Risk of Ruin
Audio documentaries about risk takers.
Risk of Ruin
The Audacity of Help
Richard Munchkin and Darryl Purpose are career advantage players. Over the past 40 years they've teamed up to win millions of dollars from casinos. In this episode they recount some of the war stories and also offer reflections on the nature of teamwork.
Darryl Purpose's music website: https://darrylpurpose.com/
Richard Munchkin / Gambing With an Edge: https://www.lasvegasadvisor.com/gambling-with-an-edge/category/podcast/
Earlier episode of Risk of Ruin featuring Richard and Darryl: https://podcasts.apple.com/us/podcast/david-goliath-part-i/id1527018692?i=1000493338179
James Grosjean's "Beyond Coupons": https://www.lasvegasadvisor.com/gambling-with-an-edge/wp-content/uploads/2022/02/beyondcouponsbjfo.pdf
Email the show: risk of ruin pod at gmail
Follow us on Twitter: https://twitter.com/halfkelly
Well, when I was younger, I just didn't worry about anything. I didn't, I wasn't afraid of anything. I just thought I was doing my job. I think I had a autistic, I think I'm on the spectrum and I would take steps that I considered to be my job. So I think I've told you before about me breaking up a Yakuza meeting in Korea because they owed us$20,000 and I had won the reverse auction to collect it and just not thinking anything of it, really. And then in Sri Lanka, you know, being in the back room with the casino owner and we had made an agreement that I'd give him some of the money back. I'd keep some of the money. And I called my friend Art at the hotel. Can you come pick me up? And Art says, do you think they might kill you? And I said, I don't remember this, but Art tells me, I said, I think they might. And he says, Art says, I'll send a taxi.
SPEAKER_00:Risk of Ruin is a podcast about gambling and life and their intersection. I'm John Reeder. This is episode 25 of The audacity of help. I'm sure you're familiar with the phrase, it's not what you know, it's who you know. And I don't know if you're like me, but every time I hear it, I get a little triggered. There's like a split second where all I can think about is, so much for meritocracy. It just seems like a cold-hearted dismissal of ability, in favor of connections. Although you could also interpret it's not what you know, it's who you know as a helpful reminder of the importance of human cooperation. We are social animals and we can accomplish things together that we could never accomplish alone. Cooperation is powerful and for that reason, it helps to know a lot of people. Also, there's an embedded caution against ego and hubris. No matter how good you are, you could be better with help. This episode is about that. interpretation of the phrase. We're going to be talking about teamwork in the world of advantage play. You know, people who make a living playing casino games with an edge. This is Richard Munchkin. He's a career advantage player and the co-host of the Gambling with an Edge podcast. He's also been a part of various AP teams for over 40 years.
SPEAKER_01:When I first started, I had a very small bankroll, so it was clear that I could make more money playing on a team than I could just playing with my own bankroll. But then once you move beyond counting and, for example, say you realize, oh, there's a lot of money to be made seeing the dealer's hole card. Well, then you start to think, well, what's the best way to extract the most money if I can see the dealer's hole card? oh, well, they're going to figure it out much more slowly if there's a reader in the seat betting small and the BP is somewhere where he couldn't possibly be seeing the whole card.
SPEAKER_00:This is Daryl Purpose, who, like Richard, is also a member of the Blackjack Hall of Fame.
SPEAKER_02:The thing about team play is that, well, when I first started, I would meet somebody in casino and it's like, you count cards, I count cards. Oh, cool. I have a friend who counts cards. Okay, we're a team. But then as it moves on, what you're looking for is people with different resources and different skills. So on a team, you need somebody with money, right? You also need people that are skilled at playing cards, right? You also need somebody who can see, because often these moves involve seeing, good seeing. Some people have good eyesight and some people don't. And so you put all those things together and everybody has different resources. So everybody has a different level of thing that they bring to the team play. But ultimately, you just need... a number of different people. Sometimes you need people who have the time to sit on a blackjack table with you and take up a seat, you know? So you put all those things together and you have a team and it's the teams I've had are all, uh, been very complicated in those ways. And they've all been different in those ways in the early days, like in my twenties. We were a team because we said, okay, we'll be a team. I like you. You like me. We got these three other guys. We're going to be a team for now. And it's something you do full time. When we had teams in those days, we weren't doing other things. We were figuring out ways to beat the games and then beating the games. We were doing it full time. So the team involved is kind of like a company. It was kind of like a sports team, but it was full-time, and everybody worked really hard. If you didn't work really hard, you probably weren't invited to be on the next team.
SPEAKER_00:You can trace a direct line between these guys and the pioneers of AP team play. Daryl played on a team with Ken Houston, who wrote the original book titled The Big Player. The book essentially gives away the system that Houston learned from Al Francesco a.k.a. Frank Schiappone. Over the years, APs have taken Schiappone's kernel of an idea and remixed it in endless ways. They've also hammered every game on the casino floor.
SPEAKER_02:Team play is also about communication in the casino on the game. There's people that are involved in the team that aren't even on the play. Maybe they ran some numbers. Maybe they had some money to invest. They aren't there. But eventually you get on the table. And it's every possible number of team players on a table. You could just be one player going to a game and playing it, or you could be seven people on a table, each with a job and each with a different job, you know, so it gets really, it can get very sophisticated in that way. And I know that Frank Schiappone, who was kind of the godfather of team play, and we see him pretty much every year at the Blackjack Ball, but He came up with the original signals for team play, and he went around and looked at people in a casino and just saw what they were doing. Oh, I see that guy's putting his fist on his chin. That guy's scratching his head in this way. Those became the signals, and those signals lasted a long time, and some of them are still in effect. The idea that you put your hand to your chin, and that means the game is good, come in. The idea that you scratch your head, that means question. And it can mean question, depending on the context, it means a different thing. But scratching your head is probably still question. Doing your nose like they do in The Sting, that means go that way, go over there, sit there. So many others that I think they're not, you know, these are not, I'm not giving away anything. I think people have gotten very sophisticated with their ways of communicating. But some of these signals stayed signals for a long time. But these days, you know, it's so different with cell phones because you had to plan quite a lot. before you went out into a casino in the days before cell phones now you can just text each other sometimes you do it on the table it's not a good idea but you can do it if you need to if somebody's doing something wrong or somebody needs to know certain information you can do it and you know the other thing that's gotten real common is we've just realized that you know audible signals can be very effective and it's just funny what the dealer doesn't hear It's really funny. You can just, when I take people out for the next day, I'm training them. When I take them out for the first time, I just tell them I will not lie on a table. Whatever I say, I mean it literally. I mean it exactly. And I just say things to them and they just can't believe I'm saying this in front of the dealer. But dealers just don't hear it because of the context. They just don't imagine that there's anything nefarious going on.
