Who knew you could find such a big fish in the middle of a desert?
December 8, 2009 1:07 AM   Subscribe

During a year-long gambling binge at the Caesars Palace and Rio casinos in 2007, Terrance Watanabe managed to lose nearly $127 million. The run is believed to be one of the biggest losing streaks by an individual in Las Vegas history.
posted by Afroblanco (124 comments total)

This post was deleted for the following reason: Poster's Request -- goodnewsfortheinsane



 
This guy needs to get back into a casino.

Man, he is so due!
posted by codswallop at 1:33 AM on December 8, 2009 [15 favorites]


"...it devoured much of Mr. Watanabe's personal fortune, he says, which he built up over more than two decades running his family's party-favor import business in Omaha..."

$127 million importing party favors? He must be importing South American party favors.
posted by vapidave at 1:33 AM on December 8, 2009 [22 favorites]


Gambling is like drug dealing with the benefit that your clients will never overdose, and there's no limit to how much they can spend on your "product".
posted by yeloson at 1:37 AM on December 8, 2009 [4 favorites]


It's not funny at all, the casinos played to his obvious weaknesses, and did so without ethics. I hope that he is able to get that 'debt' dismissed, it's clear he's paid dearly in his addiction.* Case could be made that it's not that large a price for this guy to have sold his castle in the outback of Nebraska and moved to San Francisco, but still...

*Oh, and yeah, it really is an addiction, it's compulsive, to the right (?) person it's almost intoxicating, or maybe is intoxicating, it absolutely destroys the fabric of peoples lives.
posted by dancestoblue at 1:41 AM on December 8, 2009 [2 favorites]


Wow, this reminds me a lot of the Rands Vegas System, which is a guide to having fun in Vegas that kind of freaked me out. Of particular note is the booze part.
posted by The Devil Tesla at 1:47 AM on December 8, 2009 [6 favorites]


All house games are addiction taxes pure and simple. The adrenaline rush of it though. It's so so so good when you're hot.
posted by Peztopiary at 2:24 AM on December 8, 2009


Mr. Watanabe's company sells the plastic trinkets I always try to win at arcades with those claw grabber machines. I never win. I put in another quarter and twiddle the knobs, but just when the crane claw thingy closes around my prize it fumbles, dropping my potential winnings back amongst the plush toys and plastic jewelry. But I put in another quarter and try again anyway.

Mr. Watanabe, where is your magical crane claw now?
posted by twoleftfeet at 2:31 AM on December 8, 2009 [24 favorites]


There was a somewhat similar case in Australia where the the addict sued the casino for allowing him to continue to gamble. He lost the case. (warning: auto-starting embedded video)
posted by michswiss at 2:40 AM on December 8, 2009


His claim is that "casino staff routinely plied him with liquor and pain medication as part of a systematic plan to keep him gambling" but (from what I read) that sounds something like what casinos do with all gamblers. If he wins, I suspect there's going to be a hell of a class action suit filed on behalf of everyone who has ever been given free drinks at a casino and then lost money.
posted by pracowity at 2:51 AM on December 8, 2009


He'll never win, no one forced him to go to Vegas. But, like an alcoholic to a vodka tonic, he should forever stay the fuck away.
posted by From Bklyn at 2:58 AM on December 8, 2009 [2 favorites]


The adage states: even if the house has just a 1% advantage over you in a game of chance, given enough time it will take you for everything you've got.

Goes faster when you're hammered, though.
posted by bwg at 3:16 AM on December 8, 2009


As I've said before, I was so glad to discover I don't have a gambling problem.

I feel for the guy. This happened to a friend's father, to the tune of less than 100 grand, but obviously still a devastating amount. He was arrested on a bench warrant and hauled off the Nevada to sit in jail for a couple of weeks while family scrambled to get him sprung. Still has it looming.
posted by maxwelton at 3:29 AM on December 8, 2009


In April, the Clark County District Attorney's office charged Mr. Watanabe with four felony counts in district court for intent to defraud and steal from Harrah's, stemming from $14.7 million that the casino says it extended to him as credit, and that he lost.

That's pretty crazy. I mean If you still have all your money, and I have none of it, how can it be that I stole your money? That's insane. And how is it even legal to loan someone money to gamble in your own casino in the first place?

He'll never win, no one forced him to go to Vegas.

Yeah, it's not rape get a girl to pass out by giving her too much alchohol, and pain killers because no one forced her to go up to your room.

Seriously, if it's true that they were encouraging him to drink and indulge in (illegal?) drugs then I think he has a pretty good moral argument (If not a legal argument in a state that makes most of it's tax money from gambling operations.)

I don't think Gambling should be totally illegal, but I certainly do think there should be some ethical standards here. No loaning people money for gambling, no giving people drugs with the intention of making them gamble more.
posted by delmoi at 3:53 AM on December 8, 2009 [5 favorites]


Any gambling instituition extending credit to a gambler is predatory by definition, and must be outlawed.
posted by Slap*Happy at 3:56 AM on December 8, 2009 [6 favorites]


That's pretty crazy. I mean If you still have all your money, and I have none of it, how can it be that I stole your money? That's insane. And how is it even legal to loan someone money to gamble in your own casino in the first place?

How much money do you have in your bank account? Want to loan me half of it and then flip me for the other half? If I lose I won't be able to pay you, but it won't be stealing because you'll still have all your money. I'll even give you a 5% edge, that way you'll be making a profit just like the casino.

... People seem to forget that the casino doesn't always win. What, you say? Well the house has an advantage only in aggregate, with unlimited time and money. It doesn't win every bet. People do leave as winners. If the gambling addicts who lose get their money back because they shouldn't have been gambling, do the those who win have to pay back their winnings as well? It's pretty obvious to see that if the casino doesn't collect on wagers that it wins, the house is a loser no matter what its 'edge'.
posted by cotterpin at 4:10 AM on December 8, 2009 [2 favorites]


His claim is that "casino staff routinely plied him with liquor and pain medication as part of a systematic plan to keep him gambling" but (from what I read) that sounds something like what casinos do with all gamblers. If he wins, I suspect there's going to be a hell of a class action suit filed on behalf of everyone who has ever been given free drinks at a casino and then lost money.

Doubt it. I think he might be able to get somewhere with this: it sounds like the casino seriously breached their duty of care towards him as a customer. If a verdict is found in his favour, then another successful claim will only be brought if as serious facts are brought. Casinos are allowed to 'mollify' their customers to an extent, but to intentionally and wilfully over a long period of time manipulate and, essentially, abuse them? I doubt it.

Stumbling block could be his consent and the prosecution will have to work hard to show he could give informed and 'true' consent, two main facts here are his serious addiction and the casino taking advantage for such an addiction.

Unfortunately a court might refuse relief precisely because of the floodgate argument and, even though I don’t think it would allow for others cases to succeed given the seriousness of the facts, the possibility of many, less meritious, claims following such a ruling remains. And judges are mindful of the how the law is perceived: imagine the headlines if "gambler successfully sues casino for negliently letting him gamble!"

Poor guy got seriously screwed over here.
posted by litleozy at 4:23 AM on December 8, 2009 [1 favorite]


You know who comes off looking pretty good in this? Steve Wynn. When Watanabe started gambling heavily in his casino, Wynn met with him personally, determined he was an alcoholic and compulsive gambler, and barred him from his casinos. That shows a certain amount of integrity, and I honor him for it.
posted by Faze at 4:24 AM on December 8, 2009 [47 favorites]


I mean If you still have all your money, and I have none of it, how can it be that I stole your money? That's insane.

Wow. What a weak straw man. Obviously if you get credit at some big store, buy something there and never pay for it, it's not stealing, right? After all, they have all their money, and I have none of it, so how could it be stealing?

Oh, you're saying I got goods from the exchange and I actually owe you? Yeah, so what about all the gambling he did with that money, with a chance to win, is that completely irrelevant? So casinos should either have players win, or give them their money back?

What a joke.
posted by splice at 4:28 AM on December 8, 2009 [2 favorites]


Yeah, it's not rape get a girl to pass out by giving her too much alchohol, and pain killers because no one forced her to go up to your room.


That's flip (and incomprehensible). I agree he might have a moral leg to stand on but unless he can prove he was shit-faced the whole time, the courts will say "well, why did you go back to lose more money?"
posted by From Bklyn at 4:32 AM on December 8, 2009 [5 favorites]


I'm guessing he doesn't know when to hold 'em or when to fold 'em.
posted by diogenes at 4:38 AM on December 8, 2009 [3 favorites]


On the one hand, it's a shame that this guy has an addiction, and Harrah's is disgusting for having encouraged it rather than trying to act in a minimally responsible way (i.e., what Steve Wynn was mentioned to have done upthread). On the other hand, there are an awful lot of people in the world who have a lot less money than this guy and lose the little that they have to the same addiction, so he only gets a very small sliver of sympathy from me.
posted by graymouser at 4:40 AM on December 8, 2009 [2 favorites]


$127 million importing party favors? He must be importing South American party favors.

