Gamblers Inc.

In California, betting to win can be a buttoned-down, corporate slog through the salary-man trenches.

Published January 10, 2002 8:30PM (EST)

At 5:45 p.m. on a Saturday, every seat at the pai gow poker tables in Colma's Lucky Chances casino is taken and several more players cluster around, leaning over the seated players to place their bets. The air is filled with the clatter of ceramic chips, voices raised over each other -- mostly in Chinese and Vietnamese -- and the occasional aroma of noodles, which can be ordered and eaten at the table so the players need never leave their seats.

The room is divided into two sections. In one, mostly male Caucasians play traditional poker games. On the other side of the room, the almost entirely Asian clientele play "California games," the most popular of which is pai gow poker, a hybrid of traditional Chinese dominoes and American style poker. On this side of the room, players are of all ages and almost 50 percent are women. They're not dressed up for a night on the town, but comfortably, in jeans and sweatshirts. There's little laughter and conversation. Players may toss a comment to a friend standing behind them but their eyes remain on the game, which proceeds at a brisk pace.

On one particular night at Lucky Chances a crowd of Asians is clustered around a popular table with a minimum bet of $100. Sitting in their midst is a young, white male wearing khakis, a smart, blue button-down shirt and an official-looking name badge. He stands out, not only because he is white, but because he has by far the largest rack of chips at the table in front of him. The rows of $100 chips total around $45,000 but he's placing them conservatively, while keeping a close eye on the game and glancing occasionally at a small chart, just visible under his rack of chips.

At 6 p.m. an older Asian man comes up behind the young white player and taps him on the shoulder. The white man greets him and gets up, and the Asian man takes his place at the table. His shift over, the first player fills out some paperwork in plain view, puts on his jacket and leaves. None of the other players seems to notice or care, and the game continues uninterrupted.

To many people, the term "professional gambler" conjures the image of a suspicious character in a smoke-filled bar, a hustling cardsharp with tricks up both sleeves, preying on the innocent. He's got a cigarette between his lips and he knows all the fancy shuffles. In the movies, the protagonist usually sees through his winning streak and uncovers him as a cheat. But in California today, professional gambling is a salary-paying job. Such gamblers work for entirely legal corporations that specialize in making a profit from games like pai gow. They even wear name badges identifying them to other gamblers.

"Casino props with college degree preferred needed asap," reads a recent classified ad in the San Francisco Chronicle. "Will train to play casino games. Experience not necessary."

A few professional, or "prop" players, as they're known in the industry, are gambling addicts who've found the perfect outlet for their obsession. But for most of them gambling is a job for which they draw a salary. They don't hustle and they certainly don't cheat; they are company men and women.

California casinos bear little resemblance to their flashier counterparts in Nevada. There's no clamor of slot machines and spinning roulette wheels, and there are no themes except perhaps the lucky dragon motif, which is repeated to dizzying effect on the carpets, in the elevators and on the walls. These casinos aren't designed to pull in tourists who'll throw down a few bucks for kicks. They attract serious players who come not for an all-you-can-eat buffet or a free show, but for the sole purpose of gambling.

In a game of pai gow poker, bets are placed before each of the seven players receives seven cards. One of the players shakes the dice in a special container that is slammed onto the felt table, the louder the luckier; hands are placed face down on the table and then turned over one at a time by the dealer. She quickly determines the winner, and chips are pushed across the table. There's no clapping or commotion; no one jumps up or throws punches in the air. Every face at the table is as blank as the next. The dealer shuffles the deck and the game starts over.

"Nathan" made his debut on this scene at the age of 24. Tall and Caucasian, he must have been a conspicuous figure as he walked into a card room for the first time and took a seat at a poker table. He placed $60,000 in chips on the table and slowly but deliberately proceeded to double his money. It was the beginning of his career in the gaming industry and his first job.

Nathan declined to give his real name because he is no longer a professional gambler and doesn't want his past to hurt his chances of getting a new job. But he says he was just six months out of college and in search of some direction and a steady income when his friend "Eric" (also a pseudonym) told him about his job working for CORE Capital Management as a professional gambler.