SPEAKER_00:There's a play that provides a good example of how effective these strategies can be for advantage players. But just to set things up, I should mention that in the 1980s, the Japanese economy was on an all-time heater. They had a bubble in real estate and a bubble in stocks, and the two kind of fed off each other. To give you a sense as to how wild things got, at one point, the market cap of all land in Japan was like four times the market cap of all land in the U.S., One of the beneficiaries of the bubble was a casino in Korea called Walker Hill. They got a lot of action from Japanese businessmen who were flush.
SPEAKER_01:I remember talking to a guy who, an American who was one of the management people when they opened it. And he said the first day they were hauling duffel bags of money up to the suite on the top floor. They just could not believe how much money they were making. And he said to the people who owned the casino, he's like, you got to do something. We need to stop Koreans from playing here because they're all going to lose all their money and it's going to be really bad politically. And they actually passed a law in Korea that the Koreans could not gamble in the casino. But the other thing that I saw that was just... was I went and looked at the Baccarat table. And there was literally millions of dollars in chips on the table. And guys were betting$250,000 on a side in Baccarat. And the casino came up. And again, remember, this is 1986. And the casino had come up with this brilliant idea. They went to the Baccarat players and said, there is no limit. You can bet as much as you want. As long as there is no more than a$20,000 difference between the amount of money on the player and the amount of money on the banker. And so the players would say, you know, to the guy who was betting on the player's side, like, oh, you need to bet$50,000 more because we have this much on this side, you know. And the casino just ranked their 5% every time the bank won, you know. It was unbelievable how much money they were making.
SPEAKER_02:When we look for a casino where we can maybe go and take advantage of them, if you could only ask one question about a casino to know whether this was going to be a good play, you would ask, how much money are they making? How much money are they making? And based on the answer to that question, you'd know whether you could go in there and take some for yourself. So a lot of our best plays involve money. playing at casinos where they were just making 10 times 100 times what we could take from them and so they just didn't they didn't concern themselves with us
SPEAKER_00:the target game in korea was blackjack with enough favorable rules like early surrender that players had an edge just with basic strategy they call it edge off the top so then if you add card counting the edge improves because you're betting less when the count is negative and more when the count is positive Richard heard about the game through the legendary horse bettor, Alan Woods. But when he went to scout the game, there was a problem. Card counters had descended on Walker Hill like ants at a picnic.
SPEAKER_01:I walked into Walker Hill. That was the main casino in Seoul. And there was sort of this unspoken rule that if you did not bet more than$200, they would leave you alone. They would not bar you. And... You know, we didn't want to bet$200. The limit was$3,000. And I walked in one day and I walked around the pit and I counted. There were 40 guys, 40 that I knew were all card counters. And they would come in, they would order their orange juice and coffee and their eggs and rice, you know, that you could eat at the table. And they were there eight or 10 hours a day. And I remember calling the guys back home and saying, This is never going to last. They are not going to put up with this much longer.
SPEAKER_00:For this play, there's a part that's just math, right? Blackjack basic strategy, keeping track of which cards have been dealt, and the effect of various rules on the house edge. That stuff had already been settled in books by Ed Thorpe, Peter Griffin, and Stanford Wong. It was all objective, and there was a way to do it by the book, literally. But then there's another part of the play where the answers are not obvious, and a lot of choices exist. Choices equal potential for creativity. Card counting has an order of operations, but figuring out the best way to get the money out of the casino has no set of rules. That part of the play is closer to art. Remember that Richard and Daryl had been playing on teams for as long as they'd been professional gamblers, and by 1986, they also had a very good understanding of how casinos think.
SPEAKER_01:You know, we realized we needed... It may have been Daryl, actually, who said... we need a Japanese big BP. They are never going to throw a Japanese guy out because that's where all the money was coming from. I have to say this about Daryl. Daryl is like when he has an idea, he is balls to the wall and he's just going to get it done. He went and put ads in the Japanese newspapers in Los Angeles looking for BPs and You know, fortunately, I had been producing dance shows in Japan, so I had some contacts that way. I had a dancer who had worked for us who was married to a Japanese guy, and we wanted Japanese players that had Japanese passports.
SPEAKER_00:One of the Japanese big players was a guy named Rocky. He's been a part of various plays over the years, and he is known as a great BP. Also, he's a sushi chef by training.
SPEAKER_01:There'd be two counters there, right? And we would play an eight-hour shift, and then another counter would come in and take over, and Rocky was fine to just play 16 hours straight. That was no problem at all for Rocky.
SPEAKER_02:The other thing about Rocky, you talk about an act. How good is your act in the casino? How good is the BP's act? Well, Rocky had no act. He just looked amazing. He just looked like a Japanese gambler and a very sophisticated guy. I remember one time in Vegas, it was me, him, and Gross Gene. Rocky was betting$5,000 a hand and wasn't saying a word, didn't say a word, did not say a word. We won$95,000. In that time, they came up and gave him a card, not knowing anything about him. They gave him, we want you to have this card. Here's a card, a player's card, which you can't get without giving ID, but he did. And then he won 95,000 and he stood up and walked away. He had never said a word. He never tipped. And they loved him.
SPEAKER_00:Even though the game at Walker Hill favored the player, the casino could still make a lot of money. Actually, casinos regularly make more than the house edge, and the reason is that most gamblers play horribly. Like, cannot be bothered to know basic strategy. Casinos make billions of dollars from people convinced that their gut will be right next time. So pros who play basic strategy and also make playing adjustments based on the count, well, they get used to being the subject of scorn at the table.
