Even with an Edge, Don't Gamble if You Can't Cover Your Losses

I've read and heard some terrible gambling advice over the years. I may have even made suggestions myself, that I'd now modify or qualify. But I recently ran across what has to be the bottom of the barrel. I'll elaborate, trusting that nobody will read only selected words and think I'm actually advocating this absurdity.

The bad advice in question involves borrowing money to play blackjack as a card counter -- with a small edge over the casino, if done competently. The idea is to assemble an adequate bankroll to weather the normal downswings of the game, betting high enough so you can repay the loans and live comfortably on the expected earnings as a pro, or be happy with the profits as an amateur.

The recommendation is to start by listing your assets, selling things you don't need or want and borrowing against the rest. "If you have good credit," the writer states, "you should be able to negotiate around an 11 percent loan. The interest may sound high, but it is offset by the potential blackjack winnings." Add credit card advances to this collateralized loan, he suggests without mentioning the 18 percent interest or minimum monthly payments. Then, borrow from friends and relatives, recognizing that "it's tough to ask them for money, but promise them a good return."

Don't take this cash into the casino. Rather, deposit it in an interest-bearing bank account, where it's safe, and leave it for six months. Never mind that you're paying 1 to 1.5 percent per month to the lenders, and getting under half a percent back.

With what amounts to a bogus bank account as a reference, apply for credit at a number of casinos. (It's probably only fraud!) The credit at each may be as much as the total in the bank -- multiplying your effective capital reserve by five or more. With casino credit, take markers at the table to play. Redeem the markers when you win, retaining the profits both to finance your high rolling lifestyle and to enhance your bankroll with the leftovers so you can bet bigger in the future and earn even more.

"The quickest way to wealth, he concludes, "is to beef up your credit lines." True, he concedes, disaster can befall anyone and "getting into hock to gamble can be risky." But, not to worry. As a skilled card counter, "you will have an advantage." And, anyhow, for every solid citizen who suffers because of normal downswings, "other people are out there somewhere that have had huge successes" because swings go up as well as down.

How much can you can expect to win this way, and what's the risk of serious trouble? The answers depend on your skill, boldness in betting aggressively under the right conditions, finding casinos where you can do it, and the stake you've put together.

Make believe you're an expert card counter. You've quit your day job to play blackjack. You figure on gambling about 500 hours per year -- about 50,000 rounds -- and have targeted $75,000 for annual earnings. With borrowings in the bank and credit at several casinos, you have a $50,000 stake. You bet between $25 on one spot and $250 each on three spots, depending on the count, and have an edge of 2 percent over the casino.

You have a high likelihood of success. The chance you'll deplete your $50,000 before playing for 500 hours is only three out of 1,000. And, regardless of whether you play for 10 or 1,000 hours, the chance you'll reach your $75,000 earnings target rather than go broke is 996 out of 1,000. Still, three out of 1,000 isn't zero chance of a wipeout. And this, with a 2 percent edge. Prospects decay precipitously in negative expectation games.

Also, what if you find yourself in a $25,000 hole part way through the year? The chance of a card counter with 2 percent edge falling this low is 57 out of 1,000. Half the money is lost, some has been spent for living expenses because you have no other income. Will you continue? Or will you use what's left of your borrowings to make interest and principal payments while you look for a regular job to keep afloat and fight to recover? The poet, Sumner A Ingmark, anticipated this very situation when he asked: