Chapter 144: Planning for Binion's

Thursday, April 28, 2005 (Continued)

When my family had left to go home, Prof, Vanessa, Julia and I went to the adults' study. There, Prof said, "Almost everyone we talked to suggested Binion's Horseshoe Casino. Some of them had other ideas as well, but Binion's was easily the most frequently mentioned and seems the easiest answer to our problem. Most of our advisors said we'd just need to turn up with the money and tell them what we wanted. It'd get bumped up to the boss, but he should approve it. It's happened several times in the past and Binion's pride themselves on people literally walking in off the street and placing high wagers. They obviously advertise it well, because it was very widely known.

^-- "So, theoretically, we could fly down to Vegas right now and get our wager accepted. We don't need to do any preparation to make that happen." You can imagine how happy I was at this point! "Unfortunately there are a couple of problems..."

#1: <Why is there always an "unfortunately"?>

" ... All the historic examples we were able to find out about were even-odds wagers. Usually betting on red or black on a roulette spin. We want to bet on a single number at 35-to-1 odds and there's no history of Binion's accepting a bet like that. However, their advertising clearly states they'll accept ANY wager on their games, so they shouldn't refuse ours. They're not legally bound to accept it though, and we were told several times that if someone turned up and tried to place a wager so large that Binion's couldn't pay out on it, then they'd have to refuse. Our initial bet will be quite small though, so even at 35-to-1, the possible payout is of a similar size to the payouts on bets they've accepted before.

^-- "All things considered, Vanessa and I think they'll accept our wager, but the obvious next step is for us to phone them to ask. We want to do that anyway, for other reasons, such as anonymity. It's not essential, but we'd prefer my name is kept out of the press, as we want to publicly claim that you earned the money. We could still claim that, because we could claim you developed 'the system' we used, but I'd rather people think you earned the money in a more acceptable way. Anyway, calling first also tells us whether they'll let us play. If they say, 'No', we can go to Plan B." In response to my obvious interest, Prof said, "Let's not worry about that now. Hopefully we'll never need it, as it's not nearly as good as a quick hit-and-run on Binion's.

^-- "I said there were two problems with Binion's. Assuming they accept our first wager and it wins, we have a significant problem placing a second wager. Their advertising repeatedly states, 'Your maximum bet is your first bet.' What I had in mind originally, and still prefer, is that we go down with $100,000, but we only bet $50,000 the first time. It'd make it easier if we could bet the $100,000 and be guaranteed of winning it, but that's too risky. You might get nervous, someone might bump you at the critical time, or someone might step between you and the wheel, blocking your sight of it, etc. Too many things like that could go wrong, so we bet half our money. If our first bet loses, I'll keep betting half of our remaining money, until we win, or until you walk away because there's some problem that you can't overcome.

^-- "Assuming our first bet wins, then we win a profit of 35 times $50,000, which is $1.75 million. We want more than that - because we're very greedy people, haha - so we want to keep betting. The amount we want to win is $10 million. $10 million less the tax on it, less the two $1 million emergency funds, less the amounts you indicated you wanted to pay all the 'minor participants', leaves you about $2.7 million for the mansion and any incidental expenses - new cars, etc. With what Julia and Vanessa have been talking about doing at the mansion, you're not going to have a great deal left over. In other words, $10 million is the minimum you need to achieve the goals you've set.

^-- "To win $10 million, $1.75 million at a time, would take six wins in a row. The chance of us winning six 1-in-38 odds rolls in a row, by luck, is just under 1-in-3 billion. Binion's management are NOT going to stand by and watch us win spin after spin! Even winning two spins in a row would make them deeply suspicious. Any more than that and they'd be certain to stop us playing and probably accuse us of cheating.

^-- "So to win $10 million we have to increase our bet, which is in conflict with their 'Your maximum bet is your first bet' rule. The obvious solution is for us to go away and come back another day. Winning $1.75 million would enable us to immediately start looking for and maybe to purchase a mansion of the size we're talking about. All our other uses of the $10 million are deferrable until after we get possession, including the tax on the first win, but the $600,000 tax bill would become a problem if we couldn't do the second bet for any reason.