SPEAKER_02:Well, one thing is they looked at the white guys on the table, even when we were betting very small, minimum, and just calling plays for the BPs. I mean, we were just troublemakers in their eyes, in everybody's eyes. The other players at the table, they just didn't like these white guys on the table screwing up the cards. There are no places where people are more superstitious and upset about how you play the hand than South Korea. That's for sure. Playing with those Japanese players, they are very superstitious. And so they did not like what we were doing. Hitting our 2-12 against a 3 or whatever. Hitting our 8-7 against a 9. They did not like that stuff.
SPEAKER_00:Card counting is a very easy thing for casinos to pick off. When the size of the bets are correlated with the count, it's just a matter of time before the house says, no more blackjack. But the team in Korea lasted for three years. They won a million dollars from Walker Hill, and they won half a million from other Korean casinos. If you're trying to do the inflation math, I'll save you the brain damage. It would be about three and a half million dollars today. So if one of the world's greatest gamblers calls you up and tips you off to a million dollar opportunity, It's also good to reward that
SPEAKER_01:faith. So we did. We had plenty of money. And after we broke, our targets were$100,000, which looking back, the limit was like we were betting two hands at$3,000.$100,000 is not much. But after we broke four or five banks... The play in Korea
SPEAKER_00:lasted long enough that the guys had to figure out how to live as expats who also had the specific needs of professional gamblers.
SPEAKER_01:So basically, day to day, we were playing every day. for most of the day. But the off hours, there was a large expat community there, and there was this guy named Marty who was a card counter who had found the game way early, and he had just moved to Korea, and he had been there for years. So Marty had kind of the lay of the land, and if you had questions, he was the guy who would show you where the black market was to change money. you know, he was the guy who knew things. There was also a guy who opened a disco in the area where a lot of the Americans hung out was called Itaewon. It was a shopping district. And he opened a disco in the shopping district. And so that was a place to meet other Americans and And Tom would always hang out at the Wendy's. They had a patio in Itaewon and he was there every day. He was like the mayor of Itaewon. People would come talk to Tom. But yeah, as I say, most of the time was spent working. My first team, we had a, you know, we were all living in Vegas and it was a shuffle tracking team and we had an hours requirement. And I think the requirement was you had to play 16 hours Advantage players
SPEAKER_00:get into gambling, at least in part, because it's not the square world. And so managing a big team, along with all of the related logistics, might not be what they signed up for.
SPEAKER_01:I think the big, big lesson that Daryl and I both learned was after Korea, where there was a point, I remember, after Korea, where we had money in four continents in six currencies. And I was like, this is like running a corporation. I don't want to work for a corporation. Like, to me, this is not fun. It's like a job. And after that, both of us started with kind of a system where two or three of us get together for a weekend or a week, and we make a play, and we chop the money at the end of the week, and there's no bankroll, there's no, like, carryover, keeping track of your hours, any of that kind of stuff. And once we move to that method of team, and the team might be different, right? It might be me, Daryl, and this person one week, and me, Daryl, and that person a different week. But the core is the same group of people. Once we move to that type of system, I was much happier as a player.
SPEAKER_00:One benefit of using a BP is that if the casino kicks them out for winning too much, You can just get another BP. They're valuable in part because they're interchangeable. But the play in Korea ended when the casino eventually realized that the white guys at the table were the problem. That's just the nature of plays. Nothing lasts forever. Also, having to find new games is just the life of an advantage player.
SPEAKER_01:There was a boss in Lake Tahoe. Thank you for having me. You know, having learned my lesson in Korea, I knew there was no way it was going to last. So I called the guy up and I said I was a journalist writing a story about new table games. And I understood he had invented this new thing. And he was very proud. Oh, yeah, he's telling me all about it. And I was saying, well, I know they have it up there at Caesars Tahoe. Where else do they have the game? And he named, I think, one other casino in the United States that had a small limit or something. And he said, but, you know, you should talk to Huxley in London because they're handling the international placement of the game. And I was like, oh, OK. And so I called Huxley and I gave him the same story. And, you know, the Berlin Wall had just come down and Poland had just opened a casino. And they said, yeah, we placed it in Warsaw at this casino there. And it turned out they had a$1,000 max on the side bet. And so I called Daryl. I said, we're going to Warsaw. And he said, let's take Rocky. I was like, okay. And off we went.
SPEAKER_00:Sometimes these guys found games through social engineering, and sometimes they found games through more of a boots-on-the-ground approach.
SPEAKER_02:Well, I think sometimes we knew a lot, but I was... always of a mind that it was a small, lost leader to fly anywhere and see what was happening. And, you know, you can't do better than seeing the game with your own eyes. And so, you know, you spend a couple thousand dollars, you fly somewhere exotic and spend a couple days there, maybe stop by a museum, maybe see a view. I never really did any of that, but... But it sounds good. And I knew I could do that. That's the thing. But, you know, so you pay that little bit of money to fly there and then you see what's happening in the casino. And sometimes we hit the jackpot and most times we didn't.
SPEAKER_00:I was very curious if Rocky's image in the casino in Poland was as effective as it had been in Korea.
SPEAKER_01:Well, my first choice would have been, you know, like an Arab image. probably for Europe, right? But yeah, I mean, we figured Rocky would have to be able to win more than the Caucasian American could. He lasted one day. But he did win$70,000 or whatever. It was like$70,000 US. And I remember when he went to cash out, The dealer says, well, yeah, he won a lot of money, but I mean, you can't do anything with it. And they're all look at each other. We're like, what?
UNKNOWN:What?
SPEAKER_01:And the and the guy was like, well, yeah, it's Lottie's. I mean, you can't change it to dollars and you can't take it out of the country. And we're like, what?
UNKNOWN:What?
SPEAKER_01:So, I mean, that turned out to be half true. It was true. It was not true. We could change it into dollars. That we were able to do pretty easily. But you could not get it out of the country. So what happens is Rocky gets barred the first day. And they were letting us cut like six cards off the back of a shoe. Right? Now, or less even. And the back card's exposed. Now, if you cut yourself an ace, it's considered a one. So you're 100% edge on the under, right? And so Daryl was like, well, we might as well just go play it ourselves and, you know, cut the back card. And I'm like, man, they're not going to put up with that for long. He's like, when are we coming back to Poland? So yeah, we went down and we got barred, I think within an hour, maybe less.