Bolivian Marching Party Favors
posted by diogenes at 4:46 AM on December 8, 2009


In related news, shares in Wynn Resorts, Limited (NASDAQ- WYNN) went down significantly yesterday upon discovery by investors that CEO Steve Wynn had gone out of his way to drive business to the competition, increasing rival Harrah's bottom line by 5.6%. Wynn could not be reached for comment prior to deadline, because he was rescuing a kitten from a tree. Shares in WYNN are expected to drop again tomorrow on this news, as it will affect the bottom line of Wynn Resorts, Limited subsidiary "Kitten Murder, LLC" and in a recession, this has investors spooked.
posted by haveanicesummer at 4:48 AM on December 8, 2009 [19 favorites]


In many countries gambling debts are unenforceable. This is one reason why defaulting on one's gambling debts was considered social death for English gentlemen, an honour code was the only way to enforce payment at a time when the law did not offer remedies for recovering gambling debt. These days I think that this is no longer the case, which is a shame.
posted by atrazine at 4:51 AM on December 8, 2009 [3 favorites]


I know Terry. Not well, but I've met him a few times; he was supporter of theater in Omaha, and sometimes hired the theater I worked with to perform at parties he was throwing. His party supply store, Nobbies, is still a regular stopping point for me when I go to Omaha.

I knew him back in 1999 and thereabouts, and have never heard this story. All I can say is -- he seemed like he was way too rich back then.
posted by Astro Zombie at 5:14 AM on December 8, 2009


that sounds something like what casinos do with all gamblers. If he wins, I suspect there's going to be a hell of a class action suit filed on behalf of everyone who has ever been given free drinks at a casino and then lost money

If you read the article, you'll see that the CEO of the Wynn casino actually met with him personally, and then decided to ban him as a problem gambler. So good for the Wynn. And it's actually illegal to let people gamble if they seem too intoxicated.

This case is interesting, because he actually has former Harahs employees who 'attended' to him testifying on his behalf, saying that the casino did these things and that they were afraid to stop him because they might incur the wrath of management.

Wow. What a weak straw man. Obviously if you get credit at some big store, buy something there and never pay for it, it's not stealing, right? After all, they have all their money, and I have none of it, so how could it be stealing?

Okay if you buy something at a store on credit, and you don't pay for it, then that means you would have whatever object you wanted. You would have stolen it, and the store would have lost the value of the object. But in this case, the Casino kept their money and lost nothing. In fact, they made $100 million dollars off this guy.

If you want to argue that he should reimburse them for the money they spent entertaining him (couldn't be more then a few thousand) fine.
posted by delmoi at 5:18 AM on December 8, 2009


First I want to say that the casino and employees that got him drunk and let him wager are morally bankrupt. Slime.

But delmoi, you must see that it's also not at all fair to collect on wagers that you win, yet not pay out when you lose. Being a degenerate gambler doesn't change that fact. You can't say when you lose "well the other guy lost nothing so its fair," because in reverse, you wouldn't accept that argument from me if you won.

If you want to talk about "undoing" the wager, then only mathematically neutral thing to do is to pay back the house's advantage, 2-5% or whatever it was, minus the cost of entertaining him. That's almost certainly not going to be $127 million though. That money's gone. Even though it might not have been right to allow him to make the wagers, the wagers themselves were fair up to the known house edge.
posted by cotterpin at 5:29 AM on December 8, 2009


And one more thing, about the casino that "kept their money". They didn't exactly keep it. They paid 98% of it out to all those who won at slots and blackjack and roulette.

Their profit wasn't 100 million, it's the house edge times the amount wagered.
posted by cotterpin at 5:32 AM on December 8, 2009 [1 favorite]


He should have gambled and lost that money in the stock market, like a proper, working-class American.
posted by Eideteker at 5:36 AM on December 8, 2009 [12 favorites]


See how fancy Las Vegas is? They didn't build it with the money people took home. That should tell you everything you need to know.
posted by Daddy-O at 5:43 AM on December 8, 2009 [7 favorites]


All I can say is -- he seemed like he was way too rich back then.


Looks like he's got that problem licked.
posted by nola at 5:44 AM on December 8, 2009


This case is interesting, because he actually has former Harahs employees who 'attended' to him testifying on his behalf, saying that the casino did these things and that they were afraid to stop him because they might incur the wrath of management.

Not to mention that there are probably thousands of hours of security footage, some of which must show him being visibly intoxicated.

Good for Wynn; it absolutely should be in a casino's best interest to shut down obvious problem gamblers. I hope Harrah's gets hit hard: give him back a few bucks, spend the rest supporting treatment for gambling addiction.
posted by uncleozzy at 5:51 AM on December 8, 2009


Stories like these makes one wonder if there isn't some connection between dopamine and compulsive gambling. Radiolab discussed this a bit here based on a Jonah Lehrer article in the Boston Globe.
posted by ensign_ricky at 6:05 AM on December 8, 2009


But in this case, the Casino kept their money and lost nothing.

You're missing the point.

Let's say I loan you five bucks with no strings attached. I don't care what you do with it.

You bet the five bucks on a coin flip. You lose.

You still owe me the five bucks I loaned you. If you had won the coin toss, you would have 10 bucks. But you'd still owe me five.

It doesn't matter that you bet the five bucks on a coin flip against me. You took five bucks of my money, did something with it, and you haven't paid me back yet.

"But wait," you say. "The five-buck loan was contingent on the fact that I can only use it for the coin flip against you. If I lose, you'll have lost nothing."

Yes, but I took the risk that you'd either win or lose. Risk has monetary value.

Let's look at it another way. Say I have two pockets in my jeans. In each pocket, I have five bucks, and I really, really like to keep both pockets filled. I loan you five bucks from the left pocket (taking a temporary empty-pocket risk) on the understanding that a) you'll pay it back and b) it will be used to bet against the five bucks in my right pocket.

We flip.

* If you win, I have two empty pockets. You owe me five bucks to return my left pocket to normal. But my right pocket is empty. Holy fuck! I can't have an empty pocket!
* If you lose, I have $10 in my right pocket, and zero dollars in my left pocket. You still owe me five bucks to return that left pocket to its previous state.
posted by Cool Papa Bell at 6:26 AM on December 8, 2009 [4 favorites]


Nice post title, Afroblanc.

There are tons of much less wealthy gamblers who have succumbed to their demons, but nobody is cutting them any breaks. Watanabe may have been an addict (and a poor gambler), but the law doesn't let junkies claim insanity as a defense (well, unless they are insane, but you get the point). Farrah's should be fined, but Watanabe should not get off the hook. He's a big boy, and a wealthy addict has plenty of options besides complete surrender to his demons.
posted by Edgewise at 6:39 AM on December 8, 2009 [1 favorite]


I am sympathetic to addicts, but one thing I don't understand is why the superrich are so easily swayed by the "special treatment" casinos give them. I understand that this method is effective, plying them with freebies, but when they can easily afford these luxuries anyways (the booze, the hotel, the food, whatever) it seems to not make sense. (I understand that an addiction rarely "makes sense" logically, but it's still hard to fathom).

I think overall I think this guy needed better, closer friends. If he had someone close watching over him maybe none of this would have happened.
posted by haveanicesummer at 6:40 AM on December 8, 2009 [1 favorite]


Gambling is a tax on people who don't understand probability and statistics.
posted by mullingitover at 6:42 AM on December 8, 2009


Gambling is a tax on people who don't understand probability and statistics.

I bet that's not always true.
posted by stbalbach at 6:58 AM on December 8, 2009 [10 favorites]


haveanicesummer: "I am sympathetic to addicts, but one thing I don't understand is why the superrich are so easily swayed by the "special treatment" casinos give them. I understand that this method is effective, plying them with freebies, but when they can easily afford these luxuries anyways (the booze, the hotel, the food, whatever) it seems to not make sense. (I understand that an addiction rarely "makes sense" logically, but it's still hard to fathom).

I think overall I think this guy needed better, closer friends. If he had someone close watching over him maybe none of this would have happened.
"

Asked and answered.
posted by jckll at 7:04 AM on December 8, 2009 [1 favorite]


Liquor is one thing, but if they were feeding the guy Vicodin or something, an ambitious DA might really go to town on that.

Whale Hunt in the Desert is an admiring profile of a pioneer in the art of luring rich suckers to his employer's casino.
posted by Joe Beese at 7:08 AM on December 8, 2009


Any gambling instituition extending credit to a gambler is predatory by definition, and must be outlawed.

You mean like brokerages that allow you to buy on margin?
posted by phaedon at 7:16 AM on December 8, 2009 [2 favorites]


And one more thing, about the casino that "kept their money". They didn't exactly keep it. They paid 98% of it out to all those who won at slots and blackjack and roulette.

What? This makes no sense. Watanabe's losses would not affect anyone else's winnings.Also, the games and way he played ensured much weaker odds than usual.

Let's say I loan you five bucks with no strings attached. I don't care what you do with it.

You bet the five bucks on a coin flip. You lose.


And how about if I'm shitfaced?
posted by ODiV at 7:18 AM on December 8, 2009 [1 favorite]


Gambling is a tax on people who don't understand probability and statistics.

I bet that's not always true.