^-- "We'll ask Binion's at the end of our first visit when we can come back and bet more. If they say any time less than a month or so - that's the shortest it could take to get possession of a new house - then there's no problem. If they insist on a time that's much longer, then we'd just get someone else to front you. Not Vanessa or either of The Boys because the commonality of surname would give it away, but your father for example. That's an issue to worry about on another day. Vanessa had an idea for our cover story with Binion's. I'll ask her to tell you."

Vanessa took over, "Prof will call Binion's, probably tomorrow. He'll tell them that he's in a terrible situation, and that he desperately needs to have a million dollars, but all he's got is $100,000. He'll say that his only hope is to go to Binion's, bet half his money - $50,000 - on a single number on roulette. If that loses, which he'll say it probably will, to keep betting half of what he's got left, until he either wins the million, or is wiped out.

^-- "Binion's won't care about any of that. Casinos only care that people bring them money, and they've probably heard a million sob stories, so they'll have no interest in Prof's. When you play, you will be doing what Prof told Binion's: betting half your money, including halving your bets if you lose. Eventually, we hope, you'll have a very good win. Hopefully on the first spin, but it could be later.

^-- "What happens next depends on how many losses you have first. Assuming you win on the first spin, as you say you can, then you win $1.75 million. Prof has told Binion's that he needs $1 million, which he'll remind them of, so he'll have $750,000 of 'extra money'. After he finishes acting shocked that he won, Prof will say that he wants to bet the extra money, 'while his luck is running so hot'.

^-- "More likely than not, Binion's won't let him, because it breaches their maximum bet rule. Prof will ask how long he has to wait before he can come back and bet what he wants. If they say an hour, six hours, or even a day, you could stay down there and try again when you're allowed to. If they delay you any longer than that, you come home, and we get on with buying the mansion. When the time is right, you and Prof - or you and someone else - go down again and bet what you need to bet to bring the total up to $10 million."

Prof said, "They're most likely not going to let us play again any time soon, in which case we'll go home, and make a whole new plan while we're waiting, based on our greater knowledge of how they work. There's no point in planning now for our second stage of betting under that possibility. Assuming we're allowed to play again within an hour or so, then we have to have our betting plan already worked out. We might need to change it if something unexpected happens, but I'd much rather have our scenarios all worked out in advance.

^-- "There are many different scenarios based on how many losses we have first. If we have five or more losses before our first win, then the win doesn't even get us back to our original stake. We can keep playing if we want to, though, because we're still betting less than the maximum we established by our first $50,000 bet. If we lose about twelve times in a row, it won't be worth continuing, even if you discover what to do. We'd have to win too many spins in a row to get up to $10 million. We'd be better off leaving, and if we were absolutely sure, come back another day with another starting bankroll. Of course, if we're losing spin after spin, it'll be up to you to let me know whether it's worth going on. If there's an insurmountable problem, you should walk away. If I see you do that, I'll call it quits too, as there's no point in throwing our money away.

^-- "But, assuming we get a win on the first spin, then we have $750,000 extra. I wouldn't attempt to bet that much on a single number. If that won, it would take our total win to $28 million, and it's doubtful Binion's would be able to honor that. It's pointless risking our successfully walking away with $10 million, to chase $28 million that can't be paid. For that same reason, it's highly doubtful Binion's would accept that bet in the first place.

^-- "My plan is, with $750,000 extra, to bet $250,000 on each of three different numbers. That nets a profit of $8.25 million. That plus the $1.75 million from the first spin, is exactly $10 million, and very neatly equals your goal. One reason I particularly like doing it this way, is that it doesn't make our winning twice in a row look so suspicious. Winning two 1-in-38 spins in a row has a 1-in-1444 chance, which is getting worryingly unlikely. But wining a 1-in-38, then a 3-in-38, totals 1-in-481, which isn't so shocking.