SPEAKER_00:So the play yielded 70,000 US, but it was over pretty quickly. And then the guys had to figure out how to get the money out of Poland.
SPEAKER_01:We initially went to try to do the black market because that's what you did in Korea. But then we found out you could go into these money exchanges. And that's a whole long story being in a... I remember being in a money exchange and it was this tiny little place. And Daryl's pulling money out of a backpack. And people in like... Eight different languages are in the line behind us going, you know, man, that's a shitload of money in eight different languages.
SPEAKER_00:Daryl says that this issue of figuring out how to get the money out of the casino, then out of the country, then back into the U.S. was kind of a recurring thing.
SPEAKER_02:You know, and it started when Munchkin and I went to Leicester and they said, well, you know, we'll pay you tomorrow. Come back tomorrow. We'll pay you. That was the first time we were like, wow, this doesn't happen in Las Vegas. You get paid pretty much in Las Vegas. If they don't kill you or arrest you, you will get paid. But we went to Lester and they said, we'll pay you tomorrow. And we came in and they backroomed us and called Scotland Yard. And then we experienced that really all over the world. That was the thing. You not only have to win the money, but you have to then get the money out of the casino. in cash form and then usually get the money, uh, exchanged into a currency you can use like us dollars. And then you have to get it out of the country. And there were limitations about that. Also Munchkin likes to tell the very fun story of us smuggling money out of Poland and, and getting on the plane and, and, uh, The plane's taking off and the stewardess is coming down the line. I look at Munchkin and I said, OK, you know, we're good. And he looks down and there are like streams of hundred dollar bills running down the aisle from my sock, which has emptied out onto the floor of the
SPEAKER_00:airplane. There's a missing part of the Poland story which didn't get recorded and involves making an escape from the money changer via horse-drawn carriage. They also had to leave the money in Poland for a year before they smuggled it out. The whole thing is pretty bonkers.
SPEAKER_02:At that time, I was just doing my job and I was very serious about my job. I was very serious about when I went into a casino, know what the goal was, know what I had to do. And I thought of all those other people and all those other things inside that casino is just a big cartoon that I was stepping into to do my job. And I think that's a lot of why... I somehow wasn't phased at 22 or even as a teenager going into these casinos with all these suits looking at you, trying to figure out if you're doing exactly what you're doing and all the cameras that you hear about and all the bodies left in the desert, at least at that time in the late 70s that you would hear about. I just wasn't concerned about that. I was just up for, I had nothing to lose really. I was up for doing my job and I went in there and did it.
SPEAKER_00:Fortunately, not everything required a trip around the world or dealing with confusing local currency restrictions. Actually, one of the biggest edges didn't even require leaving the house. The internet casinos that sprouted up in the late 90s gave away so much money that Advantage players could even afford the occasional rip-off.
SPEAKER_01:My first introduction was maybe like 1997 or something. I mean, when they very, very first opened. And I actually got a call from Max Rubin. And he said, you know, they're opening these internet casinos. And some of them are, you know, giving away ridiculous amounts of money. You should, like, check it out. So I found this internet casino. that had$500 max. Now, I wasn't even looking at the bonus at this point. It was a 10% bonus on the deposit, but they had a single deck game where they deal three rounds before shuffling. And you could bet from$5 to$500. And being greedy and stupid, I thought, well, You know, why even spread? If you play the first hand and the count goes negative, just log out of the room and log back in and start again. And, you know, if it goes positive, you bet 500. Otherwise, you log out and log back in. Just of the room. You didn't have to exit the whole software. I was with a group of guys at that point. We happened to all be in the same place around a bunch of computers and computers. you know, got them working on it too and ran the account up to like$70,000. And I was like, you know, I better withdraw some of this. And I started trying to withdraw and basically they wouldn't pay me. And they stiffed me. But then a couple of years later, maybe three years later, a friend of Daryl and mine, He called me up, and he's like, hey, I'm doing this internet gambling, and there's a lot of money here, and why don't you play for me, and we'll split it. And I told him my story, and he was like, yeah, no, these places have been paying. And again, they were good games, like advantage off the top, and they were just giving away a ton of bonus money. That lasted maybe, I don't know, maybe a year or something. And we made good money. They were giving away things like, oh, on Sunday for one hour, roulette pays 40 to one on a number. Or for two hours on Thursday, blackjacks pay two to one. So it was really good. It wasn't about the bonus as much as it was about the actual giveaways. So I made money again. But then the softwares that were really good, they ended up going away and It got bad again, not worth my time, so I stopped again. And then in about, I don't know if it was 2004, 2005, something like that, Daryl, you know, had gone broke playing folk music. And I said to him, like, well, you know, if you could make a quick, like,$10,000 just from the sign-up bonuses if you go, you know, play these internet casinos. And he was like, well... If that's true, why aren't you doing it? And I was like, yeah, that's true. I should probably go back and pick up my$10,000 or whatever. And so we both started playing again at that point.
SPEAKER_00:So they started to go after internet casinos, except there was just one small problem. Daryl didn't have internet. So he set up shop at Starbucks. He set up three computers and didn't buy much. He was like the world's worst Starbucks customer.
SPEAKER_02:I had gone broke playing folk music, so I didn't have any money going into this. And I just would go, before I started, I would go order one soy latte. I remember this very well. One soy latte, and I would not even tip. You know, I'm a big tipper normally, but I was just like, I got to make some money stuff happen here. So I'd get one soy latte, and I would not tip, and I would go sit up. And yeah, by the time I won the million dollars, I... I had started tipping again.
SPEAKER_00:The list of marketing offers that casinos have rolled out over the years is long. Each promo might differ slightly in design, and then the value of each promo will vary depending on how it's wagered. So you could have promotional chips, or match plays, or free bets, or lost rebates, or deposit bonuses. I mean, that's just a partial list. And then the expected value of each promo will vary depending on whether it's wagered on blackjack, or a sports parlay, or a number on roulette. If you want to understand how these factors can influence EV, there's a paper by James Grosjean titled Beyond Coupons, which goes into detail. So even if you don't want to do math, Beyond Coupons will be helpful in training your intuition.