Damn right. I'll take two to one odds on a coinflip every time.
posted by ODiV at 7:20 AM on December 8, 2009 [1 favorite]


for the Wynn

This should be the new catchphrase for when someone acts in a surprisingly ethical manner.
posted by adamdschneider at 7:36 AM on December 8, 2009 [15 favorites]


I don't understand is why the superrich are so easily swayed by the "special treatment" casinos give them. I understand that this method is effective, plying them with freebies, but when they can easily afford these luxuries anyways (the booze, the hotel, the food, whatever) it seems to not make sense.

So a relative of mine was working at Harrah's in upper management the year he lost all that, and Watanabe was (as is now obvious) their most important whale. He once called me in a panic and said, "Mr. Watanabe is asking us to redirect the monorail. WHAT DO WE DO?"

Note that his - and Harrah's - reaction was not "How crazy is that?" or "Ridiculous!" It was "WHAT DO WE DO?" as in "Can we do this? How do we tell this guy no?" Apparently the head of guest relations (or some similar position) had to call him and was visibly shaken and relieved when, upon being informed that you can't redirect a monorail, Watanabe merely said "Oh, ok, just wondering."

That's the kind of "special treatment" he asked for and, when physically possible, received.
posted by shen1138 at 7:57 AM on December 8, 2009 [16 favorites]


What? This makes no sense. Watanabe's losses would not affect anyone else's winnings.Also, the games and way he played ensured much weaker odds than usual.

It does, in the same way that people who buy lotto tickets fund the winning ticket. A casino is losing roughly between 45 and 49% of its bets. Where do you think they get that money from?

The 5% house edge can't cover the 45% of bets they lose, so it can't come entirely out of their house advantage. The casino is essentially shifting money from losers to winners and skimming a few percent.

Edgewise has it exactly right: Harrahs should be fined for their conduct, but it doesn't let Watanabe off the hook. Ethical failing by the casino or not, irresponsibility by the gambler or not, it doesn't matter. The bets Watanabe made were made in good faith by both sides. If Watanabe won, he would have kept his winnings.
posted by cotterpin at 7:58 AM on December 8, 2009


That's the kind of "special treatment" he asked for and, when physically possible, received.
posted by shen1138


Mono.. DOH!
posted by haveanicesummer at 7:58 AM on December 8, 2009


Casinos give away free booze to people who gamble? Really? Who knew?

Sorry but I don't feel bad for him at all. Everyone knows how casinos work. Everyone knows the risk. He walked into that casino under free will. The pain med handout was excessive and wrong but no one forced him to gamble from the very start.
posted by stormpooper at 7:59 AM on December 8, 2009


Can I just say, I would be way better at being filthy rich than this guy.
posted by haveanicesummer at 8:07 AM on December 8, 2009 [4 favorites]


Gambling is a tax on people who don't understand probability and statistics.

I bet that's not always true.

Heh. Bet.

But seriously. Maybe it's not always true in the strictest sense -- a lot of gamblers may have even taken and passed courses in probability and statistics -- but they certainly behave as if they don't understand probability and statistics while they're playing.

I suppose you could look at gambling as a way of buying a chemical thrill -- the feeling they apparently get when they buy a lottery ticket as a remote chance of becoming rich -- but if they feel that thrill, do they really understand the odds? If you were vaguely afraid of a very unlikely event -- being killed by lightning while you sit at your kitchen table? -- people would laugh at you, but being equally expectant that you'll win an equally unlikely bet seems to be seen as normal.
posted by pracowity at 8:09 AM on December 8, 2009


the feeling they apparently get when they buy a lottery ticket as a remote chance of becoming rich -- but if they feel that thrill, do they really understand the odds?
posted by pracowity

I occasionally buy a few lottery tickets when the jackpot is superhigh and thus the "expected value" of the ticket is near or over the $1 ticket price. Am I still wasting my money? Pretty much, however I'm wasting it in a way that gives me an incredibly remote chance of never having to work again, and I've wasted it in worse ways. Granted that doesn't make me in any way similar to regular lotto players (many of which probably have never heard the term "expected value"), but the lottery is not really identical to casinos despite them both being gambling.
posted by haveanicesummer at 8:19 AM on December 8, 2009


The 5% house edge can't cover the 45% of bets they lose, so it can't come entirely out of their house advantage. The casino is essentially shifting money from losers to winners and skimming a few percent.

I don't think you understand how casinos work. A 5% house edge doesn't mean that 45% of the people playing there are winners and 55% are losers. The casino is winning money from the vast majority of gamblers. It is in no way "essentially shifting money from losers to winners and skimming a few percent."
posted by ODiV at 8:21 AM on December 8, 2009


plied him with alcohol? in a casino? you don't say.

seriously, this guy doesn't have a prayer. it is open fact that you drink for free on a vegas gambling floor, and that people are constantly coming by to take your drink order so long as you're sitting at a gambling table. all of nevada knows this, and all of vegas depends on it. jesus christ himself could come down from on high to be like "holy shit, they got that drunk and gave him narcotics and took his money while he was passed out and then they beat him. I saw it myself," and the nevada courts would hem and haw and say "well, gee, I just don't think there's enough here to make a case."

I'm sorry for this guy. He's the victim here. They took advantage of him, and that's what happens when you spend a year in Take-Advantage-Of-You-Town. But he can't beat them on their own turf and get it back. It just won't happen.

also, this is the guy who owns Oriental Trading Company? Holy shit, I remember flipping through those catalogs constantly as a kid and thinking, 'man, this is some cheap ass shit.'
posted by shmegegge at 8:21 AM on December 8, 2009 [1 favorite]


This is a sad story, but ultimately one where Terrance Watanabe is responsible for his own actions. He didn't lose the money in one drunken night; he lost it over a year and half. It's sad to that in 18 months, he didn't have a moment of clarity or some earlier intervention from his family. Getting booted by Steve Wynn had ring an alarm.

I fully understand that gambling is an addiction. However, it's a legal activity and adults can opt to participate. I don't want alcohol/gambling/delicious pie restricted because there's a subset of adults who can't handle access. I was in Las Vegas to run a half marathon this weekend. I didn't see people strapped to slot machines. People wanted to be there.

In this specific case, there are some things that are clearly across the line. If a casino employee illegally gave him drugs, then that's a criminal matter.

What would have happened if Harrah's had booted him? He'd have moved over to Treasure Island and the Mirage. Then it would have been the MGM casinos. Booted out of Vegas entirely? There's Atlantic City, Biloxi, tribe casinos and horse racing. He was actively seeking his drug of choice.
posted by 26.2 at 8:29 AM on December 8, 2009


I was going to say I felt sorry for his children, but he never married and never had children. So at least there is that.

I bought stuff from his catalog years ago when my daughter was little-- small trinkets for birthday party goodie bags and Halloween hand-outs instead of candy. I'm sorry to hear that he sold the company, I liked the fact that it was a family business.
posted by Secret Life of Gravy at 8:32 AM on December 8, 2009


You know who comes off looking pretty good in this? Steve Wynn. When Watanabe started gambling heavily in his casino, Wynn met with him personally, determined he was an alcoholic and compulsive gambler, and barred him from his casinos.

Agreed, and I'll take it one step farther and say the quote in the article saying Harrah's didn't know why Watanabe was barred from the Wynn? To put it technically, I'd predict that's total horseshit. Absolutely impossible.
posted by empyrean at 8:39 AM on December 8, 2009 [2 favorites]


I don't think you understand how casinos work. A 5% house edge doesn't mean that 45% of the people playing there are winners and 55% are losers. The casino is winning money from the vast majority of gamblers. It is in no way "essentially shifting money from losers to winners and skimming a few percent

I'm not saying that, I'm talking about in aggregate and per dollar. I realize that for individual bets, it's not paying the winners directly from the losers. But if you look at the casino's balance sheet and the total wagers it made, it absolutely is paying the winners with the losers' money.

Simply put, in aggregate the casino does not make enough money through its profits to pay off all the bets that it loses.
posted by cotterpin at 8:52 AM on December 8, 2009


But seriously. Maybe it's not always true in the strictest sense -- a lot of gamblers may have even taken and passed courses in probability and statistics -- but they certainly behave as if they don't understand probability and statistics while they're playing.

Being an absolute GENIUS in probability in statistics wouldn't make you immune to the well-known chemical and emotional effects of gambling.
posted by kingbenny at 8:59 AM on December 8, 2009


I was going to mock the bit about "casino rules and state law stipulate that anyone who is clearly drunk shouldn't be allowed to gamble" until I read the paragraph about Wynn banning him. Frankly, that surprises the hell out of me. Maybe Wynn's in a position where he can make money milking a bit off of everyone rather than harpooning the occasional whale.

Also gobsmacked by "Harrah's also offered 15% cash back on table losses greater than $500,000". Casinos do that? I guess if they've got a sucker playing roulette they know they can give back 15% of their profit and still make a killing.

I feel a little bad for Watanabe, but I feel a lot worse for the thousands of retirees I see in small Indian casinos on Social Security check day. Oxygen canister plugged into the nose, slot machine plugged into the waist via the loyalty card. They're adults and too small-time to be specifically preyed upon, but they're just as much a victim of the casinos as the big guys. I sure hope my life is never that empty.