^-- "Hopefully Binion's would also think that if we'd been cheating then we would have bet on a single number again. Why would we waste $500,000 betting on two other numbers if we knew which one was going to win? Hopefully that'll give us some appearance of honesty. I'll even make sure I choose three numbers that are well apart, so it doesn't look like I know anything about where the ball is going to land.

^-- "There are many other scenarios for if we lose the first spin, then win our $25,000 bet, or if we lose the first two spins, etc. I won't bore you with them, as they don't affect your job. I can show you the spreadsheets for them later, but the bottom line of all of them is that we achieve a total win of $10 million, or as little over that as possible. I wanted to minimize the amount we win more than $10 million because doing so makes our gambling seem more believable and less like cheating. We don't want our win to be held up in the courts for years because it seems too unlikely.

^-- "Structurally, there are two major changes we could make to what I've described. The first is to include deliberate losses. Vanessa and I have discussed different ways of doing that: losing before our first win, losing after our first win but before our second. Maybe both, and maybe so many losses that we end up needing to win several more spins to reach our goal.

^-- "It seems to us that if you arrive at the casino a few minutes before I do, and practice for a while - not betting, just practicing your technique on their tables - then there's a good chance you'll be confident of 100% accuracy. If that's the case, you could pass me a signal, and we could adopt a cat-and-mouse type of approach. I'd still never bet all our money on one spin, in case someone blocked your sight at a critical moment, but other than those sorts of accidents, a 100% accuracy skill would enable us to play all sorts of misdirection games. We could have many $50,000 bets, for example, even dozens of them, only winning very rarely, to look more normal.

^-- "Vanessa and I laid out many different betting scenarios, and tried to look at them as a casino boss would. To our eyes, they didn't seem much more believable than simply winning two spins one after the other. The problem with losing, of course, is that we need to win more to compensate for it, so the total of all our wins has to rise. We think the casino bosses are going to notice the number of wins as much as anything else, so seeing three or four wins in a short period, even with a few losses spread among them, could look even more suspicious than two wins in a row.

^-- "There's also the worry that the cat-and-mouse approach takes much longer. It'd be very annoying, for example, if you or I got kicked out of the casino before we could put in the final win. If we go bang-bang - that's what Vanessa and I call getting two successive wins - it could be over much faster, so there'd be less time for anything to go wrong. Do you have any preferences on what we should do about throwing in some deliberate losses?"

I answered, "Yes I do. We should DEFINITELY do whatever you think is best, because I haven't got a clue! Haha. Seriously, I've got no idea how casino people think. I'll totally defer to you about all of this."

"I was more asking because there might be some aspects of your ability that make different betting systems better. Bang-bang might be harder or easier than other approaches?"

"No, there's nothing like that. Only the obvious point that the fewer games we play, the less often I have to do my thing. That appeals to me."

"Okay. We prefer the bang-bang strategy too. That's assuming we're allowed to almost immediately play again, with a bet over the initial maximum. If we have to come home, we might do something completely different than bang-bang. We're not going to worry about those scenarios now.

^-- "Moving on, the second structural issue is whether or not you can achieve 100%. You did on our test run, but maybe Binion's will be different for some reason. Is that possible?"

"Umm. I don't know enough about casinos, so I can't tell whether Binion's would have the same style of wheels. If they used balls that weighed more than about five pounds, then I might start having trouble. If the balls weight ten or twenty pounds I'd be in big trouble, but they'd have to be ridiculously large balls, I would think. And the wheel itself would have to be much larger too, because the pockets would have to be larger, unless the ball just sits on top of a pocket.

^-- "Also, if they didn't have those little metal things halfway up the wheel, to make the ball bounce around so much, then that'd complicate things a bit. I've only seen the wheels at the casino we went to, and on that video you showed me, and they looked the same.

^-- "I've seen roulette wheels in movies or on TV, and they seemed the same too, but I wasn't exactly studying them. It SEEMS they're all the same, but I won't know for sure until I'm in Binion's and get some practice. For all I know there could be some weird complicating reason, like fluctuating magnetic fields, or something. Which reminds me, isn't there a risk that Binion's will cheat if there's a lot of money at stake?"