SPEAKER_01:There was a place, Daryl loved this place, they actually had two casinos, and they had a, I can't remember, it was either a 10 or a 20% loss rebate. on$5,000, right? So you could go in and I think the limit was$500 a hand on blackjack. So you could deposit$5,000. If you lose it, they gave you$1,000 and then you could just do it again, deposit another$5,000. Now, let's say you won$10,000, you withdraw it and say, I want to do it again. And they'd say, fine. And you could put$5,000 back in and get another$1,000 as a loss rebate. And you could just do this as many times as you wanted during the course of a day. And I remember Daryl was just pounding and pounding that one for as long as that lasted. A great one was these places that have what's called a sticky bonus, which is kind of like the free bed at the sports places. But in this case, what it was, was they give you a bonus, but you can never cash that bonus out. So let's say you deposit$100 and they give you$100. If you win some money, let's say you win$200, so now you have a$400 balance. Well, you could only cash out the$300 and the bonus you could never cash out, right? And if you cashed out your$300, well, you would just lose that bonus. It would go away. So, you know, it's kind of like a loss rebate, really, but in front. Anyway, so... Optimally, you want to have as high variance as possible and bet it all on one very high variance bet. So there were a lot of those kind of sticky bonuses that, you know, for the guys who want to bet red and black on roulette, you know, they didn't like that at all. But, you know, a lot of it, you just didn't know what they were going to give you. Every place was different.
SPEAKER_00:Over the last year, it's become somewhat well-known that you can open an account with an online sportsbook and collect free bets as signup bonuses. It's such a poorly kept secret that it made the front page of Bloomberg. Every article on bonuses says roughly the same thing. You can earn a few thousand dollars with no risk. Well, Daryl and Richard were doing the same thing with online casinos, but they didn't stop at a few thousand dollars.
SPEAKER_02:Sometimes the team was small, like when Richard and I had this internet operation, internet gaming. It was him and I. It was a partnership. It wasn't a team. It was him and I. But... We probably had 50 other people involved doing specific things and being paid for that in specific ways. And we had to manage them. But it wasn't like 50 different people going out to different casinos and counting cards. Everybody had a certain role. That's an example of the team kind of being pretty large, but the core team being very small, just... Myself and Munchkin.
SPEAKER_01:You know, one of the problems with the casinos was sometimes the client would have to field a phone call. And we would tell them this up front, like, look, there may come a day when the casino is going to want to talk to you. But for the most part, basically, they just gave us, we needed an ID and a utility bill and a way to get money into their NetTeller account and things like that. But for the most part, they didn't do anything.
SPEAKER_02:We offered them$2,000 off the top. We just gave them$2,000 to do this. So people were motivated. And I remember now in my home having, you know, 20 computers, some virtual, some actual computers all over my house, each one. And then we had quite a fancy sit-up at the time. And this is like 2008. 2004, 2005, I got a T1 line to my house. And that's not a big deal today. But at the time, it was quite a big deal. A T1 line might be what an entire office building would have. So I had that to my home. And we had ways of, you know, going, I just hired computer people, internet people to find ways to virtual networks and and such so that it would look like these 20 computers in my house are all coming from a different place.
SPEAKER_00:It can seem sort of clever to use bonuses to just take both sides of a bet and lock in a win. And I mean, it is clever, but it's also not the best use of a promo. It leaves EV on the table. The best use of those bonuses is to make them on the highest variance bets. For example, say there's a$1,000 free bet that you can wager once. You get to keep whatever's won, but the bet itself isn't returned. Now, if you place that free bet on red or black on roulette, it's worth about$470. But if you place it on a single number on roulette, it's worth$920. That's on average. The average return of the bet increases as variance goes up. But lots of people would rather do something like bet red and black on roulette to lock in a win. And it's not just unsophisticated noobs that engage in hedging. I mean, we've had hedge fund managers on this show that have been honest and said that they avoid variance so their investors don't all leave. But Richard and Daryl leaned into variance, because by this time they were experienced gamblers, and they knew it would make a difference for their bankrolls.
SPEAKER_01:For some reason, people hate risk, and they would rather give up the vast majority of their EV to lock in a win, which is, you know, for us, that's just crazy talk. But, you know, I mean, they would have all these rules, like... You can't bet black and red at the same time on roulette. And we'd be like, why would anybody want to do that? But that's what these people would do. They would bet both sides in Baccarat or both sides on the crap table or whatever to like give away their EV. Yeah, it was just stupid and it made it tough for other people. I mean, in a way it helped because it made us look so different, right? I mean, the other thing that we did to look different was, you know, Who's going to be the player that you would least worry about? Well, the guy who plays slot machines. So we played slot machines. And, you know, like, I think that had a lot to do with our longevity as well. And fortunately, back then, there were slot machines where, you know, you could bet$250 a spin.
SPEAKER_00:So one part of the strategy was to optimize mean expected value. And to do that at the expense of median expected value. That's what you're doing when you bet a single number on roulette with a free bet. The mean will be higher, and yet a regular occurrence is that you win nothing. But they also went digging for bonuses that weren't obvious and weren't advertised. They were willing to experiment.
SPEAKER_01:And this is something that so many card counters would never do because they're so nitty. But Daryl would be like, you know what, let's just have this player, let's just have this guy go in and gamble and blow$5,000 and see what they give us. As I say, the vast majority of card counters are never going to do that, just like blow$5,000 gambling. Invariably, you do that and suddenly they start sending you massive bonuses.
SPEAKER_02:We didn't play badly to lose the$5,000. We just said, let's just jump in there and either win or lose$5,000. and then see what happens. In some cases, we won the$5,000. That's fine. Thank you very much. In the cases where we lost, yeah, we got given a lot of things.
SPEAKER_00:Just to be clear, Richard and Daryl weren't just gambling for fun. They weren't playing their favorite number, hoping to get lucky. They were trying to look like gamblers to get the casino to send them more bonus offers. Every human relies on the ability to pattern match, and pattern matching can be a useful skill. But pattern matching also makes you susceptible to being fooled. So what these guys were doing to the online casinos, and in fact, what they've done their entire careers, is they've used pattern matching against the house. Remember, the casino in Korea thought Rocky just looked like a big gambler, but he was part of a ruse. And in the online world, Richard and Daryl tried to look like big gamblers to get big bonuses. Most of the time, the house will win by giving out those bonuses until they run into people who know what they're doing.
