John Grochowski writes about money management.

[Alan Mendelson]

John Grochowski has responded to my email, and here it is, complete and unedited:

Hi Alan,

The win goals/loss limits advice applies only to negative expectation games, which means it applies to a vast majority of players. I'd put no such restrictions on players who have an edge on the house, provided bankroll is sufficient.

I'd just add a couple of cautions. Advantage players in blackjack need to be wary of surveillance catching onto their edge. The longer you play, the more likely it is that you're going to be spotted. Counting cards is not illegal, but casinos are private clubs and can bar you from playing. One defense is to play short sessions and to move on after an hour or so, win or lose.

And advantage players at any game need to be wary of fatigue. Regardless of whether you're a blackjack card counter, dice controller at craps or a video poker player who sticks to expert strategy at the best games, if you play when weary you're going to start making mistakes. Get some rest, and come back to the games refreshed.

Good luck,

John Grochowski

[arcimede$]

The win goals/loss limits advice applies only to negative expectation games, which means it applies to a vast majority of players. I'd put no such restrictions on players who have an edge on the house, provided bankroll is sufficient.

I'd just add a couple of cautions. Advantage players in blackjack need to be wary of surveillance catching onto their edge. The longer you play, the more likely it is that you're going to be spotted. Counting cards is not illegal, but casinos are private clubs and can bar you from playing. One defense is to play short sessions and to move on after an hour or so, win or lose.

And advantage players at any game need to be wary of fatigue. Regardless of whether you're a blackjack card counter, dice controller at craps or a video poker player who sticks to expert strategy at the best games, if you play when weary you're going to start making mistakes. Get some rest, and come back to the games refreshed.

John Grochowski

Oh no, not another expert saying exactly what I have been saying for years. Obviously he doesn't understand how to apply the right pixie dust.

[Alan Mendelson]

Oh no, not another expert saying exactly what I have been saying for years. Obviously he doesn't understand how to apply the right pixie dust.

I sent him a followup question and I hope he responds. Basically I asked him if he saw any need to protect his profits against a run of bad luck even on games a player might have an edge on. Really that is the issue. Do you protect your profits and throw caution to the wins because you have an "edge."

What do you do, Arc? Do you protect your profits or would you willingly put them all back in the machine leaving yourself to hit the ATM the next time you play?

[Alan Mendelson]

John Grochowski has responded to my email, and here it is, complete and unedited:

Hi Alan,

The win goals/loss limits advice applies only to negative expectation games, which means it applies to a vast majority of players. I'd put no such restrictions on players who have an edge on the house, provided bankroll is sufficient.

I'd just add a couple of cautions. Advantage players in blackjack need to be wary of surveillance catching onto their edge. The longer you play, the more likely it is that you're going to be spotted. Counting cards is not illegal, but casinos are private clubs and can bar you from playing. One defense is to play short sessions and to move on after an hour or so, win or lose.

And advantage players at any game need to be wary of fatigue. Regardless of whether you're a blackjack card counter, dice controller at craps or a video poker player who sticks to expert strategy at the best games, if you play when weary you're going to start making mistakes. Get some rest, and come back to the games refreshed.

Good luck,

John Grochowski

I sent a follow-up question to John about recreational players. Specifically I asked this:

Is there any fear that even on a game you have an edge at that you might run into a string of bad luck which could offset your "edge" and take away your profits? Do you not protect any of your profits even if you have an edge at the game?

And this is the response I received:

Hi Alan,

Sorry this took so long.

Yes, I think there's value in a casual player, even one who has an advantage over the casino, in locking up a percentage of profits.

It's a matter of bankroll. A pro who is sufficiently bankrolled, with tens of thousands of dollars in reserve, probably is just going to play on when he draws a $1,000 royal flush. He has an edge, and continuing to play is pursuit of profit.

But if I go into the casino with $500 and win a $1,000 royal, leaving me with a bankroll of $1,500 minus whatever I'd already invested, I have to be aware that a long losing streak --- which happens to everyone --- can wipe me out. In that situation, I'm probably going to lock up my original $500 plus $500 more.

One advantage casinos have even over players who have an edge on the game is that the casino has more money than you do. They can withstand longer losing streaks than you can. So yes, unless players have very deep pockets, locking up some winnings is a smart way to go.

Best,

John

[regnis]

I sent a follow-up question to John about recreational players. Specifically I asked this:

Is there any fear that even on a game you have an edge at that you might run into a string of bad luck which could offset your "edge" and take away your profits? Do you not protect any of your profits even if you have an edge at the game?

And this is the response I received:

Hi Alan,

Sorry this took so long.

Yes, I think there's value in a casual player, even one who has an advantage over the casino, in locking up a percentage of profits.

It's a matter of bankroll. A pro who is sufficiently bankrolled, with tens of thousands of dollars in reserve, probably is just going to play on when he draws a $1,000 royal flush. He has an edge, and continuing to play is pursuit of profit.

But if I go into the casino with $500 and win a $1,000 royal, leaving me with a bankroll of $1,500 minus whatever I'd already invested, I have to be aware that a long losing streak --- which happens to everyone --- can wipe me out. In that situation, I'm probably going to lock up my original $500 plus $500 more.

One advantage casinos have even over players who have an edge on the game is that the casino has more money than you do. They can withstand longer losing streaks than you can. So yes, unless players have very deep pockets, locking up some winnings is a smart way to go.

Best,

John

And before Arci says again that it doesn't change the expected return, no one is saying that it does. What it does is lock in an actual return, which I value much more than a theoretical return.

[Alan Mendelson]

And before Arci says again that it doesn't change the expected return, no one is saying that it does. What it does is lock in an actual return, which I value much more than a theoretical return.

Is there going to be a Super Bowl prop bet in 2014 with the over/under on the number of times Arc will bring up "expected return" when the rest of us are discussing "actual return"??