Vanessa answered, "We don't know, which is another reason why we don't want to bet all the money on one spin. If they do cheat, it should be apparent to you, shouldn't it?"

"Perhaps. Sorry, but there are too many unknowns for me to be sure of anything. That doesn't create a warm, secure feeling, does it?"

"No, but you get to practice for a while before Prof commits any money. If you think there's a problem you can send Prof a signal to abort, and he can tell them he has a bad feeling and doesn't want to do it yet. Your being able to practice first makes a big difference to our confidence in this scheme. From what we can tell, Prof will be able to choose which table he plays on. That's what's happened to people who've done something similar in Binion's before. He can walk around and choose the same table you're on. So you'll even have been practicing on the same table. If you've had several perfect results in a row, you should be able to get at least one more when Prof's betting."

"Yeah. It'd certainly be a horrible shock if I've had a dozen perfect results, then get Prof's first bet wrong. It won't be because I'm too nervous, because I can control myself better than that. It'd be an external reason, and that'd be worrying. We'll just have to wait and see, won't we?"

Prof said, "Yes. Let me show you my profit share schedule, assuming we win $10 million, and see what you think of it."

Prof handed me a page, saying, "I've taken out the tax right at the start, so all these numbers are after-tax. In practice, the actual amounts that'll go into our bank accounts will be 50% higher than these figures, so each person can pay their own tax, which will vary somewhat but I've assumed 33%."

The page said:

Pre-Tax, $10,000,000
After-Tax, $6,666,667

Mark, 56%, $3,733,333
F & S, 10%, $666,667
V & P, 25%, $1,666,667
Andrew, 1.5%, $100,000
Robert, 1.5%, $100,000
Julia, 3%, $200,000
Carol, 3%, $200,000

Prof explained, "There are two types of payments buried in there: Gifts and what I'll call Earned, although that's a bit of a joke. Andrew's, Robert's, Julia's and Carol's shares are entirely gifts: arbitrary amounts you indicated you wanted them to get. You also made an issue out of the two sets of parents getting a good chunk, so I've allocated enough percentage points to give each pair of parents two-thirds of a million each. Actually a million before tax, which is a very pleasantly round number. Those gifts are why the amount we need to win has risen all the way to $10 million.

^-- "You'll notice that 'V & P' - Vanessa and Prof - are getting $1,666,667. The $1 million part of that is going to the emergency fund. Your parents - 'F & S' - are getting their million fund out of your share. I know you don't care about those divisions, but the IRS can get snooty, and splitting the money this way is more justifiable as your parents didn't provide much capital investment. So after your paying tax and the Anderson's $1 million emergency fund, you'd have $2.7 million left. That's to buy the mansion, with a little left over to go clothes shopping with Julia."

Julia laughed, adding, "I hope so, because my $200,000 won't last long, haha."

Prof asked, "Of your $2.7 million, you probably shouldn't spend more than about $1.7 million on the initial purchase of the mansion. That should leave enough for the detached wing, alterations to both buildings, furnishings, etc. When we first started looking at mansions, we had about $1.5 million in mind as the purchase price, so that's risen usefully. So what do you think of the shares? Do they look something like what you had in mind?"

I said, "I think Julia and Carol should get more, being my..." I was cut off by Julia kissing me.

Prof took advantage of my silence to speak, "The problem is justifying that to the IRS. We can justify your share based on your capital input, and mostly because it was your idea - you being an acknowledged mathematical genius makes that hard for them to argue with. But it'd be very hard to explain what 13- and 16-year old girls did to justify more than $200,000. Other than kiss you so much, from what I can see, haha. The only real input they could justifiably have is freeing up your time so you could use it on this project. Allocating them 3% each is probably not excessive for that, but much more than 3% would be awkward to justify."

"In that case I think it's perfect as is."

