Doubling Down on Price Is a Losing Strategy
If you’re like me, when the name Don Johnson comes up, you jump straight to the dapper Det. Sonny Crockett of the hit TV show, Miami Vice. In the current edition of The Atlantic, Mark Bowden tells the story of another Don Johnson.
The article—titled “The Man Who Broke Atlantic City”—explains how an expert gambler won a total of $15 million from playing Blackjack at three Atlantic City casinos in a short period of time. For anyone who’s left a casino with a thinner wallet, it’s a David vs. Goliath story that warms the heart and provides equal parts of hope and justice.
Upon further review and after a deeper dive into the story, however, I became less excited and more concerned. Johnson is a very smart guy and extremely good with numbers. He knew that the odds of Blackjack were against him. He also knew that total revenue taken in the 11 Atlantic City casinos had fallen from $5.2 billion in 2006 to $3.3 billion last year. Competition had spread with the rise of gambling in other states, and Atlantic City was desperate to attract high rollers.
Is this starting to sound familiar?
Johnson began negotiating improved odds with the casino, including 20 percent off any of his losses over $500,000, playing with a hand-shuffled, six-deck shoe, the right to split and double-down on up to four hands at once, and a “soft 17.”
In the casinos’ desperation to get him in the door, they essentially gave him 50/50 odds and then insured him against 20 percent of the downside risk. With this deal in place, Johnson went on a rampage and won $5.8 million from the Tropicana, $5 million from the Borgata, and $4 million from Caesars.
Yep, once he secured the deal with one, he had the other casinos match it. They fell right into place.