sitting at the table that's doing it.

[Zachary Crockett]

That's coming up. Before he was a consultant, Bill Zender played nearly every role in the casino business. He started his career as a blackjack dealer. He spent several years as an enforcement agent with the Nevada Gaming Control Board. And he served as a vice president of a major casino on the Vegas strip. For most of that time, he was given strict instructions to stop card counters. He could usually sniff one out pretty easily because he could count cards himself.

[Bill Zender]

I'm counting the cards in parallel, and I get to a situation and I'll say, okay, on this next hand, I would bet more money. Let's see what the player does.

[Zachary Crockett]

Over the years, Zehnder says he caught 230 card counters, and he had a process for dealing with them.

[Bill Zender]

I would approach them. I'd introduce myself. I'd ask them to do me a favor. Pick your chips up, come away from the table with me for a little bit. And I'd basically say that I've been watching your play, and you're really good, and, you know, we'd rather you didn't play blackjack here anymore. And after a couple of, well, I don't know what you're talking about, they'd finally get the point, and then we'd shake hands, and they'd go their way.

[Zachary Crockett]

But Sender says not all casino agents, often called pit bosses, handle the situation with that kind of grace.

[Bill Zender]

Some of them actually physically haul them off the game. Some of them take him in the back room. They want to ID Them. They want to take their picture. Sometimes if they get up and say, you know, you can't arrest me. I'm leaving. And then they throw him back into the chair, they're actually kidnapping him. Right. The casinos have to understand that you can't do that. And taking somebody in a backroom and trying to intimidate them is not professional.

[Zachary Crockett]

It's not just unprofessional. It's a liability. There aren't any laws against card counting. It's a perfectly legitimate way to improve your odds. Now, that doesn't mean that casinos have to tolerate it. In most states, they can kick you out for almost any reason they like. But when they use physical force, refuse to cash out chips, or illegally detain a suspected card counter in a back room, they can cost themselves a lot of money.

[Bill Zender]

These true card counters, they know that you can be the casino two ways. One is across the blackjack tables, and number two is in the court of law. I had one player tell me what he does. He said that if they're walking him out, he looks for the biggest, dumbest security officer and make some kind of a comment to him to see if he can get the guy to grab him up or maybe take a swing at him. And everything is captured on film.

[Zachary Crockett]

Over the years, casinos have paid out millions of dollars in settlements as a result of their thuggish behavior. Ben, the card counter I talked to, has his share of war stories.

[Ben]

Some casinos will go so far over the top that that it's almost like a movie. I mean, I've been dragged through a casino floor against my will, dragged. One of my friends I know got tackled full tackles, like linebacker tackled a big one is. Security will just take you to the back room. It's just a room in the back with white walls. And a lot of times, they won't let you leave. They'll call the police on you. They'll demand that you show them your identification, all kinds of stuff to intimidate you, and it's all against the law.

[Zachary Crockett]

In one of those instances, Ben and his friends decided to take legal action.

[Ben]

We called a lawyer in Vegas who's very well known for suing casinos, and he was like, oh, yeah, this is good. And yeah. So we sued the casino for false imprisonment. We sued them for not cashing our chips. We sued them for all kinds of stuff. And the jury voted unanimously for us.

[Zachary Crockett]

The settlement was $200,000 more than Ben or his friend had ever made from playing blackjack. And that's not the only way casinos can lose money in the fight against card counters. To keep their edge at the blackjack table, They've changed how the game is played. For starters, they stop players from entering a game after the first hand is dealt.

[Bill Zender]

What this does is it basically was set up to prevent people from back counting and jumping in on the games only when they have the advantage.

[Zachary Crockett]

Instead of dealing one deck of cards, Casinos will mix together six of them. They'll either continuously reshuffle these cards or shuffle once they've dealt out a certain percentage of them. That makes it much more difficult for card counters to know what's left to be dealt.

[Bill Zender]

The more decks you have, the less opportunities a card counter has to have a profitable situation.

[Zachary Crockett]

Those techniques do deter card counters to an extent, but they also slow down the game.

[Bill Zender]

See, the more hands a casino can deal, the more revenue they have. They're concerned about a small sliver of the gambling public. But you've got thousands and thousands of other people coming to your casino every year. And what you're doing is you're limiting the profit potential on them.

[Ben]

Normal gamblers go to have fun and excitement. They don't want to play for five minutes and then wait for a 10 minute shuffle. They'll just leave.

[Zachary Crockett]

Before he turned to card counting, Ben got a master's degree in hospitality management from the university of Nevada, Las vegas. As a grad student, he did an analysis of a casino in Atlantic city. That casino shuffled cards by hand before putting them into an automatic shuffler. He estimated that adding one extra shuffle cost the casino over $15,000 a year per table, and the casino in question was adding five extra shuffles. Zehnder has tried to tell casinos that fighting card counters isn't worth it. He says that if they dropped all the countermeasures sure, there might be more people counting cards, but the casinos would make up the lost revenue by increasing turnover at the tables. He says most of them aren't buying it.

[Bill Zender]

Casino people, they're very reluctant to change because sometimes if they make a change, it could backfire in the short term.

[Zachary Crockett]

Ben has heard similar stories.

[Ben]

I had a professor at unlv, and he would consult with casinos, and he said they would tell him to his face, oh, you know, you're just an academic up in your ivory tower. You don't know what it's like here on the casino floor.

[Zachary Crockett]

The casino's approach may be irrational, but on their terms, it looks like they're winning. Many card counters, including Ben, have given up the trade for the most part.

[Ben]

It's just really not that scalable. And that's why I stopped. Once you get, like, known and you start getting thrown out and put in databases, like, pretty much the game's up.

[Zachary Crockett]

What do you do now?

[Ben]

Yeah, I work in finance. I'll just say that.

[Zachary Crockett]

For the economics of everyday things, I'm Zachary Crockett. This episode was produced by Sarah Lilly and mixed by Jeremy Johnston. We had help from Daniel Moritz Rabson. You ever try to come back in wearing a disguise? Maybe one of those glasses with the fake nose and the little mustache or something?

[Ben]

I have never done that. But I know people who have, like, really elaborate makeup, Halloween costumes. People go to, I mean, insane lengths to, like, dress up. And it works. The Freakonomics Radio Network.

[Zachary Crockett]

The Hidden side of Everything.

[Ben]

Stitcher.