The others talked about the split some more, but I thought it was fine. Vanessa raised the issue that I was spending my share on the house that everyone would be benefiting from, and there was a very good chance that the vast majority of my money would be used up, leaving me with not much. She suggested knocking a couple of percentage points off their share.

I interrupted and vetoed that. "Prof has set up the percentages the way I told him I wanted, and I'm quite happy that I might be the first person to run out. I can always get more one way or another. I will always have me in my life, whereas if something bad happens you may not. My intent is to pay you as much as possible up-front for all you've done for me, rather than 'owe' it to you. We all know this casino idea never would've gotten off the ground without all the help you and Prof have given me. Not to mention all the help you've given me in so many other areas..." You get the idea, LOTS of mutual expressions of appreciation went around for a while.

When everybody had thanked everybody else a sufficient number of times, I asked, "So what happens now?"

Prof said, "Vanessa and I have a reasonable idea of what I want to say to Binion's when I call them, but we're going to mull that over until tomorrow just in case further thoughts occur to us. We want to get our first approach to Binion's right, so waiting a day is advisable. Assuming we call them tomorrow night and all goes well, then we could be going to Vegas very soon. I want to go via Los Angeles on a weekday so I can set up a bank account there, and another one when we first arrive in Vegas. If we win, I don't want our winnings wired directly into our normal Corvallis branch. The bank staff are going to gossip if a wire for $1.75 million or $10 million comes in from Binion's Horseshoe Casino. We want Binion's payment to go into a Vegas account, which we'll immediately wire to my new account in LA. I'm going to use two different banks to make it even harder for Binion's to pull the money back if something makes them want to try that.

^-- "We'll wire it from LA to Corvallis in irregular lumps and to different accounts. If it's only $1.75 million, which is the most likely winning result, we'll wire it mostly to your account, and maybe some to your parents, on different days, to obscure the total. If it's the full $10 million, we can still spread the wires over a couple of weeks, and we can do the profit split you okayed at the same time. The amounts will actually be 50% more, as they'll be pre-tax, but the percentages will be as agreed. Your family and my family use different banks, so no one should be able to work out where the money came from. How does that sound?"

"A hell of a lot better than my last vacation job, haha. It sounds wonderful."

"Yes, it's not too shabby. So, if tomorrow's phone call to Binion's goes well, we can probably head off Monday morning. Fly to LA, set up an account, fly to Vegas, set up an account, and then go win some money to put into the accounts. How does that sound?"

"Monday! Wow. That sounds superb. Umm, what time will we be back on Monday?"

"It's impossible to say. If we win our first bet, Binion's could tell us we can increase our limit if we wait four hours, for example. I also wouldn't be at all surprised if you come back before me."

"Really! Why?"

"Especially if we win $10 million, Binion's might not want to pay me. I might have to stay down there for a few days to get lawyers on the case, etc. After the playing is finished, you'll head straight to the airport and straight home. There's no merit in you hanging around. Your getting connected to this would cause nothing but problems, so you leave. I've already told my department that I'll probably need next week off, so I'm able to hang around and do whatever needs doing. Vanessa and I have been researching this too, and there are several things we can do to put pressure on Binion's to release the funds."

"Wow. I REALLY underestimated the complexity of this job, didn't I?"

"We're just playing safe. The previous winners from Binion's never had any trouble being paid, but none of them won as much as we are aiming for, nor so suspiciously, so we're playing safe. There's a lot of money at stake, so we're preparing carefully."

I spent some more time thanking them, they spent some more time thanking me. "After all," Prof said, "you're paying us a million before tax, and the emergency fund will be in our name too, so it seems reasonable that we should actually do some work! Haha."

We joked around a bit, then I thought to ask, "You knew that my family use a different bank than yours, so I'm guessing you asked my parents?"

"Yes. I asked for their account numbers - yours and Carol's too - for business purposes. They don't know any more than that. Why?"

"They don't know how much money they could be getting?"

"No, they've no idea. They're going to get a pleasant surprise when a million dollars are deposited, aren't they?"