A question, maybe for Astro Zombie: is Watanabe gay? Not that it's really relevant, but between the "no wife" and the large AIDS charity donations, I wondered.
posted by Nelson at 9:01 AM on December 8, 2009


So did the casino give back the nest egg? Because there's a huge advertising idea right there. It can say "We made a mistake and they gave back our nest egg."
posted by crapmatic at 9:03 AM on December 8, 2009 [4 favorites]


haveanicesummer : I occasionally buy a few lottery tickets when the jackpot is superhigh ... Am I still wasting my money? Pretty much, however I'm wasting it in a way that gives me an incredibly remote chance of never having to work again,

I can count the number of times I've bought a lottery ticket on one hand. But in every instance, the value for me was that, between the moment I bought it, and the point where I checked to see if I had won, I was Schrödinger's cat rich.

That is totally worth a buck every couple of years.
posted by quin at 9:06 AM on December 8, 2009 [13 favorites]


WATCH OUT, TERRY'S ON TILT!

Gambling is a tax on people who don't understand probability and statistics.

ODiV already responded quite well, but that's obviously not true. The whole point of handicapping is to determine probabilities and bet on the best value.

In casinos, that best bet (ignoring games of skill like poker or blackjack where good players actually have an edge on the house) is your backing odds on "pass," "don't pass," "come," and "don't come." Those are straight 50-50.

If you're on pass for a point of 8, the odds of rolling an 8 before a 7 are 6 to 5, and you will get $6 for every $5 you bet. No house edge at all. If you are on "don't pass" for a point of 8, you likewise get $5 for every $6 you bet. (I think some video-poker machines may also have a double-bet feature that offers no house edge, but video-poker is stupid.)

The house gets its advantage on the initial pass/come or don't pass/don't come bet. That edge is 1.41% in the former and 1.36% in the latter.

Most of the strip Vegas casinos let you back 2x your bet, which reduces the edge on a "don't pass" bet (backed fully) to .682%. Some downtown casinos let you back up to 100x your bet, giving them the slimmest margin of an .014% edge.

That said, you can know all of the odds and still lose everything you own.

So, I think gambling addiction is the bigger problem, not understanding of probability and statistics. I would bet gamblers have a better sense of those topics than the population at large.
posted by mrgrimm at 9:13 AM on December 8, 2009 [4 favorites]


cotterpin: "Simply put, in aggregate the casino does not make enough money through its profits to pay off all the bets that it loses."

you're not really making a clear point, here, and I'm starting to question your numbers. can you cite for any of the claims you're making? I mean, it's patently obvious that they pay the winners with money earned from the losers, because that's how a business works. but the numbers you're putting forward seem... wrong. specifically I'd like to see the balance sheet you're saying we should look at, and where the figure of losing 45-49% of their bets comes from.
posted by shmegegge at 9:15 AM on December 8, 2009


Also, this point seems to be the most relevant to Watanabe's claim:

In September 2007, Mr. Watanabe fell in his room and hurt his back. He says his handlers -- including Mr. Kunder and Mr. Deleon -- supplied him doses of the prescription pain medication Lortab without a doctor's prescription, his court filing says.

If he could provide evidence that casino employees provided him with illegal medication and that he gambled extensively while intoxicated on that medication, I think he may have some traction.
posted by mrgrimm at 9:15 AM on December 8, 2009


So if this dude wins does that establish a precedent that I can use to sue my old coke dealer?
posted by The Straightener at 9:18 AM on December 8, 2009 [4 favorites]


Simply put, in aggregate the casino does not make enough money through its profits to pay off all the bets that it loses.

I, too, would like some clarification here. This statement seems false.

Also, it's no where near as simple as winning X% and losing Y% of bets. Even if the casinos lose more than 50% of the bets, they can still make money depending on how those bets are paid off, i.e. a sportsbook where 60% of the people bet on the favorite and win, but the losses from the 40% are much more than the winnings paid to the 60%, etc.

There are a million propositions available in the casino, and many of them pay very badly (though I doubt any offfer worse odds than the goverment-run numbers games). The casino knows very well what its overall edge is, and can likely tweak floor layout, games, limits, etc. to maximize it.
posted by mrgrimm at 9:21 AM on December 8, 2009


specifically I'd like to see the balance sheet you're saying we should look at, and where the figure of losing 45-49% of their bets comes from.

The house edge on some table games can be in the range he's describing. If you took a look at all the wagers on a blackjack table where the players knew what they were doing, you would see a large amount of money won and an even larger amount of money lost. The amounts won and lost on individual wagers would add up to amounts several times larger than what the players had brought to the table.

Watanabe lost $127 Million to the casino. This is nowhere even close to the amount he wagered (any experienced gambler/croupier want to take a stab at this?), which is one of the reasons I was taking issue with the statement "They paid 98% of it out to all those who won at slots and blackjack and roulette." That $127 Million is profit, not wagers.

The other reason I took issue with the statement that they paid 98% of Watanabe's losses out is that Watanabe's gambling has absolutely no effect on the wagers of the other patrons. If some whale comes into a casino and makes really stupid wagers then the "house edge" goes up. They don't pay out extra money to compensate (which is what it sounded like cotterpin was saying).
posted by ODiV at 9:29 AM on December 8, 2009 [2 favorites]


In many countries gambling debts are unenforceable… These days I think that this is no longer the case

Gambling debts are still unenforceable in a court in England – oddly. Explains why I’ve never been offered credit by the house. Mind you, I’m not a millionaire which might be a stronger explanation...

It's so so so good when you're hot.

You know what, I’ve heard this from other people and I’ve never experienced it. When I go to casinos (one a year?) I gamble a bit, waiting, expecting to lose my chips. On the rare occasions I’ve ended up ahead I’m gripped by the paralysing fear that I’m about to lose all my winnings making my efforts thus far a waste of time. I’ve never enjoyed gambling. Probably a good thing as I’m no stranger to some of the other vices and no one wants a full house…
posted by dmt at 9:30 AM on December 8, 2009 [1 favorite]


In many countries gambling debts are unenforceable.

In the US the general rule is that debts from illegal gambling are unenforceable. So, for example, a debt from gambling on an illegal underground boxing match would be unenforceable whereas a debt from a legal casino would be enforceable.

Of course the problem there is that if you owe a debt made illegally, the creditor is likely to be comfortable using extra-legal enforcement. Hence the leg-breaking mafia debt collector stereotype. There's an argument to be made that even illegal gambling debts should be legally enforceable in order to prevent the greater harm of extra-legal enforcement. Or, indeed, that basically all gambling should be legal and regulated in the first place. In this regard it's similar to the arguments in favor of harm reduction policies for drug use.

Of course, taking a harm reduction policy for gambling further would require a lot more regulation of legal gambling. No more noisy carpet, bright lights, free buffets, or comped rooms. Posted house take on every machine, no serving alcohol inside the casino itself, etc. But we're a long, long way from that, and with a state as completely dependent on gambling revenue as Nevada is, it's hard to see such regulation ever being enacted.
posted by jedicus at 9:57 AM on December 8, 2009 [1 favorite]


And how about if I'm shitfaced?

How about you stop changing the subject? The original question I was responding to was the "he doesn't need to pay back loans because the casino didn't lose any money."
posted by Cool Papa Bell at 9:57 AM on December 8, 2009 [1 favorite]


Harrah's also offered 15% cash back on table losses greater than $500,000". Casinos do that?

A few years ago I had a gig where I would occasionally be with high rollers in Las Vegas. (I worked with pro athletes who'd have charity golf tournaments hosted by casinos. The high rollers would get to play in foursomes with the athletes. These weren't the highest gamblers but solid earners for the casino hosts.)

It's almost unbelievable what the casinos give away to lure the big gamblers. We'd play golf on a private course that averaged 4 golfers a day. That's an entire golf course, maintained in the desert, that exists to amuse only a few high rollers. One weekend, Caesars gave me a two-story hotel suite complete with a giant round tub in the master bedroom which overlooked the strip and a private steam room, full catering, the works. They gave that to me, a girl who plays penny slots, just because I was with people who might attract people who might lose big.

It was an interesting experience. There's a whole other world to casinos that only the really high rollers see. It's completely understandable to be be lured into that.
posted by 26.2 at 10:04 AM on December 8, 2009 [7 favorites]


In casinos, that best bet ... is your backing odds on "pass," "don't pass," "come," and "don't come." Those are straight 50-50.

Just to clarify for people that might miss something here ... saying it's straight 50-50 is a bit of a misnomer.

First, a few casinos don't even allow odds betting. Second, the odds bet is something you do on top of a previous bet, which you can lose outright. So while odds betting alone is 50-50, since it can't be done out of context with a previous bet, your total odds are never truly even.
posted by Cool Papa Bell at 10:07 AM on December 8, 2009


I bet Lloyd's of London doesn't think Wynn is such a saint after he asked to be paid $54 million for poking a hole in a painting.
posted by digsrus at 10:22 AM on December 8, 2009


So while odds betting alone is 50-50, since it can't be done out of context with a previous bet, your total odds are never truly even.

Yeah, I mentioned that. For a "don't pass" bet and a 2X back bet (most common limit in strip casinos), the house edge is .455% (I was wrong about .682% - that's the house edge for "don't pass" + 1X back bet). For a "pass" bet and a 2X back bet, the house edge is .606%.

Of course, you can lose on the come-out roll (2, 3, 12 for "pass" bets and 7 or 11 for "don't pass" bets) which is 3/36 or 8.33% of come-out rolls for "pass" and a whopping 8/36 or a whopping 22% of come-out rolls for "don't pass." Those losses are figured into those edge percentages listed above, however.

First, a few casinos don't even allow odds betting.

A very few, I would guess, if there are others in town that offer it. I would never play a craps game that didn't offer at least 2X back bets. I'm willing to give the house an edge for the opportunity to play, but it's not gonna be more than 1%! (I kid.)
posted by mrgrimm at 10:23 AM on December 8, 2009 [1 favorite]


I think he was just translating for people like me who don't understand the jargon.
posted by shmegegge at 10:29 AM on December 8, 2009


I was a Harrah's employee during the time that Watanabe was losing his shirt.

I quit for a lot of reasons, but one of them will always stick out in my head: the woman who came to me crying hysterically and begging for a hotel room so she could continue gambling in order to finally win and pay off her house in foreclosure.

She couldn't stop gambling, she'd already lost her house, and she wanted me to enable her to continue gambling. Keep in mind that this was two or three years ago, well before the current wave of foreclosure, and her loss of the house was not due to a ballooning rate on a subprime loan but rather entirely to her gambling. It made me tremendously upset. Nonetheless, I didn't report her to the chain of command the way I had been taught to the interminable, regular classes we took in order to keep our gaming licenses current.* It's a failure that haunts me.

Compulsive gamblers are not healthy people; they have an addiction, and to Harrah's credit, there are several programs in place at the company to detect these problem gamblers. I have called security to toss out gamblers who signed the paperwork to ban themselves and came in the next week believing that they could get around the paperwork and keep gambling. So, there are instances when Harrah's did the right thing for problem gamers (that's the phrasing we were told to use for compulsive gamblers). Unfortunately, there isn't always a push from lower management to match the ideals that upper management has set out.

When I read the article listed in the FPP, I had a feeling that Watanabe was going to be a Seven Star (in fact, the article states that he had an entirely new category, 'Chairman,' created for him. I'm not in the least convinced that this was a company-wide designation, because I'm pretty sure I've handled Watanabe's file in preparation for a trip he never ended up taking to our casino).

Harrah's has entirely revolutionized the casino experience of comps and rewards for gamblers. The current CEO of Harrah's, Gary Loveman, used to teach at Harvard Business School, and there's a very statistical, business-like (some would say robotic) method to granting comps at Harrah's. They have a system called Total Rewards; feel free to google it for all the gory details but suffice to say that if you go down to your local Harrah's in Biloxi or Sioux City or wherever every month for a buffet and to blow off a little payday money, you're a Gold card. In other words, go away goldfish.

There's an increasing tier level, and a few years back, they to had invent a new tier, Seven Star. To be a Seven Star means you have to lose a set amount to the casino every year ($500,000? I can't remember the amount anymore, but it was a LOT of money to be losing every year). If you stopped going to the casino as often, your status slipped. So a problem gambler like Watanabe had a disincentive to stop gambling (beyond the obvious disincentive that comes from being addicted): the loss of all those comps, the special status, the deferential treatment, etc. It's a nasty, soulless system that doesn't allow for a lot of flexibility or employee autonomy in most cases.

I feel sorry for Watanabe, and I do think that Harrah's Las Vegas employees probably did have a responsibility to cut him off according to the company policies, if not for moral reasons. I know what Harrah's employee handbook said about problem gamers during the time Watanabe was gambling there. Nonetheless, I think he's destined to lose his case.

Here's how the process in place, according to company policy at the time, should have worked for those who are curious. Had his family members come in to the casino and asked Harrah's to ban him based on their discussions with him at Thanksgiving, the casino would have taken a serious look at him and decided whether to implement a ban. However, you hear the most heart-rending stories of wives asking to get their husbands banned or vice-versa and failing to get that to happen. Another issue is that had Watanabe expressed a couple of key phrases ("I feel like I can't stop gambling," "this isn't fun anymore but I can't stop," "I'm in danger of losing my house/my job/whatever"), then a process should have been started to involuntarily ban him. Had he requested a temporary self- ban (and I no longer remember how long those were supposed to last; a year, I think?), one should have been granted to him and he would have been thrown out of any Harrah's casino he entered. There's methods to cut off credit, to cut off access permanently, etc etc. I wonder whether they would have if he had requested it, but in theory, that's the process.

*When I tell people that I had a gaming license, they give me a look of disbelief. 'You owned a casino?' No, no. I had a license to work at a casino. It's actually a really difficult, time-consuming process to get a license and it requires all kinds of intrusions into your life (do you have a significantly negative debt/income ratio? Denied a license. They asked for your tax returns, your fingerprints went off to the state licensing board, they called every single one of your previous employers, etc etc. I was almost denied a license because they couldn't reach a former employer). And that was just the preliminary license!
posted by librarylis at 10:45 AM on December 8, 2009 [113 favorites]


you're not really making a clear point, here, and I'm starting to question your numbers. can you cite for any of the claims you're making? I mean, it's patently obvious that they pay the winners with money earned from the losers, because that's how a business works. but the numbers you're putting forward seem... wrong. specifically I'd like to see the balance sheet you're saying we should look at, and where the figure of losing 45-49% of their bets comes from

I've tried writing a more clear explanation but I'm having difficulty not simply repeating that winners are paid from losers, but here goes.

I'm talking about a straight mathematical expectation. A 'bet' is when a player makes a wager that he can win or lose. The player's betting on red in roulette on one spin, for instance.

Instead of winning 50% of the time, house ratchets its percentage up by 1/38, and ratchets your winning percentage down 1/38. So instead of being 50/50, it's about a 47.4/52.6 proposition. That spread between 47.4 and 52.6 is the house's edge, namely 5.2%. In roulette, its exactly 2/38.

I'm saying 45-49 because I'm estimating, and in table games edges between 1 and 10% are common. These edges correspond to spreads between a 45/55 and 49.5/51.5. The player is winning in these spreads 45 to 49% of the time.

I admit that this is simplifying it a little bit, because it's assuming an even money wager. When the casino lets the player take the underdog in a 2:1 bet, the player's going to lose more than 33% of the time, but gets paid twice as much when he wins. The casino's theoretical balance sheet has 2 house wins for each player loss and again, it's going to balance except for the house edge.

The only reason to think about the balance sheet is to note one important thing: The casino's profit is dwarfed by both the total amount wagered.

That's why they cannot afford to, nor be expected, to give back lost wagers. They aren't just paying winners out of their profits. They're paying winners out of their gross receipts. That means that Mr. Watanabe's $129 million loss, although it is a net loss to him, is not so simply a net profit in Harrah's bank account that they can simply give back.
posted by cotterpin at 11:12 AM on December 8, 2009 [3 favorites]


Though this man did not bet 14 million on a single coin flip. He bet it on a series of biased "coinflips" which in aggregate means he was far far more likely to lose than to win.
posted by Zalzidrax at 11:54 AM on December 8, 2009


Watanabe lost $127 Million to the casino. This is nowhere even close to the amount he wagered (any experienced gambler/croupier want to take a stab at this?)

I'm going to go out on a math limb and suggest that you can easily make a round estimate. Let's assume for argument's sake that he's actually a pretty good gambler and stays very close to the house edge, in aggregate over all of his gambling. He wins some, he loses some, so at any given moment, he could be "ahead" or "behind," but he never defeats the locked-in, ruthless math of the games themselves.

Therefore, over the long course of his adventure, he likely wagered something on the order of $127 million (his total loss) plus $127 million (his total wins) plus the house edge.

In reality, he's probably a very bad gambler that spent a lot of time "chasing bets," which is to say, he was throwing very good money after very bad money as the nights wore on. So, he probably didn't wager enough to be anywhere close to the house edge, bringing his total wagers and win percentage way down.
posted by Cool Papa Bell at 11:56 AM on December 8, 2009


In many countries gambling debts are unenforceable.

My question is why Wantanabe's debt is a jailable offense. Is the issue that he can pay, but won't?

If he can't, it seems like Nevada is using "fraud" as an excuse to operate a debtor's prison.
posted by evidenceofabsence at 11:56 AM on December 8, 2009


First I want to say that the casino and employees that got him drunk and let him wager are morally bankrupt.

Unless they used an IV or strapped him down and poured it down his throat, the only person who got him drunk was himself.

Gambling is good, clean fun for 98% of those who do it. Hell, I can play nickel poker for 2 hours on $10. If I win, I can win up to several hundred. If I lose, it's only $10. So for $10 I can have a good time, drink for free, and maybe come out on top -- that's better odds than going to the movies.

If I were a shitbag with no self-control I might lose my house. But then, if gambling were illegal, Watanbe would do it anyway at a mob-run casino and you'd never read about it on Metafilter. Watanabe was destined to fail -- I'm glad Vegas exists to let him do it here. At least he'll get to leave with his kneecaps intact.
posted by coolguymichael at 12:12 PM on December 8, 2009 [1 favorite]


A question, maybe for Astro Zombie: is Watanabe gay? Not that it's really relevant, but between the "no wife" and the large AIDS charity donations, I wondered

I don't know for sure, but if I had to wager a guess, that guess would be oh my goodness yes.
posted by Astro Zombie at 12:53 PM on December 8, 2009 [2 favorites]


I am a criminal defense lawyer in Las Vegas. I have handled several similar cases, not involving sums of money such as Mr. Watanabe's millions, but yes cases where hundreds of thousands of dollars are alleged to be owed.

