May 08, 2003
William Bennett, Gambler Extraordinaire
Forgive me for a dry, boring, technical article on gambling. This is an issue I know quite a lot about, and there seems to be a lot of misinformation floating around over how much money William Bennett lost over the last ten years. I'm not going to judge Bennett - I'll leave that to his wife, who is probably still busy beating him with a shoe. Gambling is not immoral, but it can be stupid. It can also be good, inexpensive recreation. But you have to know what you are doing. Bennett clearly didn't.
The figure most commonly bandied about for his losses is $8 million dollars. This is a 'casino estimate'. Is this how much money Bennett actually lost? It's hard to say, because it depends how the casino estimated it.
There are several ways a casino can track the activities of high limit gamblers. The most likely is by tracking their chip purchases. High rollers don't pull out wads of cash and hand them over to the clerk in the cage. Rather, they are extended a credit line, and they buy their chips on credit. They are then expected to cash their chips remaining back to the casino when they are done, and settle for the difference (or collect their money in the unlikely circumstance that they actually won.) This appears to be the way Bennett operated, because the records show that he had to wire money to the casino to cover losses.
If this is the way the casino tracked Bennett's play, then that $8 million figure is probably pretty close to the actual amount he lost. Now, casinos can be fooled if someone is trying to over-estimate losses (say, to hide the fact that they are card counting, or to increase comps). Bennett would not have done that, because it wasn't in his interest. If anything, he would want to minimize the recording of his losses.
Bennett claims that he broke even over that time, or close to it. Is that possible? Not bloody likely. Bennett's choice of games was particularly stupid - he picked games with the highest house edge, and the fastest rate of play. In Vegas, speed kills. Let me explain. No, there is too much. Let me sum up:
The odds of winning in Vegas depend on three things - the house odds, the variance of the game you are playing, and the number of times you put your money into 'action'. Consider a coin toss game - I'm the casino, and you're the sucker player. Here's the deal: You wager whatever you want. If the coin comes up heads, I'll give you 98 cents for each dollar you wagered. If it comes up tails, I'll keep your money. Your best chance of coming close to doubling your money is to take your entire bankroll and bet it on one flip. You've got a 50% chance of a 98% return on your investment (and of course, a 50% chance of a 100% loss). But if you took 1/50 of your bankroll and wagered it 50 times, the distribution of wins and losses will look more and more like a bell curve, with the center of the curve offset by the house edge. As the number of wagers increases, the slope of the curve gets steeper, meaning it's less and less likely that you will get 'lucky' and come out ahead.
The best games to play in Las Vegas, therefore, are the ones that have the fewest numbers of plays per hour, and the lowest house odds. Blackjack meets both those criteria - the house odds following basic strategy are usually around .5%-.7%, and you only play 50-100 hands per hour. Lots and lots of people get 'lucky' at blackjack and win over the course of a day or a weekend. Of course, the longer you play, the less likely it is that you will beat the odds.
Slot machines are among the worst games in the casino for the same reason. A slot machine may have a house advantage of as much as 15%, and you can pull the handle at least 400 times an hour.
To see how expensive slots are, let's assume Bennett was playing $100/pull slot machines, with a 2% house advantage. A much smarter player (say, Jonah Goldberg) is playing $100/hand blackjack. They're both wagering the same level of bets. Bennet's gambling jones will cost him $800 per hour over the long run. Goldberg's blackjack playing, on the other hand, will only cost him $25 per hour.
Now, if you were wagering $100 at a time, and the house is only charging you $25/hr to play, you don't have to be very lucky in order to come out ahead. But if you're being charged $800/hr to play, you have to be significantly luckier. Moral of the story: Stay far, far away from slot machines when you are in Las Vegas. Stick to the table games, learn how to play well, learn to avoid the sucker bets (roulette, many craps bets, proposition bets in any game) and your entertainment won't cost you much.
Bennett played stupidly for ten years. Is it possible he won money? Well... If it were a coin flip, it would be very, very unlikely. Astronomically so. But slot machines have high variance. A percentage of your winnings comes from longshot 'jackpots'. Let's say a jackpot comes up every 50,000 spins on average, and pays out $40,000. There's an equal chance that it could come up in 25,000 spins, or 75,000. It costs you $1.00 to try for it, and you get nothing if you miss. If you play until the jackpot is hit, half the people will walk away ahead $15,000, despite having played a game with a 20% house edge, and having played it 25,000 times. High variance worked in their favor. Of course, the other half of the players will lose $35,000. The house always gets its money.
Real-life slot machines are not this skewed towards jackpots. There has to be instant gratification, or players will stop playing. So the typical game will have only a small percentage of its total payouts in big jackpots, and lots of smaller jackpots along the way. This makes it more likely to win something on any given pull, but less likely to be ahead overall over a very long period of time. For Bennett to be ahead of the game after ten years is unlikely, bordering on unbelievable. Of course, he may believe it. If the slot designers did their jobs correctly, many players who are overall losers will not realize it unless they keep careful track of their wins and losses. And most losing gamblers hate doing that.
My conclusion: Bennett played bad games. As a result, he probably did lose $8 million. Not that there's anything wrong with that. "Whales' like Bennett get treated like royalty. They play private golf clubs, get jetted around, live in palatial suites, get the best liquor in the world for free, front-row seating at all the best live events, etc. If Bennett spent $800,000 a year for that, how is that any different than if he had purchased a $20 million yacht and paid $800,000 per year for maintenance and staff? Whatever floats your boat, I say.
Posted by Dan at May 8, 2003 01:22 PM
What is the big deal about Bill Bennett gambling? Only that while doing it, as a government employee he accepts free limos, complimentary hotel rooms and other amenities. Let's be real, the gambling industry has one of the most vigorous lobbies in Washington, the American Gaming Association, and its president, Frank Fahrenkopf, is a former Republican National Committee chairman.
Stupid Bill got free limos, comps and such from the casinos because he was a lousy player and dropped wads of cash on them... stupid ass slot machines...
Did Bennett accept these goodies while he was working for the govt? I was under the impression that he'd only really indulged after he was out.
My parents like to play the slots. I don't understand it. Well, OK, I do, sorta. When they lose, they lose a dollar at a time; when they win, they can win $1500 at a time. $1500 is a lot of money for them, so they feel like they've really "won" something (even though they've probably lost more, over a longer period of time).
But Bennett had real money, so winning even $40,000 shouldn't have been a big deal to him. So I don't get what the attraction was.
Ms. Shultz;
The "whale" treatment that H.F.P. described. There are people who really enjoy that kind of fawning and rest assured no one fawns like Las Vegas over a high spending gambler.
As for slots in particular, I suspect that one advantage is the lack of thought. There's no mental effort involved. If you're in a high pressure job it can feel good to turn off the brain and get a happy jolt every now and then when the machine pays off.
FWIW, the word I hear is that he played slot and video poker...if he was playing decent VP machines in Vegas and playing them correctly (admittedly unlikely), it's very possible that he came out near even. VP generally ranges from 92% to 100.26% payback in Vegas given correct play...but even if Bennett wasn't playing correctly but was on high payback machines (which have giant signs over them in Vegas flouting their payback percentage), it's still very possible that he came out feeling like he basically broke even. If he lost even 10% of his money, that's still what alot of people would call "breaking even" in gambling. And I have to agree that given the extensive comps he probably received based on his play, it's not too much different from the person who spends $1 million per year maintaining some luxurious yacht.
Still, I don't blame his readership for feeling as if they've been conned by a hypocrite, although I hate the stigma associated with gambling. Maybe his readers will think twice before listening to the next William Bennett...
I guarantee you the $500 video poker machines do NOT have a positive expectation.
The slots MAY have had only a 1% vig. Even so, at 400 pulls an hour, and $100 a pull, the house would expect to make $400/hr from Mr. Bennett.
Remember, just because he bought 8 million in chips does not mean that's all he put through the machine. Put in a thousand, get $999 back. Put that back into the machine, and now you've put $1999 into action on your first thousand, and rate to be down almost 2%.
The average 'hold' in the casino is around 30-40%. In other words, for every dollar in chips people buy, they bring about 60-70 cents back to the cage for cashout.
If Bennett lost 8 million, he probably put hundreds of millions of dollars in chips into play.
