Comments (5)

• TGGP

  It's too bad this was written before prediction markets. They have stunning degree of accuracy when it comes to estimates of the type discussed here. I've heard the Koch family have implemented such markets within their company to overcome the calculation problems that Mises and Rothbard stated would occur give a large enough firm.

  Published: August 3, 2007 5:32 PM

• Pepe

  TGGP,

  Could you please elaborate on "prediction markets" and perhaps site a layman's source?

  Are you saying Koch has some kind of internal market where managers bid against each other for resources therefore setting internal prices? (which, if true, I suspect would be very much guided by market prices outside of Koch)

  Thanks

  Published: August 4, 2007 8:34 AM

• N. Joseph Potts

  I imagine this chapter might have been written a little differently if the process of "counting cards" in blackjack had been known to Mises. The technique does not contradict Mises's generalities, but only appears to on first consideration.

  For this reason, I expect he might have digressed briefly into an explanation of why the technique represents nothing more than having found and exploited an aspect of casinos' practices in which the odds are not "stacked" in favor of the house.

  Published: August 5, 2007 10:15 PM

• gene berman

  Joe (Potts):

  
  "Card-counting" was known (but not widely) quite some years before the public-at-large became aware. Technically, this would have been while von Mises was alive and could have been cognizant.
  But the ordinary casino game of blackjack, involving non-counting patrons, behaves more or less like any other game in which the casino has a mathematical "edge." The edge arises as a result of two conditions of the game. The first (and more obvious) is that the "house" plays a fixed, robotic, "best" game: "hitting" 16 and under and "standing" on 17 or over. Against the house are arrayed a tableful of "less-than-best," limited (other than card-counting) at the upside but not on the downside; it's an "average" stategy against which the house must emerge generally a winner. But that's not the principal advantage enjoyed by the house. After all, in the casino game in which ties are "pushes," all players could adopt the (robotic) strong strategy of the house and, theoretically, fare equally.
  But the case is that the dealer is THE LAST TO RUN THE RISK OF (and actually) "BUSTING." And in this lies the principal advantage: those who have "bust" are not "pushes" if and when the dealer does likewise. The house is the more assured of the eventuation of their advantage the
  "fuller" are the tables.

  The potential for "counting" was first brought to a (limited) public attention in the mid-'50s when a paper was presented to a national mathematical society titled "Twenty-One--a Way to Win". I already had a dim idea of the potential because I naturally remembered many of the cards played in many card games (as do very many)and modified my play and betting in some roughly-thought-out accord. A dramatic illustration occurred when (in a "friendly" game in school, the dealer failed to offer me a "hit" on my two cards (both faces) because he had 20. I called him on the technicality and demanded my "hit." Annoyed, he asked what kind of chance I thought I had of drawing an ace. Before I could respond, he offered me a side bet against--at 5 to 1. I protested that the bet should actually be 12 to 1 to be fair but said I'd settle for 10 to 1. Meanwhile, I'd reflected that there were only 11 cards left in our single-deck game in the "day room" and that all 4 aces were among those 11 cards! I took the bet--$5 worth--got my ace (and, eventually, my 50 bucks).

  As far as actual "counting" goes,I did it only a few times, using a method published in the late '60s by a guy pseudonymed Revere--the foundation of all the systems to come. In a place in Vegas called the Silver Slipper which still dealt from a single deck in a $1 minimum game (in the mid-'70s), I ran a $25 stake up to $500 and then was faced with a crucial decision. I had the highest favorable "count" I'd ever experienced--a "plus 18" and so bet the whole $500. Wouldn't you know it--I got a double-down "opportunity" and wound up a $525 loser! C'est la vie!

  When the first casino opened here in NJ (Resorts International), it was a counter's dream--the game was single-deck and the dealers were pitifully slow. I went just once, won a few bucks, and became bored. But word spread and, even with the dealers getting better and the joint switching to multi-deck with frequent shuffling, the hoopla of people selling can't-lose systems and "blackjack schools" was intense. The only lesson to remember is that "fools and their money are soon parted."

  
  

  Published: August 6, 2007 8:19 AM

• AJ Goddard

  This i soff topic but...This might make an interesting article and I don't know if anyone has brought this up yet but my family and I were discussing the tax liabiility of the "lucky" person who happened to catch Barry Bond's record breaking ball. At what point would the "victim" be liable to the government to pay up the appraised value of the ball. What if the person immediately lost the ball, but hadn't yet insured it. Would they be liable for the taxes anyhow, etc.

  Published: August 6, 2007 2:52 PM