My question is why Wantanabe's debt is a jailable offense. Is the issue that he can pay, but won't?


No. The issue is his intent at the time of the bet.

Mr. Watanabe is charged with two counts of Theft and two counts of Drawing and Passing a Check with Insufficient Funds. (A casino marker is a "check" in Nevada by legislative fiat. These markers would not traditionally be checks in the commercial paper sense.)

Theft (NRS 205.0832) and Drawing/Passing (NRS 205.130) require that the gambler KNOW at the time he signs the marker that he cannot cover the bet he is making.

Yes, there is an argument here that the casinos should do a better job of checking whether or not gamblers can actually afford the credit the casinos extend to them, but that is not currently the law.

Now, as I said, I've handled these types of cases before. Yes, Mr. Watanabe's offense is jailABLE. But the chances of him going to prison are almost nil. Usually the DA, the casinos, and the defendant will negotiate some kind of arrangement where the charges are reduced to a misdemeanor or dismissed in exchange for the defendant's promise to repay the debt (plus the DA's 10% cut). Everyone knows from the get-go that the defendant is not going to repay the whole amount. But the casinos are happy to get anything back. At the end of the probationary period or whatever the amount of time given to repay is, and the defendant hasn't repaid, the DA will either call it a day or have the defendant sign a civil confession of judgment so the casinos can go back to chasing the defendant in civil court if they think it is worth their while.
posted by falconred at 1:08 PM on December 8, 2009 [12 favorites]


The premise that an edge of 2% is equivalent to the house making 2% profit is wrong. Very very wrong.

To make a rough guess at the odds of the casino actually losing money on Watanabe's 14 million, I set up a quick Monte Carlo simulation. I simulated gambling with what is essentially a weighted coinflip, if you win you get double, lose you get nothing. Then I set up a series where the player wins if they double their overall money, and the house wins if they lose their shirt. I went with a bit of $100 thousand on each game.

The number of overall wins (where the gambler doubles their original cash and walks away) out of 100,000 are as follows

50% of winning bet- 50132
49% player chance - 352
48% player chance - 0
47% player chance - 0
46% player chance - 0
45% player chance - 0

The house is pretty damn sure to win.

Though if you bet in larger increments, it becomes a whole lot more likely that you'll double your money. With $1 million bets, the player won 36285 times with a 49% chance of winning each bet, so if you want the highest odds of doubling your money, it looks like your best option is to bet it all at once, and then find something else to do. This simulation, of course, also assumes that the player will walk away after doubling their initial cash. A compulsive gambler is not going to do that.
posted by Zalzidrax at 1:11 PM on December 8, 2009 [6 favorites]


The only reason to think about the balance sheet is to note one important thing: The casino's profit is dwarfed by both the total amount wagered.

That's why they cannot afford to, nor be expected, to give back lost wagers. They aren't just paying winners out of their profits. They're paying winners out of their gross receipts. That means that Mr. Watanabe's $129 million loss, although it is a net loss to him, is not so simply a net profit in Harrah's bank account that they can simply give back.


Almost everyone else in the casino at the same time as Watanabe also experienced a net loss. That they may have won almost half of their wagers is irrelevant. The casino doesn't (usually) collect or pay out on individual wagers, but on the net result of an hour, an evening, a weekend, etc. Thanks to the house edge, the net results are overwhelmingly in favour of the casino.

Somewhat beaten by Zalzidrax
posted by ODiV at 1:30 PM on December 8, 2009 [1 favorite]


50% of winning bet- 50132
49% player chance - 352


Hah! I knew it was huge in aggregate; didn't know it was that huge. I had a friend who explained his "foolproof" gambling system to me once, and I was like, "Dude, it doesn't work that way." I always knew I was correct; I didn't know I was astronomically correct.
posted by Cool Papa Bell at 1:57 PM on December 8, 2009


Falconred- Thanks for the thoughtful reply!

I guess my confusion is that for at least some of the debt, it seems like a matter of credit, not of passed checks. The casino offered Wantanabe a line of credit, which he then passed back to them in the form of casino markers. As such, it seems like the debt owed should be on the line of credit, not the markers themselves.*

Let's say I have a credit card that offers me the option of writing a check backed by the card. Now let's say I max out my card using such checks, in full knowledge that I won't be able to repay the credit card company. At that point, I haven't written bad checks, but am in debt to a creditor, which isn't a jailable offense.

The only difference, in Wantanabe's case, is that he wrote the checks to the creditor itself.

*This is possibly confused by the fact that the law refers to the casino marker issue with the words "Credit extended by any licensed gaming establishment." If this is interpreted broadly, it seems the law gives preferential treatment to casinos, over other issuers of credit.
posted by evidenceofabsence at 3:38 PM on December 8, 2009


I've tried writing a more clear explanation but I'm having difficulty not simply repeating that winners are paid from losers, but here goes.

If you understand business accounting a bit, it's like cash flow and revenue. You may have an account which pays $1M a month. That doesn't mean that is profit. There is a cost to sales and overhead. That account doesn't exist on its own, independent of other transactions. Any gross profits are recorded that way, not as profit on that one account. Money is fungible. So, profits from one account may go to service another account, but it's hard to tell, because money is fungible, and it's probably not earmarked as is done with government spending sometimes. So, the losers help to fund the winners in a casino, because their cash flow depends on winners and losers. They keep the spread, in other words the advantage the house is allowed to have, which is a very low single digit amount. That's their gross profit, more or less. The money coming in and going out is not kept separate, so money coming in pays to money going out.

Again, the key concept, money is fungible.
posted by krinklyfig at 4:14 PM on December 8, 2009


Hah! I knew it was huge in aggregate; didn't know it was that huge. I had a friend who explained his "foolproof" gambling system to me once, and I was like, "Dude, it doesn't work that way." I always knew I was correct; I didn't know I was astronomically correct.

There are only two foolproof methods to keep your money in a casino. One is to cheat. Well, it's not foolproof, but good card counters back in the day could really clean up. That never lasts, however. A good system will always be found out by the house, and you'll get banned forever from almost every casino anywhere. The other foolproof method to keep your money in a casino is not to gamble.
posted by krinklyfig at 4:28 PM on December 8, 2009


Unless they used an IV or strapped him down and poured it down his throat, the only person who got him drunk was himself.

Gambling is good, clean fun for 98% of those who do it.


I do agree in principle. However, if you look at the sales for any major liquor distiller/reseller, you quickly realize their bread-and-butter is the rot-gut booze, the worst stuff which is generally high in impurities and is only appealing to gutter alcoholics and maybe some teenagers. Almost every major distiller has a line like that, even if their primary line they advertise is high-dollar, because that's how they make their money.

I am not entirely certain, but it would surprise me if casinos didn't have a similar business model. Sure, for most people it is fun and is not really a problem. But the ones who do have a problem may really be holding up the house in a financial sense.
posted by krinklyfig at 4:33 PM on December 8, 2009


it would surprise me if casinos didn't have a similar business model.

Supposed to be "wouldn't."
posted by krinklyfig at 4:34 PM on December 8, 2009


"I am a criminal defense lawyer in Las Vegas. I have handled several similar cases"

MetaFilter, have I told you today that I love you?
posted by flaterik at 5:12 PM on December 8, 2009 [1 favorite]


I occasionally buy a few lottery tickets when the jackpot is superhigh and thus the "expected value" of the ticket is near or over the $1 ticket price. Am I still wasting my money? Pretty much, however I'm wasting it in a way that gives me an incredibly remote chance of never having to work again, and I've wasted it in worse ways.

The expected value of a lottery ticket isn't actually a very good way to measure the utility of that particular kind of bet. Fact is, for the average person, the marginal value of $1 is a lot less than the marginal value of each of those $10,000,000. You really have to scale the expected winnings by the marginal value of the money in aggregate to decide if buying a ticket makes any sense.

Thinking about it further though.. You also have to find a way to factor in your odds of winning in a lifetime of playing at your full ability to afford tickets. If you only have a 1 in a million chance of winning once in your lifetime at your full ability to afford tickets, it doesn't really matter if the marginal value of the investment is in your favour or not.

Of course this has nothing to do with casino betting, and I never buy lottery tickets anyway, but it is worth thinking about how the simplistic analysis fails.

One way of looking at my point is that money has a non-linear value. Anybody know of what to call this? Like "non-linear economics" or something?
posted by Chuckles at 7:50 PM on December 8, 2009 [1 favorite]


Cool Papa Bell: I think the math is actually something like this:

Losses / loss rate = total wagered

Let's assume he lost 10% of what he wagered. Then he actually BET $1.2B!
posted by mtstover at 8:55 PM on December 8, 2009 [1 favorite]


$127 million importing party favors?

Oriental Trading sells a hell of a lot of party favors. And the markup on that stuff is insanely high.
posted by Monsters at 9:50 PM on December 8, 2009


I am not entirely certain, but it wouldn't surprise me if casinos didn't have a similar business model. Sure, for most people it is fun and is not really a problem. But the ones who do have a problem may really be holding up the house in a financial sense.