Nathan's parents had brought him up with the sense to know that gambling was a loser's game. He assumed that Eric's company must be running some kind of scam. Eric explained the difference between what is defined as cheating in California -- introducing something new to the game such as new cards which might be marked or chips that don't belong to the casino -- and using your brain and powers of memory. In other words, said Eric, it's not illegal to count cards and use sophisticated mathematical formulas to give yourself an edge over the competition. Eric's explanation was convincing, and besides, Nathan owed his roommate three months rent. He decided to give it a shot.

Sitting at a table with a deck of cards and pen and paper, Nathan took all of two days for his training, which mainly involved learning to count cards. Despite his lack of casino experience, he had a good head for numbers and was soon only playing at tables where the minimum bet was $100 or more. Sometimes he bet $10,000 on a hand. He didn't win every time he played, but just over 50 percent of the time, enough to make the company a profit. Although he didn't work on commission, his $20-an-hour salary was generous for a 24-year-old graduate with no work experience. After three weeks on the job he was able to pay his roommate back the money he owed him.

Professional gamblers wouldn't last long in Las Vegas or Reno. The odds are stacked against you when you're always playing against the house; if you do start to win consistently, you're asked to leave. The presence of professional gamblers in California, however, is not only tolerated but encouraged by many casinos.

Companies that employ prop players, such as CORE, are able to operate in California because state gambling laws allow casinos under the stipulation that patrons only bet against each other, not the "house." The California casinos are usually card rooms that charge a fee of $1 per $100 bet. These fees, known by players as the juice or the drop, are the primary source of income for the casinos and cover the cost of providing services such as cashiers and dealers.

Prior to 1998, California's gambling industry was mostly unregulated. CORE, says Nathan, was one of the first companies to see the potential for operating a profitable business out of the casinos while staying within the boundaries of state law. It began operating in Southern California in the early 1990s and pioneered the field by arming its players with proprietary techniques for playing popular casino games such as pai gow poker. CORE's rapid success soon spawned copycat companies with names such as Network M and the Bankers Group.

Walk into just about any of the larger San Francisco Bay Area card rooms any time and you're likely to see one of their players at a pai gow poker table sporting a name tag and a large rack of chips.

But the edge that professionals such as Nathan have over other players at the table is small. To profit from it, CORE's employees must play 24 hours a day, seven days a week, working in shifts and playing with the highest possible stakes. The casino owners often want them there because they draw other players to the table, push the stakes up (and therefore the fees) and keep the games going on a slow night. In the good old days, before CORE had to compete with other companies, casinos actually paid them up to $25 an hour per prop player.

In pai gow poker, CORE's game of choice, someone has to play the part of the bank. Whoever plays the bank has slightly better odds of winning, which explains why in Vegas the bank is always played by the dealer. In California, the bank moves from one player to the next after every two hands. Professional players are trained to wait patiently until they have the small but significant statistical advantage of playing the bank, at which point they will take greater risks and place larger bets than most other players at the table can afford. Although they may appear to lose as often as the other players at the table, eventually they come out ahead.

The best professional players are not compulsive gamblers who may give in to the impulse to place a high bet on the basis of a hunch or an impulse. Professionals can't afford to believe in luck. Nathan says he was one of CORE's top players because he was able to maintain some detachment from the game and the large quantities of money that passed through his hands. He stuck to the formulas and only increased his bets when it was his turn to be the bank. "It was a job," he says. "I never thought about the money that much; I got numbed to it really quickly."

CORE's growth from a Southern California start-up six years ago to a thriving statewide business of approximately 150 employees grossing, Nathan estimates, around $20 million a year lies in the work of the Ph.D. statisticians and mathematicians it contracted to devise its card-winning formulas. These formulas are protected in a shroud of secrecy. New hires sign a confidentiality agreement and are instructed not to reveal their card-playing methods to anyone.

"The most important quality CORE looks for in a new hire is loyalty," says Nathan. "The rest can be taught." Loyalty means you don't steal from the company and you don't divulge information about the company. A large percentage of employees are hired through friends of friends of current employees.

Despite the fact that it is doing nothing to break the law, CORE is tight-lipped about the details of its business. Darrell Myers, CORE's CEO, did not return this reporter's phone calls, but his secretary did call, wanting to know which former employees had been interviewed for this story.

