A Story from Frank Kneeland

For the first six months of the Gambling with an Edge podcast, my co-host was Frank Kneeland. One of Frank’s claims to fame, video-poker-wise, was that he managed a large team of video poker players for two years in the early 1990s. On one of the shows, about six years ago, Frank told a story about a player on his team way back then.

Video poker teams at the time primarily chased progressives. If a game was breakeven at $8,000, his team might start playing at $11,000 or so (every team had its own strike numbers.) The team members would get a $10/hour “salary” and some percent of the royal if they hit it. The royal money would go to the team owner, who would pay all the taxes — minus the expenses of paying his team members. The tax laws have changed since then, and video poker teams are far less common than they were then.

I may have a few of the details incorrect in the story, but I’m sure I have the gist correct. I’m sharing it because it provides a lesson today

The player involved, “Joe,” had played on Frank’s team for several months. As far as Frank was concerned, Joe was the perfect employee. Joe would show up when called and stay as long as needed. Some players are “high maintenance.” Not Joe. He quietly played and rarely had any special requests.

One day Joe asked Frank if he was about to be fired.

“Fired?” Frank asked. “You’re one of my best employees! Why would I fire you?”

“Because I’ve never hit a royal flush, and obviously the success of your business depends on hitting royal flushes. Since I can’t seem to do that, you must think of me as an undesirable employee.”

“Hardly!” Frank replied. “I really don’t care who hits the royal. That’s all pretty random. But if I have enough competent players playing when the progressive is high enough, I’ll end up ahead. So just keep doing what you’re doing and don’t worry about it.”

Why do I bring this up today? After all, I hardly ever play progressives.

Because there are a lot of players really concerned about their score. If they are ahead, they figure they are pretty good. If they are behind, they figure the opposite. (Of course, players who don’t keep track of how much they are ahead or behind don’t need to worry about this. They have other problems we’ll address another time.)

The key to success, as Frank realized, is playing when you have the advantage. That edge can come from the game itself (as it did back then) or from the slot club, mailers, promotions, or sometimes other things. If you’re playing when you have the advantage, and not playing when you don’t, on average, good things will happen.

You just don’t know when those good things will happen. Every player who plays long enough will go through the type of dry spell Joe was experiencing. I have. Several times. And I’m confident that with my skills and game selection, if it happens to me it will happen to you too. It’s just part of the game. Not a fun part, to be sure. But a part that will surely show up from time to time.

Joe’s “problem,” if you want to call it that, is not that he was running bad. Since he only played when and where Frank told him to, the team as a whole was playing with an edge. Since he was getting $10 per hour, plus a bonus that he hadn’t collected yet but would when he finally hit a royal, Joe was personally playing with an edge.

Joe had one advantage over the rest of us. His salary guaranteed he couldn’t go broke while gambling. (He could certainly go broke if he overspent his income, but gambling losses would never cause him to go broke.) The rest of us don’t have that safety net. At the same time, I wouldn’t want to play for $10 an hour.

Joe was giving up expected value for the sake of a guaranteed salary. That fits well with some people. Especially people without the skill and bankroll to successfully play the games profitably. But also people who are risk adverse — who just can’t stand to lose.

I don’t like to lose. But it doesn’t bother me very much. I’m confident that things are going to turn out pretty well over all and today’s score doesn’t matter too much.