Actually, krinklyfig, they kind of do. Harrah's at least always reinforced to their employees that 10% of their customers were 90% of the profit (NOT 90% of business, but rather 90% of profit). The reason to make employees well trained on this fact? So they can give the proper deference to that 10% (see what I said above about comps, status, etc for Seven Stars).

It's not a particularly pleasant business, and my whole experience working there turned me from someone who was pro-gambling (I grew up with a more-than-amateur poker player as a parent) to someone who is pretty rabidly against it. I haven't been back to Vegas since I quit working at Harrah's.

Yeah, they're aware, and no, they don't really care except for what damage it does to their PR as 'good clean fun.'
posted by librarylis at 9:54 PM on December 8, 2009 [3 favorites]


What I'm getting from this story, and this thread, and what librarylis seems to be straight out saying is that Casinos are the only place in modern society where rich get appropriately screwed relative to their position at the top of the economic ladder.

I knew there was a reason I loved Las Vegas.

I was once so drunk at a Blackjack table that the dealer was basically playing my hands for me. I actually ended up winning money that night, which most assuredly would not have happened had I been making my own decisions.

I hate the "see how fancy Vegas is? that's not from people winning" cliche. Las Vegas is not fancy. That shit is all made of plaster and chicken wire. Wealthy people's houses are fancy, and they got that way by not letting you see what fancy really looks like.
posted by billyfleetwood at 11:09 PM on December 8, 2009 [11 favorites]


if you look at the casino's balance sheet and the total wagers it made, it absolutely is paying the winners with the losers' money.

Yes, but the winners and the losers are the same people and the amount of money taken home by gamblers is going to be much less than the amount they bring. Zalzidrax showed how this works.

If there are, say, a thousand gamblers betting $100 at odds of 49% then the house will in fact pay out $49,000 while receiving $51,000, which is a profit of only $2,000. But gamblers, especially problem gamblers, will keep gambling for a long time. So for the next round of betting the gamblers will have $98,000 between them. And the next time they'll have about $96,000 between them. And after thirty five cycles the casino will have more than half the money the gamblers brought.

So Mr Watanabe's $127 million didn't leave in the pockets of lucky punters. It stayed in the casino. Very few gamblers will actually walk home with more money than they brought, certainly nowhere near 49% of them. The only way that could be true would be if each gambler made one large bet and then walked away, win or lose.

Here's another way to look at it. Mr Watanabe didn't gamble $127 million. He reinvested his "winnings" and so his aggregate turnover was, say, around ten billion dollars, most of which came out of his pocket and then came back in. He isn't asking for the return of his turnover but for the profit which the casino made on that turnover - $127 million. And the casino certainly could (I don't say "should") return at least the net profit without being in a worse position than if Mr Watanabe had never gambled there.
posted by Joe in Australia at 12:21 AM on December 9, 2009


What I'm getting from this story, and this thread, and what librarylis seems to be straight out saying is that Casinos are the only place in modern society where rich get appropriately screwed relative to their position at the top of the economic ladder.

My reading of librarylis's posts is that the Casino's position is more akin to 'rich or poor, we'll fuck you all without a care'.

If it was a drug dealer who was treating their customers in this way, the media and the DA would regard it as an example of how thoroughly evil they were, and how they deserved to be given the maximum sentence.

However, because of the amount of juice that the Casino's spend in Nevada, they've managed to have the laws changed in such a way that it's the victims who get the extra punishment.

That said, proportionally, this guy lost a hell of a lot less than the Earl of Derby lost to John Aspinall and chums at the Clermont Club in a country where gambling debts were unenforcable.

Because a gentleman always settles his wagers.
posted by PeterMcDermott at 12:28 AM on December 9, 2009 [1 favorite]


I occasionally buy a few lottery tickets when the jackpot is superhigh and thus the "expected value" of the ticket is near or over the $1 ticket price. Am I still wasting my money?
posted by haveanicesummer
I do this too, but: if you want to buy "a few" tickets you have to compute the expected value of the lot knowing that you can't win two jackpots. It's much more rare for the "average" payoff on two tickets to exceed $2.
posted by fantabulous timewaster at 6:38 AM on December 9, 2009 [1 favorite]


This simulation, of course, also assumes that the player will walk away after doubling their initial cash. A compulsive gambler is not going to do that.

...and that's why your simulation is grossly optimistic about the player's chances. The reality is much, much worse.

A compulsive gambler will gamble until they (or the house) goes broke. Using this exit condition, let's run the simulation again.

If we give the two parties equal initial bankrolls, the simulation results are unchanged:
50.0% player bias: 50,202 wins per 100,000.
49.9% player bias: 36,567
49.7% player bias: 15,809
49.4% player bias: 3,398
49.0% player bias: 371

But Mr. Watanabe's bankroll was much smaller than Harrah's. Let's assume 100x ratio:
51.0% player bias: 42,851 wins per 100,000.
50.0% player bias: 1,029
49.9% player bias: 25
49.7% player bias: 0
49.4% player bias: 0
49.0% player bias: 0

So even with a 1% bias towards the player, the house will still win most of the time. With a 50/50 unbiased game, the house wins 99% of the time. And that .455% edge at the craps table ensures the house will ALWAYS win against a compulsive gambler.

TL;DR: For compulsive gamblers, the casino's massive bankroll affects the eventual outcome more than the slim bias inherent in the games.
posted by ryanrs at 7:32 AM on December 9, 2009 [7 favorites]


falconred: "(plus the DA's 10% cut)"

ah, justice.
posted by shmegegge at 7:54 AM on December 9, 2009


I occasionally buy a few lottery tickets when the jackpot is superhigh and thus the "expected value" of the ticket is near or over the $1 ticket price.

Expected value is misleading when the payoff is larger than your net worth. Which bet would you prefer:
1) 1% chance for $100 million.
2) 50% chance for $1 million.

For most people, the marginal value of the first million is much greater than the marginal value of the second million, which is greater than the third, etc. In other words, the first million is much more life-changing than the second million. Therefore most people should prefer the second bet because it increases the odds of winning the first million at the expense of reducing to zero the odds on the subsequent millions. This is a perfectly rational strategy, despite the lower expected value.

But if you're already a billionaire, then the marginal value is roughly constant across the whole 100 million, so chose the bet with the higher expected value.

(There's also a point about progressive taxation in there somewhere.)
posted by ryanrs at 7:57 AM on December 9, 2009 [1 favorite]


While we're on the subject of gambling misconceptions, did your math teacher ever tell you that 1-2-3-4-5-6 is just as good as any other lottery pick? That's bullshit. Someday that number is going to win, and a thousand smart-ass math teachers will have to split the jackpot.

The moral is: the casinos are smarter than you. They're smarter than the guy with the Monte Carlo simulation, they're smarter than the guy calculating expected value, and they're smarter than your math teacher.
posted by ryanrs at 8:09 AM on December 9, 2009 [2 favorites]


One is to cheat. Well, it's not foolproof, but good card counters back in the day could really clean up.

Card counting is not cheating.
posted by Bonzai at 8:52 AM on December 9, 2009 [6 favorites]


This is insane. I worked at a casino in Connecticut for a couple of years (take a guess, there's only two), and took care of chips and credit card cash advances. I occasionally worked in the high-roller casino, and there were several nights where one of our customers would come up, take out a cash advance of $25,000, lose it, come back 10 minutes later, take out another $25,000. Rinse and repeat.
posted by booticon at 9:04 AM on December 9, 2009


I got my degree from the Nova Scotia College of Art and Design, which is literally across the street from the then-new Casino Nova Scotia, which is in turn attached by a pedway system to a mall (whose food court essentially serves as the school's cafeteria), a convention centre, and several major office buildings where lots of people work. It's as if the place was designed for the express purpose of creating problem gamblers.

I went in the casino exactly once, for lunch. It was... Well, let's just say I'm glad I never went back in there.
posted by Sys Rq at 9:18 AM on December 9, 2009


but one thing I don't understand is why the superrich are so easily swayed by the "special treatment" casinos give them. I understand that this method is effective, plying them with freebies

It has nothing to do with being superrich. People of all economic stripes are overly swayed by "free" things, even if there are hidden costs which makes them not truly free. Predictably Irrational spends an entire chapter on this, if you're interested in specific studies.
posted by DevilsAdvocate at 10:41 AM on December 9, 2009


While we're on the subject of gambling misconceptions, did your math teacher ever tell you that 1-2-3-4-5-6 is just as good as any other lottery pick? That's bullshit. ... the casinos are ... smarter than your math teacher.

What the what? Did I miss something? How is it bullshit?