The company expanded its operations to the San Francisco Bay Area in 1997. Its players have worked Lucky Chances casino in Colma, Artichoke Joe's in San Bruno and Casino San Pablo and Oaks Card Club in Emeryville. A couple of those casinos refused to discuss prop players. Artichoke Joe's said it has never paid prop players to work its card room; that the casino "never believed in it." When asked about the presence of name-badge-wearing players with large piles of chips, the casino claimed to have no idea who these players were. "Maybe they're wearing name badges 'cause they work at the airport," offered one of Artichoke Joe's shift managers.

Sally Hogarty, director of public relations for Casino San Pablo, was more forthcoming. "Yes, we employ prop players," she says. "They're good for business because they draw players to a table when we're starting a new game. They also allow us to accommodate players who want to bet larger amounts." The casino itself employs a certain number of prop players who don't receive any special training but are experienced cardplayers. The casino also works with several outside companies, including CORE, although it no longer pays its players to be there.

In response to pressure from the California attorney general's office to exert greater regulatory control over California's gambling industry, the state Legislature enacted the Gambling Control Act in 1997. The Division of Gambling Control and the California Gambling Control Commission were created to ensure that state gambling licenses are not issued or held by "unsuitable or unqualified individuals."

Peter Melnicoe, chief counsel for the California Gambling Control Commission, is aware of the existence of companies that employ prop players and their mutually beneficial relationship with card rooms, but until now the provisions of the Gambling Control Act have had little effect on their activities. That may change in 2002. The Division of Gambling Control will soon be responsible for controlling the licensing of prop players.

"Contracts prop player companies have with casinos will have to be approved by the Division," explains Melnicoe. The agency will also run background checks on prop players and provide the official name badges that are currently issued by local regulatory authorities. The specific criteria for the contracts and licensing will be decided at a hearing in San Francisco Friday.

The commission knows about the prop players, but do the other players know who the men and women wearing name badges are? After all, they're the people who actually stand to lose by the presence of professional gamblers.

"Anyone who goes to card rooms on a regular basis knows when they're playing against a professional," asserts Nathan.

I test this theory out at Lucky Chances by striking up a conversation with another onlooker at a pai gow poker game, an Asian man in his 20s with a wispy moustache. Indicating the professional player sitting opposite us, a middle-aged white woman in a colorful sweater, I ask him why she has so many chips.

"She works here," he explains.

"For the casino?"

"No, corporation."

"What corporation?"

He shrugs and turns away.

The other players don't appear to be concerned about playing against professionals as long as they are playing and occasionally winning themselves. It's worth noting that the statistical advantage that professionals have in California card rooms in most cases is significantly smaller than the advantage that Nevada casinos have over their customers in every game.

I asked Melnicoe if he feels that the activities of companies such as CORE in any way violate the Gaming Control Act, which states that gambling in the state of California should be "free of criminal and corruptive elements, that it is conducted honestly and competitively."

"There's a certain amount of skill in this form of gaming," Melnicoe replied, "and I'm not sure that it's improper for people to have a high level of skill. If someone's wearing a name badge that identifies them as a prop player and another player doesn't want to play against them, they can always leave the table."

Whatever the impact of the Division of Gambling Control's new provisions, CORE's days may be numbered. Its profits have been in decline for some time and it recently laid off several employees, according to both Nathan and Melnicoe. Nathan believes CORE's fate is the result of other companies such as Network M and the Bankers Group undercutting its presence in the casinos by offering prop players for a lower fee than CORE charges, or for no fee at all. Melnicoe disagrees. "The field isn't overcrowded," he says. "There's more demand for prop players than these companies can supply."

Nathan got out of the casino industry several months ago. Although he is still out of work, he has no regrets about leaving when he did. He says that although CORE takes great care not to break the law, he was still plagued by the feeling that he was involved in "a nasty and unethical business."

Knowing how long he's been unemployed, I ask him if he isn't tempted to simply go to a casino with what's left of his savings and make some quick cash. He grins and shakes his head. "I would need to play with hundreds of thousands of dollars around the clock to turn a profit," he explains. "If you don't have that kind of capital, gambling's a loser's game."

By Kristy Siegfried

Kristy Siegfried is a freelance writer from San Francisco.

MORE FROM Kristy Siegfried

Related Topics ------------------------------------------