Not long ago Bonnie and I invited a friend to join us for dinner at a casino restaurant. The friend, a woman in the same improv group in which I participate, was not a gambler. “Sandy” was a senior citizen and was retired.
At one point, Bonnie and I told Sandy of a time I was playing in downtown Las Vegas and had gone through all of my cash on hand. I was playing a slot machine, in significant positive territory, and I didn’t want to walk away and leave the machine for others to capitalize on. So, I called Bonnie and asked her to get some cash and take Lyft to downtown (Bonnie no longer drives.) She agreed.
Sandy asked how much we were talking about.
I didn’t remember for sure, but I told her it was probably $10,000. It was very likely more than enough, but if she was going to make the trip, we wanted to make sure we didn’t run out again.
Sandy remarked that this was way too large of an amount not to be earning interest.
I conceded her point — but suggested that it was a different calculation for a professional gambler.
“How come?” she asked. “Interest given up is interest given up, no matter what your profession is.”
I changed the subject, but have been thinking about this. While Sandy wasn’t wrong, here is my thinking on the subject:
- Gamblers have bigger cash swings than most people. Sometimes the swings go against you, and you need a “cushion” available for when that happens. If you have lines of credit at every casino you frequent, this can serve as a sort of short-term cushion. While I have lines of credit at a number of casinos, I regularly frequent casinos where this is not the case for me. So, I need a buffer.
- Gamblers for “large” stakes need bigger cushions than gamblers for smaller stakes. I’ve had some monthly negative scores in excess of $30,000 over the past few years. I need a way to cope with these swings. Overall, I’m a winning player, but not every week or month (or even, occasionally, year).
- Banks do not like large regular cash deposits and withdrawals from gamblers. Numerous gamblers have had banks terminate their accounts for such activity. I’m not sure why banks act this way, but they do. Perhaps they’re nervous about money laundering situations and don’t want to risk it.
- Even if banks did allow large cash deposits and withdrawals from gamblers, banks are not always near the casinos and not always open when the money is needed. Casinos are open 24 hours. Banks aren’t.
- Sometimes casinos will lock up a machine for a few hours for a player. Sometimes they won’t. If a player has cash in a safety deposit box at a bank or casino near several other casinos, this can be used to fulfill cash needs for those casinos fairly quickly.
- If I did run out of cash, I have gambling friends I can count on to lend me short-term money. I very much try to avoid this because if I borrow, I have to be willing and able to lend money to others. While most gamblers to whom I have lent money have paid me back reasonably promptly, there have been exceptions. I would rather not open this door.
- I don’t know Sandy’s exact financial circumstances, but I suspect she is living closer to the edge than I am. She needs to make every penny count, so to speak, and to earn them while she can. So, she has developed rules of thumb that serve her well for this purpose. A good rule for most people is to keep your money working for you and don’t leave money uninvested.
While I don’t consider myself wealthy, I have enough money to comfortably gamble for considerable stakes without threatening my lifestyle or retirement status. So, I can afford to keep more cash around than many other people can. Very little of that is at home (for safety reasons). Most is spread out in safety deposit boxes in casinos I frequent.
“Sometimes the swings go against you, and you need a “cushion” available for when that happens.”
Better change “Sometimes” to “Frequently”.
I have been told on good authority that Mr. Dancer’s proximity to “the edge” is about half the distance to Neptune.
And while he may not be Billy Walters, he does not spend nights in a van down by the river.
A slight tangent to the cash on hand and loss of interest discussion, but one way I rationalize keeping cash is that there are other casino perks that help me offset the loss of interest. The status I have at the casino closet to my house affords me rebates on all ATM transactions over $300. The ATM fee is $7 and my Fidelity brokerage debit card reimburses unlimited ATM fees. So I make a habit of withdrawing $300 nearly every visit whether I need it or not for an extra $7. That’s an immediate 2.3% return and I can afford to hold that cash for several months before the loss of interest even comes close to the ATM fee reimbursement.
If you pay a $7 atm fee to get the $300 then get reimbursed from your bank you are even. What am I not understanding?
I get the $7 cash directly from casino after turning in receipt. My bank reimbursed the ATM fee so I only get charged for the actual cash withdrawal. Result is a $7 profit for each $300 ATM transaction.
At our house we have a checking account we use for bills and house hold expenses. It is a credit union account that gives a 0.5% bonus at the end of the year for the average daily balance. We also have a Discover on line bank account where we also keep cash that earns about 4% a year.
Let’s use some made up numbers. Say I keep $40,000 in the credit union (CU) account and $40,000 in the Discover account. I earn $200 in CU and $1600 in Discover. I could move all the money to discover and then do a lot of money transfers to pay the bills. If I kept all the money in Discover and only transferred when bills are due, I could earn an additional $1400 per year, not a small amount. But, like the other interest, the $1400 would cost me about $325 in federal tax and $100 in state tax so the difference is now $975. Plus I have to keep track of all the bills, when they are due, etc.
Discover is a savings account. I don’t know if I can do monthly auto bill pay from that account or not. ( Worth looking into). At this point in life, I am willing to give up the $975 a year to simplify things. Also, that is an absolute maximum number. There would have to be some cushion in the accounts The max I could realistically earn is probably 85% of that or about $825.
The same with having cash in a very accessible account vs a higher paying, less accessible account. for gambling funds. Convenience vs rate of return. Sometimes, the lower return method has enough additional benefit to make a worthwhile option.
I’m still trying to get past the idea of having her get up in the middle of the night to come down to Fremont street to get him more cash. I’m pretty sure she is in her late 70s or so.
Again, I know you all just praise Bob but sometimes do a quick little reality check of the guy you are all fawning over.
Being in one’s ‘late 70s or so doesn’t always equate to sleeping through conventional ‘night’ hours. I’m 78. I fall asleep around 8 pm, wake up 11 pm or so on a good night; visit the bathroom; freshen the cat’s food and water dishes. Back to bed (recliner, actually) to watch some TV or read until, on a good night, fall back asleep. 3 am the cat wakes me up for whatever he wants. Bathroom again, cat’s needs, more TV/reading etc to try for another hour or two of sleep. Works for me.
My point being it is possible that Bob and Bonnie have this worked out based on her (and his) sleeping habits.
A wife helping out a husband at his job. What is wrong with that? Do you think the Uber rides are unsafe? That is a different topic.
Bob, will you ever teach classes again? Maybe a webinar style class?
Bob, will you ever teach classes again? Maybe a webinar style class?