SPEAKER_01:But even if you didn't lose, they saw, oh, this guy came in, gambled$5,000 with no bonus. He just came in and gambled, right? Which is the kind of player they want. This also is tremendously important in real live casinos. You know, you go in and show a casino some action before you're going to make the play that you're going to make. It's tremendously helpful. And, you know, I mean, nitty players are going to say, but you're giving up all that EV. But yeah, but if it buys you a lot more time, then it's way worthwhile.
SPEAKER_02:Well, one advantage we had is the way everybody thinks about gambling, the casinos and the other players. They're trying to make it safe for themselves. And what we understood, you know, right away, because of our background in card counting and APing, we understood that if we were willing to take the high variance, we could really maximize the amount of money we could win. And so I think that's one reason why the bonuses lasted so long. A lot of the players were betting so that they would make a safe, small amount of money. And we were betting to make more money, but have real variance, win big, lose big.
SPEAKER_00:Richard also knew advantage players that had other strategies for beating the online casinos.
SPEAKER_01:I knew a guy who was at Berkeley, and he would sign up people at school. And he'd be like, give us your ID, and within two weeks, we'll pay you$400. And he would crank through within two weeks. He would sign them up, collect the bonus, collect the money, done. And he would average about$10,000 just in sign-up bonuses. He went through hundreds and hundreds of students doing that. And our approach was different. We kept our IDs and kept playing. And ultimately, by the end of it, every ID that we had was worth about$100,000 and would have continued probably to earn money in the future had the hammer not come down. I know another individual who was very, very successful and he also had a completely different way of going about things. You know, he was able to calculate when progressive jackpots were advantageous and he would go after those. So his approach was different than ours as well.
SPEAKER_00:If we do a little math, we can figure out that Richard and Daryl had about 50 names and each name was worth about$100,000. So that's plus or minus$5 million. The play also included capturing some of the affiliate referral money.
SPEAKER_02:So Munchkin and I are both just, you know, making a little money here and there, starting off small and then starting to grow it. And then another friend of ours, Steve Poe, you know, had a website that he was just playing with. He liked, you know, promoting his little thing of the day and sometimes a big thing of the day. and selling some stuff on this website, things like Rupert Pumpkin. And we just thought, well, why don't you put up some links for some casinos and we'll go through those links. So we ended up making money from the affiliate play and then also making money from the bonuses and then finding some games like Munchkin was talking about, some games with advantages off the top. And when it was... Just before the hammer fell, it was about a year and a half later maybe, and Munchkin and I were making a quite solid$200,000 per month. And it looked like it was going to go on and grow forever.
SPEAKER_00:The ending for Advantage Play Stories is often something like, eventually the casino caught on and they put an end to it. But that's not how this story ends. Actually, the U.S. government put an end to it. The unlawful Internet Gaming Enforcement Act was passed in 2006, and the gravy train was over. Bonus hustling wasn't dead forever. I mean, there are still people who do this kind of thing, but the heydays were gone.
SPEAKER_01:We were in either Aruba or St. Kitts, I forget which, at a Ultimate Blackjack Tour event, and nobody had a clue that this was happening. And Bill Frist inserted it into the port security bill at 1130 at night when they were going to adjourn for the summer or whatever it was, you know, Congress adjourns. So he just stuck it into this port security bill that had to pass because it was port security. And all of a sudden, I remember it was like people looking like they'd seen a ghost around Aruba there, like Because these guys with the ultimate blackjack tour and all that, I mean, it just killed them. So the law said that banks and credit card companies could not send or receive money from offshore casinos. So we didn't see it coming at all. And then, boom, overnight, it's over. And our money is locked up in NetTeller and we can't get it out. And that took three months. We didn't know if we would get it or not.
SPEAKER_02:When we were first setting this up, we went to accountants here to talk to them about what exactly to do with taxes and all that. And we had legitimate accountants tell us, oh, you're using NetTeller? That has nothing to do with the US. You don't have to report that. And both Munchkin and I said, you know what? We're going to report it. And we did. And it really, it was a big deal because in the end, the US froze all of NetTeller's accounts and looked at every single individual account. And so we had large amounts of money in there and it was frozen for about eight months. And it was a really nervous time. I had a lawyer tell me what to do if they knocked on my door and And we just waited and waited and waited. And eventually they saw that, oh, these guys are, I mean, I'm guessing, but they looked at our accounts and they saw that, oh, these guys are paying taxes on all this money. They're okay. Just give them their money back. And so got a call one day, come get your money.
SPEAKER_00:After the crackdown in the U.S., Daryl set up a similar operation in London, and he also engaged in some other extracurriculars.
SPEAKER_01:Daryl flies off to London, right? And he... Again, he goes through a legal name change and changes his look and all that. He wants to be completely clean when he goes into the casinos in London. He flies off, and I don't even know what he's doing. I think he was trying to do internet stuff. But three days later, I get an email from a guy who is a surveillance consultant. for casinos around the world, not really in the United States, but other parts of the world. And the subject line says, Daryl Purpose. And I open the email and it says, good game in London, huh? And I emailed Daryl and I go, did you make a play? And he goes, yeah, how did you know that? I was like, well, you've been made. They made him immediately. Of course, he won a lot of money.
SPEAKER_00:You know how in the movies, casinos are places where James Bond is drinking a martini and engaging in witty banter with other players at the table? Every detail in the scene down to the way players are smoking exudes class and sophistication. But then you go into a real casino and the guy next to you is wearing cargo shorts, a tank top, and Crocs? His girlfriend is complaining that she lost a flip-flop, and they're both vaping in your face. Well, Daryl's play in London was more of the James Bond-type casino.
