On October 27 the Palms gave away $50,000 to one player. There were 40 possible tickets in the drum — if everybody eligible showed up. Some players had more than one ticket. When players earned the tickets they received somewhere between $100 and $3,000 but for the final drawing there was no second place. It was “winner take all.”
I made no attempt to earn tickets for this drawing — even though this was the biggest giveaway at the Palms in quite a while. I had a family commitment out of state on October 27 so earning one or more chances at the $50,000 would have been worthless to me.
Each ticket was worth $1,250 (e.g. $50,000 / 40 = $1,250) in EV but 97.5% of the tickets will end up worth zero. You don’t know which ones until after the fact. If I had one or more tickets I would have attempted to make a deal with one or more other players.
The deals I have in mind will not affect EV — but they will affect the variance. I would increase my chances of getting part of the $50,000 but eliminate any chance I had at getting the whole thing.
What deal would I make? Well, it depends. My “opening suggestion” might be as follows:
If the deal was just between me and one other player, and we both had one ticket, I might suggest that the winner pay $10,000 to the other. So one of us would get $40,000 and the other $10,000.
Now let’s consider a deal between me and Joe, with unequal amounts of tickets. If I had one ticket and Joe had two tickets, I’d suggest I’d pay Joe $10,000 if I won and Joe pay me $5,000 if he won. Joe would be paying half the amount twice as often, which comes out that both of us have equal equity.
It’s possible I might have two separate deals — either the same size or different. Perhaps one deal with Mary, where the winner paid $10,000 to the other and another with Joe, as listed above. Joe and Mary aren’t involved with each other — and I’m involved with both.
If the deal was among three or more players, each player would receive in proportion to how many tickets he had. For example, consider me (1 ticket), Joe (2 tickets), Pete (6 tickets). If I won Joe would get $6,000 and Pete would get $18,000 and I’d keep $26,000. If Joe won, I’d get $3,000 and Pete would get $18,000 and Joe would keep $29,000. If Pete won, I’d get $3,000, Joe would get $6,000, and Pete would keep with $41,000.
There is no unique best way to do it and any deal I would make would necessarily include one or more other players. Obviously their opinions on the matter would need to be considered.
There are tax considerations to think about. I’m not qualified to give tax advice. That said, here are a few ways to do it.
One (possibly illegal) way is for the winner to deal with all the taxes and the one(s) who get the smaller cuts get off tax free. This is probably the most common way to do it. It’s only fair, however, if all of the players have an equal number of tickets going in. If you have two tickets and I have only one, you have twice the chance of paying all the taxes as I do. This makes the deal negative EV for you and positive EV for me. If we’re friends and will potentially do other deals in the future, me having the advantage now may well be a deal-killer in the future.
Another way to for the winner to issue 1099s to each of the others.
Another way is to give the casino an IRS 5754 form with a list of the distribution of wins and they will issue the appropriate 1099s. While this way is the cleanest way to do it, it possibly comes with costs. One of the players in the group may be “toxic,” in the sense that the casino thinks he’s an advantage player that they are planning on kicking out soon. The casino might figure than anybody else listed on the form may be “toxic by association.”
Whichever way you deal with the taxes you should make an agreement up front. If some-but-not-all of the people think there will be 1099s issued and the rest don’t, it can get sticky after-the-fact.
Be careful with who you make such a sharing arrangement. For me, if I’ve known the person as a video poker player for two or more years and haven’t heard anything bad about them trust-wise, I’m probably going to give them the benefit of the doubt. If I’ve heard suggestions that this person may have financial problems or has stiffed somebody in the past, I’m going to avoid making a sharing arrangement with them. I don’t need “reasonable doubt.” A whiff of dishonesty is enough for me to stay away.
And even if there is no trust reason to disqualify dealing with somebody, there are people with whom I’m more comfortable than others. If the relationship is strained for any reason, that’s a good reason to avoid a deal with that person.
If I do make a deal with somebody and end up getting stiffed, then I will make sure all my gambling buddies hear about it. And if somebody else gets stiffed I hope I hear about it.
Bottom line for me is that reducing the variance is a good thing, but it’s not that big of a deal. $50,000 is a nice prize but it’s not a life-changing amount for me. If the amount were $1,000,000 instead, I’d be MUCH more inclined to make a deal.
For some of my readers, even a $10,000 jackpot would be close to a life-changing event. Many players are living close to the edge financially. For these players, making a deal to increase your chances of getting $10,000 or more would be a very good idea.