Assuming the lottery draw itself is fair, how is a specified 1-2-3-4-5-6 sequence less likely to come up than a specified 23-56-11-67-43-31 sequence?
posted by Cool Papa Bell at 11:38 AM on December 9, 2009


DevilsAdvocate: Sorry I wasn't clear, I meant that I understand a lot more when it comes to people who aren't as wealthy. So this special treatment is something novel to them. With the rich I guess it's just the gambling addiction and that the casinos have gotten very good at engineering the situations so the people feel special to receive free things, even if they would have saved millions of dollars to just buy the nice stuff and treatment without the gambling part.
posted by haveanicesummer at 11:46 AM on December 9, 2009


Assuming the lottery draw itself is fair, how is a specified 1-2-3-4-5-6 sequence less likely to come up than a specified 23-56-11-67-43-31 sequence?
posted by Cool Papa Bell


I think he meant that more people would have chosen 1-2-3-4-5-6 and thus you'd have more chance of splitting the jackpot. Not that there was any less chance of those being the winning numbers (as you are obviously correct, all the sequences are equally likely).
posted by haveanicesummer at 11:48 AM on December 9, 2009 [1 favorite]


The moral is: the casinos are smarter than you. They're smarter than the guy with the Monte Carlo simulation, they're smarter than the guy calculating expected value, and they're smarter than your math teacher.

I have a family member who works at a casino and were telling me that they were experimenting with network play using slots. New machines are actually capable machines with the ability to render some high quality graphics and accept touch screen input. Some of the displays are so cool (the ones with the transparent overlays) that I kept wondering how they did that. In any case with networked play the slot machines would respond to the aggregate behavior of the casino. Slow Monday? The denomination would change from $1 to nickel machines. Big fight night? Bank after bank of $5 slots.

What really gets them excited, however, is the ability to induce more gambling. Someone playing all night, lost $5,000? No floor manager would bat an eye at a casino on a strip, but what if a better room opened up and there was no way it would be booked tonight? Have the system book the room and offer the comp on screen. Big fight night? Have a bank of slots switch to a game with a lot of small, intermittent payouts. Place it strategically around the $10 slots so you always see someone winning $1k and getting excited.

They already do this to some extent, as librarylis points out they have a fairly extensive system already in place to keep gamblers gambling, but you still need someone to actually carryout the comp, approve and so forth. Not a big deal for the whales, but a lot of people drop $5k in a weekend and maybe get some nice mailings. There's a "long tail" there (Damn you Gladwell!) just waiting to be exploited.

They're still experimenting and I'm sure you'll see some version of this out eventually, sooner rather than later, but I have a feeling there's several possibilities:

1. Bad publicity as those who normally drop $5k empty out a kid's college fund of $10k, which already happens, but get 12 in a room on a 60 minutes group interview and you have a disaster.

2. When you have a system that changes its probabilities based on input behavior you create the scenario where you have a stochastic process, something that looks deterministic, especially in test conditions, but is devilishly non-deterministic in execution. Or at least that's what I assume would happen. It would be interesting to see a "casino crash," or at least players that manage to make statistically improbable returns.
posted by geoff. at 12:21 PM on December 9, 2009 [4 favorites]


I occasionally buy a few lottery tickets when the jackpot is superhigh and thus the "expected value" of the ticket is near or over the $1 ticket price. Am I still wasting my money?
posted by haveanicesummer

I do this too, but: if you want to buy "a few" tickets you have to compute the expected value of the lot knowing that you can't win two jackpots. It's much more rare for the "average" payoff on two tickets to exceed $2.
posted by fantabulous timewaster
Likewise, as ryanrs explains (why 1-2-3-4-5-6 is a lousy pick), you have to factor how many people are competing against you. If the number of competitors is high enough to expect 2+ winners, then the "expected value" drops very quickly.

In short, if you win, you can't assume you will be the only winner. It seems like you'd need to know the total number of consumer-bought tickets in order to calculate the true "expected value" of your ticket.

Anyway, I like to gamble, but I don't buy lottery tickets. It's a shitty way to fund government.

Now I'm curious when the last time 1-2-3-4-5-6 won a lottery and how many people won ...
posted by mrgrimm at 1:45 PM on December 9, 2009 [2 favorites]


All just goes to prove the wise maxim I learned a while back (and I wish I could remember where I saw it): The way to get a small fortune from gambling is to start with a large fortune.
posted by ZsigE at 3:58 PM on December 9, 2009 [1 favorite]


splice wrote: "Wow. What a weak straw man. Obviously if you get credit at some big store, buy something there and never pay for it, it's not stealing, right? After all, they have all their money, and I have none of it, so how could it be stealing?"

Oddly enough, it's not, unless you applied for the credit with the intention of never paying it back.

Thankfully, we are not yet back to the point where being unable to pay your bills is a criminal matter. Except, apparently, in Nevada. Way to make sure I won't be taking that Vegas trip my SO wants. Or ever return to the state. Period.

Don't let facts get in the way of a good rant, though!
posted by wierdo at 6:38 PM on December 9, 2009


Oddly enough, it's not [stealing], unless you applied for the credit with the intention of never paying it back.

Based on the article and falconred's comment, this is precisely what the DA claims Watanabe did.

Don't let facts get in the way of a good rant, though!

Good to see you're following your own advice here.
posted by DevilsAdvocate at 8:11 PM on December 9, 2009


Now I'm curious when the last time 1-2-3-4-5-6 won a lottery and how many people won ...
posted by mrgrimm
At least with the national Powerball game, there are about 250 ways to pick six consecutive numbers: the red ball only goes to 39, and can be first, second, third, etc. in the sequence. There are 200 million combinations, so you expect one "consecutive" pick to win, on average, per million drawings. There are a hundred drawings per year, so the mean time between consecutive wins will be ten thousand years. I think that the Powerball game is not quite that old yet, so the most likely number of consecutive winning tickets in its history is zero.

There are other "pick three" and "pick six" games floating around the lottery ecosystem but I don't know their rules.
posted by fantabulous timewaster at 4:25 AM on December 10, 2009


DevilsAdvocate wrote: "Based on the article and falconred's comment, this is precisely what the DA claims Watanabe did."

Yet the article indicates no such thing. It indicates that he now refuses to pay the debt, but not that he incurred it in 2006 with the intention of default.

Moreover, your comment was phrased in such a way that implies that either you thought intent was irrelevant or think that it should be.
posted by wierdo at 7:22 AM on December 10, 2009


Yet the article indicates no such thing.

Yes, this is precisely why I said "based on the article and falconred's comment," not "based solely on the article." Falconred's comment made clear to me that the specific crimes Watanabe is charged with are, in fact, those which require that Watanabe knew that he would not or could not repay the debt at the time he applied for credit. Whether that's actually the case is unclear, but that is what the DA claims.

Moreover, your comment was phrased in such a way that implies that either you thought intent was irrelevant or think that it should be.

Huh? How do you get that? I'm asking sincerely, as I re-read my previous comments in this thread and see nothing that would indicate I think intent either is or should be irrelevant. In fact, I haven't expressed anything in this thread to indicate whether I believe Watanabe is guilty or not. Are you perhaps confusing someone else's comment for mine?
posted by DevilsAdvocate at 10:08 AM on December 10, 2009


actually, this intent discussion has me wondering something that perhaps falconred can clarify:

how do they determine intent in a court of law? would a cross-examination like the following be enough?

DA: when you accepted the casino marker for x amount on date y, did you then have the money in your bank account to pay it?
Watanabe: yes.
DA: and if you lost the amount of that marker in subsequent play on the casino floor, did you then intend to pay the full amount for all of your markers?
Watanabe: if I had to.
DA: and when you instead took out another marker for amount x on date z, did you then have the money in your bank account to pay it?
Watanabe: no.
DA: how did you intend to pay that marker?
Watanabe: by winning on the casino floor.
DA: and at the time of accepting the marker, how did you intend to pay the marker if you did NOT win on the casino floor?
Wa: I had no plan for that eventuality.

would that be enough? or do they have to prove that he intentionally wanted to gamble with money that wasn't his and wanted to con the casino into giving him that money?
posted by shmegegge at 10:47 AM on December 10, 2009


There's an increasing tier level, and a few years back, they to had invent a new tier, Seven Star. To be a Seven Star means you have to lose a set amount to the casino every year ($500,000? I can't remember the amount anymore, but it was a LOT of money to be losing every year).
Actually, Seven Star requires a handle of 500k. Someone who plays perfect strategy blackjack or baccarat could hit Seven Star with an expected loss of 10k or so.
posted by Lame_username at 2:15 PM on December 10, 2009 [1 favorite]


how do they determine intent in a court of law?

The same way that you would determine it yourself. The question of intent is a question of fact and it comes down to the decision made by the person (e.g. judge) or body (e.g., the jury) which has the duty of determining the facts. The only special considerations are what gets admitted into evidence (that is, what you can base your decision on) and the degree of certainty you need - are you convince beyond reasonable doubt? or just mostly convinced?
posted by Joe in Australia at 3:02 PM on December 10, 2009


I used to work as a parking valet, graveyard shift, at a Harrah's casino.

The most depressing part of the job was every morning, at about 4 am, when a steady stream of little old ladies would start to arrive. They'd one by one trundle inside, one hand carrying a plastic bucket of small change, the other hand still black from pulling the slot machine handle the day before.

This dates me somewhat; slot machines don't have handles anymore
posted by ook at 9:04 AM on December 11, 2009


"Oriental Trading has since been acquired by the Carlyle Group."

Oh. Snap.
posted by fourcheesemac at 10:06 PM on December 12, 2009 [1 favorite]


« Older Debashish Bhattacharya, slide guitarist from India   |   Hai Hai!!! Newer »


This thread has been archived and is closed to new comments