There's nothing wrong with smoking a doobie, consenting adults having homosexual sex, good single mothers who don't want to get married, or wearing condoms either, but Bill Bennett wants to punish those people. The gambling is no better or worse than any of the things listed above.
This is why Mr. Bennett is a hypocrite. He wants the power to pick and choose our national vices based on his personal experience. Feel free to defend a hypocrite, but I would rather rely on MY personal experiences to determine what is the right thing to do with my time and money. MY moral judgment is far better than Mr. Bennett's.
We call this concept freedom. It's what conservatives talk about but never actually get around to defending.
Seems to me Timothy Noah at Slate might be on to something. Bennett's claim that he broke even might be a statement that certain people at a certain Olive Oil Manufacturing Company might have, shall we say, disagreed with. Which might be what led to his being ratted out, which Mr. Noah claims, rightly, to be pretty risky behavior.
It reminds me of the time Sinatra saved my life that night on the Strip. There I was, lying on the sidewalk, getting kicked by two guys with skinny jacket lapels and ties, when Ol' Blue Eyes walked up, tapped the bigger one on the shoulder and said, "All right, boys, that's enough."
Ba-doom. Pish.
Speaking with utmost authority (I went to the same old-guard conservative prep school as Bill Bennett), I can say that there is plenty wrong with his behavior. A man who positions himself as a moral leader can certainly drop a few bucks on the slots when he's in Vegas. However, wasting $800,000 a year on such vices is distasteful. Scale *does* make a difference here -- Bennett engaged in such a disgusting display of consumption and excess that, as an example of moral rectitude, he has proven a failure. Utterly. Imagine the uses to which that $8 million may have been put -- it could buy houses for a hundred families in depressed areas of the country. It could jumpstart a foundation for teaching kids community ethics via service programs. Heck, he could use it to pay for the higher education of all of his own grandchildren, and have enough left over to buy them houses and cars.
Bennett's preaching hearkens back to a semi-mythical America, one where the virtues of diligence, hard work, self-sacrifice, and community spirit are rewarded. Issues of hypocrisy aside, the example he has set is one of gross consumption and furtive self-indulgence. He has broken the back of the American values he professed, showing all of us just how they wither under too harsh a light.
At least he was too busy jerking one-armed bandits to invest in the Dotcom Bubble. That would have been indicative of a co-dependency problem.
So if wasting 8 million over 10 years gambling is 'distasteful excess', does that also apply to, say, having a 40 million dollar private jet fly you around? How about having a 20,000 square foot mansion and a a cottage in the Hamptons? Or being a social climber who throws parties that cost $100,000 a pop?
The world of the very rich is a lot different than the life you or I lead. When Kirk Kerkorian divorced his wife, her expense disclosure had items like $5,000 a month for food for the child, and $25,000 a month for 'kids parties'. Elton John spends $50,000 a month on flowers.
The fact is, gambling has a social stigma. That may have made what Bennett did stupid and unwise, but before we go throwing around charges of gross excess, it would be useful to see how the other people in his social circle live. Somehow, I doubt that Jerry Falwell or Pat Robertson live in 2,000 square foot homes and fly coach, y'know?
This is why I don't gamble: I don't understand how it works. You wrote,
"Consider a coin toss game - I'm the casino, and you're the player. Here's the deal: You wager whatever you want. If the coin comes up heads, I'll give you 98 cents for each dollar you wagered."
I read that, and I thought, "where's the winning in that? You bet a dollar, you win, you get back 98 cents, you're out two cents." It was only after re-reading the entire paragraph with its discussion of the possibility of breaking even over many runs of the game, that I realized what you must have meant is "I'll give you 98 cents, -plus your original dollar back-, for each dollar you wagered."
Is that right? I really don't know.
"Whatever floats your boat, I say"
If Bennett hadn't been a sanctimonious prig--and a liar--nobody would care about his gambling. But he grew wealthy--and, as a result, was able to finance his gambling "habit"--by preaching "virtue" to others, and getting paid handsomely for it.
Query how many of those who paid Bennett to be preached to, would have paid him if they knew that more than a bit of the money would be going to finance his gambling debts.