SPEAKER_02:A very fancy Mayfair casino, the kind where you walk in and there are 13 employees there to serve you. There's maybe two customers and employees in evening gowns and tuxedos, and they are there to... Darrell says
SPEAKER_00:that the way to find edges is to look for things the casino assumes are random, but that aren't actually random. What assumptions have gone into the casino's house edge? And then what are the problems with those assumptions? It requires paying a lot of attention.
SPEAKER_02:So we had scouted all these Mayfair casinos, me and a couple of teammates. And we found this one casino where they were doing a thing procedurally that it seemed like we could take advantage of on a three-card poker game. Now, I'd never played three-card poker. I did not even know how to play three-card poker. But we went back to the apartment and we learned how to play three-card poker. And we saw some serious non-randomness in the shuffle. it just turned out they were putting the played cards at the bottom of the deck and then not shuffling them and they understood that if they were high cards they needed to be careful so in that case they tended to shuffle them and you know I figured out Just if there were a high card that we know was coming out, one high card that you know is coming out, you have a big edge on that hand in three-card poker. Because it's sort of the same as blackjack. The player gets more for his high hand than the dealer gets for his high hand. So that would be good. But I figured out as I was playing there that when it was all little cards, they pretty much did not shuffle those six cards. Only some dealers did it, but they put those six cards down at the bottom of the deck. and they handed you the deck to cut, and you knew what the bottom six cards were. It required some really sophisticated work, and the most sophisticated thing is you had to cut, they gave you the deck to cut, and you had to cut it exactly right. Exactly right. You had to cut it the exact number of cards. If you cut it one off, you actually would do the opposite. of what you want to do, you would lose the hand. So you bet a lot of money and you're cutting it and you hope to cut it at the exact right place. And I remember that for this game, I had practiced at home and I could cut the exact number of cards 60 or 70% of the time. But I knew that I was better in a casino. I was so focused in a casino. I was so focused. I was just much more focused than I was practicing at home. And I knew I could do a little better in the casino. I thought, you know, we're going to have to take advantage of a great low card hand. And it turns out in three card poker, Six, seven, eight of diamonds is the best hand you can get. And all of a sudden it happened very quickly. I folded this hand and she turned over her cards and she scooped up the cards and put them over there. And I saw it. Six, seven, eight of diamonds. I had to cut six cards to get this hand. And again, she handed it to my left hand, which I had not practiced with at all. And I was looking at cutting six cards and I did a little extra take when I grabbed the deck, you know, just an extra effort to try to get it right that I wouldn't have had to do if I was cutting with my right hand. But I did it with my left hand and I just thought, you know what? I think that's six cards. And I bet the money and everybody in the casino came over to look when we turned over the cards and they were amazed.
SPEAKER_00:Remember that the way Richard found out about the play in London was through a casino consultant that he knew. Well, that consultant delivered something valuable when it was all said and done.
SPEAKER_02:Because Munchkin was connected to this consultant, we ended up getting the film of the play from the eye. And it's a treasured souvenir that I have on my phone. John, next time I see you, I'll show you the moment where I cut the cards and and won the most ever won in London on a hand of three-card poker.
SPEAKER_00:We've now heard a lot of creative ways that these guys found edges, which is not surprising, since they both had parallel careers in the arts.
SPEAKER_01:The most satisfying part of gambling is when you create something, especially when you do something that you don't think anybody has ever done before. That's what makes it all worthwhile. That and the dinners with the team or whatever. you know, afterwards rehashing it, replaying it, or just coming up with new ideas?
SPEAKER_02:You know, we were both quite serious gamblers, but also Munchkin was making movies and I was writing songs. And so we had that piece of, you know, our personage. And I think we recognize that in each other, that we were maybe a little bit more of a creative than just a gambler. And as it turns out, you know, being a creative really helps in gambling identify the situations that you can take advantage of.
SPEAKER_01:So the first time I retired from gambling was like 1983. And I went to L.A., you know, to become a movie star. And, you know, of course, that's how it worked out. But eventually, you know, I mean, your life takes you where it will. And I ended up directing, which I really loved. And at some point I hit a wall where I could no longer get work. I was on the TV show. It got canceled. I was on another one. It got canceled. And people wouldn't return my phone calls. And I was like, well, screw this. I have a way to make a living. I know I have a skill, a trade, so I can go back to gambling. And if a job in television or film or whatever comes up, okay, fine. But if not, I'll do this. And I have to say that when I got older and was able to just go back to my first love, which was acting in theater, it was so much more satisfying to not be worried about You know, will this get me a better agent or lead to another job? No, I could just go do it for the joy of doing it. You know, I was no longer worried about a career at it.
SPEAKER_00:In the 90s, Daryl embarked on his second career as a touring folk singer.
SPEAKER_02:You know, I was down on my luck. I had spent all my money. What was I going to do with my life? And I said to my sister, you know, there are people there are people who take their guitar around and play songs they've written for people, other people, an audience, and they make a living out of it. There are people that do that. And she's like, no. And I just didn't understand that you really couldn't do that in your mid-30s, decide you were going to make a living traveling around the country, recording music, getting it played on the radio, performing in clubs and theaters and folk festivals and make a living at it but i did that for 10 years one of the proudest 10 years of my life i i made a living as a folk singer you know i've i've been able to do both i thought for most of my life you had to focus on one and at a time but i came to think maybe that wasn't true and i i did each part-time really for a lot of the last uh 15 years, I did each of those, gambling and music part-time. And then about a year ago, I just decided, you know what? Gambling's not good for my health. Those casinos, there's a lot of light, there's a lot of noise, there's a lot of smoke, and you lose a lot of sleep that would keep you healthy. And so I've just thought in the last year or so, I've decided from here on out, what could be better? than putting music out into the world and trying to make the world a better place in that way. I like to put myself in situations where there's greatness all around me. And in the case of gambling, I've been able to do that in his own way. Ken Houston was great. And of course, Munchkin is great. And The people I've played with lately in my life, James Grosjean, among others, you know, real greatness. And you can still do that, you know, in music. You know, somebody the other day called me folk famous. You're folk famous. So I've reduced the music thing to folk music. And in that way, I'm folk famous. And I am around some pretty great songwriters like Paul Zolo, We Write Together. And I do some great things myself. I put out albums that are, they always get to number one on the folk charts across the country. And in that way, there's achievement there. I know I'm not going to be a pop star. And that's just going to have to be okay. But, you know, Pete Seeger said the right song at the right time, you can change the world. And I still hold on to that. And that's still my goal. You know, as I go about making music, this idea that you could write a song that changes the world, that could happen.
SPEAKER_01:Gambling, I was fascinated with it. But it wasn't an end in and of itself, right? The thing I liked about the arts was creating something with other people. And I've always been kind of about team. I don't like creating alone. I don't like gambling alone. And I like working with other people. So in the arts, you create something together and... something greater than each of the individuals comes out of it.
SPEAKER_00:One of the hardest things to figure out when you're working with other people is how to compensate everyone so that people feel like they're valued in proportion to their contribution. If you've ever been part of any partnership, then you understand this issue. Well, these guys have an elegant and simple solution.
SPEAKER_02:I remember back in the old day, we tried to figure all that out and we tried to, you know, we were both team players. We wanted to split you know, spread the money around. But, uh, we tried to reward people for, uh, having a special talent or having a, a, a, a, especially an especially good result. But, um, I have to say it was, uh, gross gene that, that taught me just split it up. You know, it's sort of like, that's like in Nashville. If you're in the room when a song is writing, is being written, you are a co-writer, you know, and, and gross gene is that way, uh, with APing. If you're involved, everybody gets an equal share. And in that way, and he's like the last guy that deserves to pay everybody an equal share, right? But he was the guy I've met in the industry who most was up for that way of doing things, just splitting the money evenly. That way, nobody can argue. That's just the way it's done.
SPEAKER_01:I could count on one hand the times that maybe we threw in an extra share for somebody or included somebody who wasn't there or whatever. I mean, it was very rare. Normally, it's just you chop it evenly. But the other thing I would say is people bring different things to a team. So in the case of James, he's obviously brilliant at numbers and analyzing games and things like that. He's also the hardest worker I've ever met. But there might be one person who is good at scouting, who likes to be in casinos all day, just wandering around looking for things. There might be another person who's good at something else. So people bring different skills to the game. And you know, rather than trying to figure out, well, my skill is worth more than your skill or, you know, that kind of stuff. It's just, yeah, chop up the money.
SPEAKER_00:This episode has contained a few references to James Grosjean, who has been a sometime teammate of Richard and Daryl. He's kind of a larger-than-life figure in advantage play for a few reasons. First, he's written influential technical books about beating casino games. Also, he won a lawsuit against Caesars and the Imperial Palace, which was pivotal in establishing the rights of And then he's also known as kind of a savage for his constant hammering of casino games. And Grosjean is just one of the wildly successful gamblers that Richard and Daryl have worked with over the years. They've also been involved with people like Bill Benter and Alan Woods, who account for more than a billion dollars in horse racing profits.
SPEAKER_01:I always tried to surround myself with people smarter than me. And, you know, that's the way you learn is being around people who are smarter than you are. So whatever you're trying to do, I think that's a good strategy.
SPEAKER_00:Knowing a lot of people and knowing some really brilliant people is probably one of Richard's superpowers.
SPEAKER_02:You know, we go back over 40 years. We've been doing this for 40 years and we've been doing it together and apart and our paths have crossed and we've been on the same path, but it's, It's one of the joys of my life in blackjack to have experienced so much of it with Munchkin. The other thing I love about Munchkin is that he knows everybody now. People get that Munchkin is a nice guy and extremely talented and knowledgeable, and he's the first guy people call in a lot of respects. I remember not that long ago, We encountered somebody in a casino that was trying to do the same game we were doing. And who do you call? And we didn't know who they were. Who do you call? We call Munchkin. Say, who's this person? You describe him. Oh, yeah, I know that guy.
SPEAKER_00:Let's go back to the internet casinos for a minute to try to illustrate something that keeps coming up. The guys started with a simple play. Collect$10,000 bonuses. And then they added 50 of their friends. And then they figured out a way to capture the affiliate revenue. And then they installed a bunch of computers and a T1 line. And then when it got shut down in the US, Daryl went to London to replicate the play there. What they didn't do was just copy someone else's play and then call it a day.
SPEAKER_01:When I found something, you know, whether it was, you know, Poland or I remember I found a game in Aruba and Curacao one time, the first person I would think of to call was Daryl. Like, he was the person that I really enjoyed playing. Daryl's mind may be
SPEAKER_00:very good when it comes to pushing the limits, but it is also uniquely bad at storing biographical details. For this episode, Richard had to provide the stories to jog Daryl's memory.
SPEAKER_02:became a professional blackjack player and then became the best counter on the Ken Houston team and then started running my own team. So I was 23 at that point. And it just never occurred to me. And years later, when I decided to get back into music, I had a manager and she said, Daryl, we're trying to write up your bio here. This was many years later. I'm in my late 30s. We're trying to write up your bio here. Have you done anything interesting in your life that we could put in here? And I said, I'm telling you the truth. I said, no, I can't think of anything.
SPEAKER_00:Daryl and Richard both said that the reason they work with teammates is because it's the best way to live life. They didn't do it just because it was profitable. But this episode has also highlighted stories of millions of dollars won through cooperation. They helped each other. They got help from their networks. And they also delivered value back to their friends. One reason I like the stories in the gambling context is that you can see the value of teamwork at its essence, sort of stripped of the baggage it might have in the square world. In the square world, you might say something like, it's not what you know, it's who you know. And the implication is that some part of the result is not really earned. But the stories in this episode show that you can't really separate what you know from who you know. It's all the same thing. When someone calls with a million dollar opportunity, it really helps. If you're actually good at what you do. After all, this is a world that attracts people looking for meritocracy.
SPEAKER_01:The thing I love about gambling was you are totally in control of your destiny. It's how much you, how hard you work, how much you learn. You know, it's all up to you. Nobody, there are no gatekeepers.
UNKNOWN:Yeah.
SPEAKER_00:Risk of Ruin is written and produced by me. A big thanks to Richard Munchkin and Daryl Purpose. I'll put links in the show notes so that you can find them on the internet. To get in touch with the show, you can email us, riskofruinpod at gmail.com. You can also follow us on Twitter, at HalfKelly.