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Bob Dancer writes a video poker column for beginners to experts. He also writes a column with Jeffrey Compton, "Player's Edge", featuring information on promotions at various Las Vegas casinos. Player's Edge is published each Friday in the Neon section of the Las Vegas Review-Journal. Click here to send Bob Dancer an e-mail.

For a 3,000-word preview of Bob's juicy new novel, "Sex, Lies, and Video Poker", visit www.bobdancer.com.

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April 17, 2007

It's All Variance

I didn't want to do it.

Focus now on Saturday, March 31, 2007. It was the last day of the Station Casinos $1.25 Million Point Challenge. Over the previous six weeks I had played $2,900,000 through their $5 NSU machines (now gone, alas) and I had the ninth-highest score. If I ended up anywhere between fourth and tenth, I'd collect $5,000. If I slipped to eleventh, I'd collect "only" $2,500. First, second, and third got larger prizes but they were out of reach.

The week before I thought my lead was insurmountable. I thought I was safely "top ten" and only had to wait it out until the $5,000 prize was mine. However, the two players who were currently in tenth and eleventh had made major moves. It was clear they weren't going down without a fight. For them both to catch me (and hence move me down to eleventh place) would require them both to play many hours on the last day. It was possible for them to do this, but not likely. I figured that at this point I had a 90% chance of being in the top ten even if I didn't play at all.

Part of the problem is that I didn't know who my competitors were. The point challenge was being played at nine different casinos and the scores were posted by Boarding Pass or Amigo Club number, not by name. If I knew who was in tenth and/or eleventh I could watch them. If they weren't going go play, I wouldn't either. But I didnÕt know them nor at which of the nine Station/Fiesta casinos they were playing at.

But I DID know who was in eighth place, and that score was 79,000 points ahead of me. "Johnny" had built up a huge lead in the first two weeks and hadn't played in over a month. Although I could be wrong, I thought I heard Johnny was in Reno over the weekend so he obviously wouldn't be adding to his score today. Assuming that's true, I could play another $79,000 through the machines and guarantee a top ten finish. Even if the players currently in position ten and eleven put on major moves, it would be Johnny who would be bumped out, not me.

Moving from a 90% chance of winning to a 100% chance is worth something. How much would it likely cost? My expected loss playing $79,000 on a 99.728% game was $215. This would be offset by slot club points (4x points today for me and my competitors) that would be worth $316 if I wanted to travel, although Shirley and I currently had more than $40,000 worth of "travel bucks," so additional ones would possibly never be spent.

Everything considered, I figured it was worth it to play. It would take me four hours or so and I had the time.

As a question to the reader, ask yourself if you consider this a smart move on my part? Assume I knew the game well, had sufficient bankroll, and was comfortable playing four hours on a $5 machine. Answer this question, and then we'll go on.

We'll proceed to the tragedy. As it turned out, I lost $10,000 earning those 79,000 blasted points, trying to guarantee me the extra $2,500. I had several close calls for a $20,000 royal flush and several near misses on $5,000 sets of deuces, but nothing popped. I ended up losing almost 50 times as much as I predicted.

To twist the knife a little bit more, when they posted the final scores a few days later it turned out that I hadn't needed to play at all. Had I stayed at home that day, I still would have ended up in tenth place, which paid just as much as ninth place. I was correct that Johnny didn't play any more (and would have remained in eighth place), so my passing him had no effect on the final prize money distribution.

So I ask you again: Was this a smart move on my part to play the $79,000?

I've described a fingernails-on-the-chalkboard situation that is familiar to every intelligent gambler or stock market investor --- although many folks are used to either more or less zeros than the numbers presented. You make your predictions based on the best information available, and then occasionally everything goes south. Nobody's prediction is dead-on every time. Sometimes you're high. Sometimes you're low.

In my opinion, it was a smart move to play the $79,000 and losing the $10,000 was unfortunate, but hardly important. Every decision I make at gambling needs to be made before I know what the final result will be.

If you thought it was a dumb move before you knew the result, fine. We disagree, but every gambler needs to live and die by his own decisions. My way has been very good to me, but there are a number of successful gamblers with different styles than mine.

The people prompting me to write this article are those who believed it was a smart move up front and after it was over believed it to be a stupid move. These people don't appear to understand the decision-making process. There are no do-overs in video poker.

We've all been up. We've all been down. Those who consistently make good decisions end up positive and can make a fine living from this form of investing. Those who don't end up negative. We need to concentrate on learning to make good decisions rather than paying too much attention to the results of one particular day. If you're gambling within your bankroll, one day's result is essentially irrelevant.