"Especially when we tell them that it's nothing to do with the mansion, that it's entirely theirs. Hehe, I'm looking forward to that. I just thought of something: can we do this on Tuesday rather than Monday please? Would that be okay?"

"Sure. Have you got something important on Monday?"

"Monday evening is when my Aikido instructor spends three hours giving me one-on-one training. It's incredibly good training - far better than I could receive in a one-hour class with a couple dozen other students. I probably learn twenty or thirty times as much, so I'm loath to miss it, especially considering how useful Aikido has been recently. The $10 million can wait a day, haha. How bizarre it is, to say that!"

Prof said, "Not something you hear very often. It's fine for me too, so Tuesday it is. I'm assuming you've got no problem taking a day off school?" Prof was smiling to indicate he knew that answer to that.

"Hmm, let's see. School versus $10 million - hard call! Haha. Yes, I think I can take time off school."

"Tuesday it is then. Hopefully by Wednesday you'll owe the Government a great deal of tax. That's not likely as I expect $1.75 million is the best we can hope for out of the first trip."

"Yeah, I understand that. The timing for that is up to Binion's so we'll just have to wait and see."

"That's right."

Julia, who'd been thoughtful recently, said, "I'm right, aren't I, that Mark's share is 56% of $10 million pre-tax, which is obviously $5.6 million?"

"That's right, $5.6 million pre-tax. Assuming we win $10 million, obviously."

"I didn't know about your idea to have accounts in Vegas and LA. I'm just thinking about how that'd work. You said you wouldn't send the money up in one lump, to avoid people knowing where it came from. That you'd drip feed it over a couple of weeks."

"Yes. There might be a big time gap between the first and second wins though, depending on Binion's."

"Sure, I got that. I was just thinking about how we'd 'go public' about Mark's money. I've been thinking about that over the last week or so, and I didn't like the idea of a huge lump of money arriving all at once. Your way is much better. I was just imagining spreading out Mark's money's, so it arrives at the rate of about $1 million per week, or $200,000 per day. It'd take about six weeks for all of it to arrive. We could pretend he had a business in LA, and that he earned money every day, which he sent up once per week. So every day at school I could ask Mark how his business went yesterday evening, and he'd say something like, 'Oh, pretty good - about $245,000', or, 'Only $125,000 yesterday, because I had an assignment I had to do'. Keep the average at about $200,000 per day, and transfer up the weekly total each week. After six weeks, he could say that $5.6 million is enough for a while, and he'll put the business on hold while he studies for his exams. That sort of money being earned day after day would seriously impress everybody. They'd be creaming themselves about his casual attitude, and his stopping his business to study for the exams. That'd work, wouldn't it?"

We all chuckled or laughed. Vanessa commented, "You do like your little schemes, Julia."

"They're good fun. We wouldn't necessarily do it exactly like that, because that sounds a bit contrived, but something along those lines could be fun. Can you send the money up daily, rather than weekly?"

"You can do wires whenever you want. Several times a day, if you wish. There's a small fee, but I think Mark will be able to afford those. Or, seeing as how this seems to be for your enjoyment, you should pay them."

Julia said, "I like the idea of daily better. If there's any doubt around school - and there's bound to be - then after a few days Mark can bring in a printout of his account. Daily deposits of roughly $200,000 for several days will look suitably impressive! If someone's mother, father or older sibling works in the bank, and is nosey, they can confirm the transfers are real and do come from LA. All we need is a good sounding explanation of what his business is, because he's bound to be asked that over and over."

Vanessa suggested, "Seeing as how he's pretending to operate out of Los Angeles, how about he trades in silicone futures, haha."

I knew what futures trading was, as I'd seen it mentioned on TV a few times. And I knew that silicone was a reference to breast augmentation. I may not know much about biology, but breasts are somewhat of a hobby of mine, so I tend to pay attention to every conversation I hear that mentions them. While Prof and Julia chuckled, I asked, "Do people really trade silicone futures?"