Before Don Johnson sat down to play blackjack at $100,000 a hand, he figured he - not the house - had the advantage in the game. Apparently, he was right.
From December 2010 to April 2011, Johnson won more than
$4 million from Caesars Atlantic City and about $5 million from Borgata Hotel Casino & Spa, also in Atlantic City. Then he won $5.8 million in a 12-hour session at Atlantic City's Tropicana Casino and Resort in what reportedly was a record loss for that casino, winning figures presented by the Press of Atlantic City show. Even with some losing sessions scattered among the big scores, he netted millions.
In phone interviews for my column in the Pittsburgh Tribune-Review, Johnson said he negotiated playing rules that cut the house edge to 0.253 percent for a player following basic strategy perfectly. He wouldn't specify all the rules, but said they included a hand-shuffled six-deck shoe, s17 (soft 17, or a hand of a total of 17 in which an ace is counted as 11), and resplitting to at least four hands. In addition, he could bet up to $100,000 a hand if he bought in for at least $1 million. For Johnson, the decisive factor was an agreement with the casino that they would reimburse him for 20 percent of his losses, once they totaled at least $500,000.
"You'd never lose the million," he said. "If you got to minus-five hands ... you would stop and take your 20 percent discount. You'd only owe them $400,000.
"It's a huge edge. I just think somebody (at the casinos) missed the math when they did the numbers on it."
He described his advantage in the game as "substantial" but declined to give a figure.
Johnson, 49, who lives outside Philadelphia, is chief executive officer of Heritage Development LLC, a company that offers computer-assisted wagering in horseracing. He once managed Philadelphia Park racetrack, years before it became Parx Casino.
He said his blackjack arrangement was "like going to the horse races and betting an even-money shot and only having to spend 80 cents on the dollar to get that shot."
Johnson said he didn't bother with card counting.
"The discount gives you a bigger edge," he said. "Why waste your time counting?"
Johnson said he's read books about card counting and knows professional players who are counters.
"But I don't think counting gets you all the way there," he said. "I think the discount is way more valuable than counting."
Johnson said he was allowed to play up to three spots at a time, but the betting limits changed. For three spots, the maximum bet was $15,000 per hand, for a total of $45,000; for two spots, it was $25,000 per hand for a total of $50,000; and for one, $100,000.
"I think that was part of the flaw in how they offered the game," he said. "The regression should have gone in the opposite direction." He said a typical arrangement at MGM properties and the Venetian (in Nevada) is three spots at a maximum of $15,000 per hand, two spots at $20,000 per hand or one spot at $25,000.
Johnson said his Atlantic City deal made it advantageous to play only one spot.
"If it's worth it to you to play $45,000, then it must be worth it to you to play $100,000," he said. "Especially with the discount, you want to get to that number quickly or you want to blow them out of the water. One or the other."
Johnson said he was not required to play a specified length of time or number of hands.
"There were no parameters on that. If you suffered a loss of $500,000, you got 20 percent back. It could have happened in the first five hands. I would have left, came back the next day, and started over. I would have gotten the discount starting over again. Under those rules, long term they can't win," he said. "They've changed that. They've corrected their error, and I've got to think about it now. The game isn't nearly as good as it was."
He said one change is that the 20 percent discount doesn't take effect until the player's loss totals $2 million.
"It's a much different game," he said. "Now they're spreading you out. You have to play a larger sample size of hands, so the negative edge that the house has over you has a bigger chance of catching hold."
He recalled one hand in which he split a pair and resplit to a total of four hands, with three of them doubled. That meant his original $100,000 bet suddenly grew to $700,000. He won all four. Two other hands in that session were similar, with multiple splits and doubles, he said.
Johnson said the key for casinos offering loss discounts is spreading out the house risk over enough big players. "If they can get the volume spread out over enough hands, they're going to get their house hold," he said.
Johnson said he played with his own money and that he occasionally placed a bet for the dealer.
"I like to put the dealer in the same position I'm in," he said. "If they win, they get a great tip. If they didn't win - well - they've got no risk."
He said the state's reaction to his winning spree could put a chill on high-roller betting in New Jersey. He said he's being told to pay New Jersey income taxes on his winnings even though he has never lived, owned property or done business there.
"That would be a precedent that might just kill off New Jersey gaming," he said. "I can't imagine any big player going there knowing that if he does hit them big, he might have a tax liability to them even though he's paying taxes in his home state."
He said he was being asked to pay under a provision tied to the introduction of gambling in New Jersey in the 1970s.
"It made sense when you had no other states surrounding New Jersey that had gaming," he said. "Now you have all these competitors involved. It becomes a nightmare for a player who wins big and plays in multiple states. He has to figure out what his P&L is in every state. It's ridiculous."
Johnson explained further.
"Let's say you won $1 million in New Jersey for the year, but you lost $2 million between Pennsylvania and Vegas. You had an overall net loss of $1 million. You lost money for the year, but the state of New Jersey may still come after you to try to require you to pay for what you won from them. That's where this doesn't work. The math doesn't work on that."
Johnson's winnings were first reported in The Press of Atlantic City newspaper. He said he went public after revenue figures showed the casinos had multi-million dollar blackjack losses and a professor expressed suspicions.
"I was a bit concerned that the wrong message would get out there," he said. "There was certainly no foul play involved. They'd offered a game that had a 20 percent discount with a $500,000 loss. With a $100,000-per-hand (bet), it was a straight-up edge."
Johnson said he doesn't view the loss discount as a comp. To him, it's "an adjustment in the betting odds. By my calculation, you actually wind up with a positive edge."
He said comps don't matter to him all that much.
"To be honest, what can they give you - a suite? Big deal. You're not even spending any time up in the room," he said. "If they give me the right game and the right discount, they could give me an umbrella on the beach."