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DU professor says poker is about skill, not luck

There was this casino, a major online operation based in Europe, and this casino had a problem. A little problem, sure, one lousy player on a hot streak. But he was getting to be a bigger problem every day.

The player — call him Ludwig — was a regular customer at roulette. That is to say, he was a regular loser, since few casino games are quite so elegantly designed to separate chumps from their chips as roulette. But Ludwig wasn't losing so regularly anymore.

Poker skills quiz: Test your savvy against DU expert Robert Hannum -- and no bluffing!

After dropping 3,000 euros with his usual low-wager strategy, Ludwig had come back a week later a changed man. Multiple bets per spin, some quite sizable. He was up, he was down, but he kept putting more money in play. He spewed ten, twenty, even fifty bets all over the layout, like a house painter with a spray gun, trying to cover up all those unsightly black and red numbers. At one point, he had 10,000 euros riding on one spin of the wheel. Then 40,000. Then 100,000.

Common sense, or what passes for it in the gamblers' world, dictated that Ludwig should bust — and bust hard and fast, since many of his bets essentially canceled each other out. But he didn't. He kept coming out ahead. When his winnings crossed the one-million-euro mark (about $1.42 million at current rates), the casino's manager decided to bring in two experts. One was a private investigator, hired to look into Ludwig's background, in search of unsavory associates — mobsters, say, or computer hackers, or even a confederate inside the virtual casino.

The other was a different kind of gumshoe: Robert Hannum, a professor at the University of Denver. Although his doctoral work leaned heavily toward the theoretical side of statistics, Hannum now carries the title "professor of risk analysis and gaming" — a tribute to his many years studying the odd collision of mathematics, marketing and fantasy that fuels the commercial gambling industry. Hannum has been the official mathematician in residence for the MGM Grand and the Aria Resort & Casino; other casino operators call on him to run the numbers on tricky new games or review the math behind special betting promotions that, despite the best of intentions, might actually end up costing their casino some money. He is their go-to guy, the probability king, the wizard of odds.

The anxious manager at the European casino wanted to know one thing: Was Ludwig legit? Was it possible for someone to bet so crazily and come out ahead, spin after spin? Or was it more likely that something crooked was going on?

Hannum collected the data from the hot streak and subjected it to various statistical tests. He determined that the result of each spin had a degree of randomness one would expect from an honest wheel. Ludwig's action was a bit harder to track; in his first 1,600 rounds at the table, he had come out almost exactly even. But in the days that followed, he'd increased the size and number of his bets. After 3,200 rounds, he was up nearly 1.5 million euros.

The house edge on a standard American roulette wheel, one that has a zero and a double zero, is 5.26 percent. The European wheel has only one zero and an edge of 2.7 percent; on average, a player shooting a thousand bucks on a series of bets on red at a Monte Carlo roulette table will end up with $973. But that's just an average; some players will lose more, a few will come away winners. Hannum's challenge was to figure out, using what he describes as "some rather involved and sophisticated mathematics," the probability that Ludwig's bizarre betting pattern would yield such staggering results. To do so required an understanding of what statisticians call the volatility of the game and just how far from the expected win-loss range Ludwig had strayed.

After some vigorous number-crunching, Hannum told the casino manager to relax. Ludwig's run was unlikely — an 80-1 shot, it turned out — but hardly the one-in-a-million outcome that would almost have to be cheating. Reassured, the manager decided to do what good casino bosses always do when they take a hit: smile and encourage the lucky fella to keep playing.

Ludwig did. The wheel kept spinning and the numbers kept changing. A week after his streak reached its 1.5 million-euro high point, Ludwig was cleaned out. His rapid collapse was yet more proof, if any was needed, that it's hard to argue with probability.

It's hard to argue with Hannum, too. He has one foot in the academic world and the other in the high-stakes world of commercial gaming; his dealings with casino surveillance teams, game manufacturers and state gaming commissions have given him a unique perspective on legalized gambling in America. But consulting is only one aspect of his work. He's taught courses in gaming law and held classes in Las Vegas casinos, to give students a firsthand look at the industry. He's written papers examining how many shuffles are required to truly randomize a deck of cards and explaining how statistics get misused in gambling. His book Practical Casino Math, now in its second edition, has a tendency to disappear from library shelves and never return.

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Alan Prendergast has been writing for Westword for over thirty years. He teaches journalism at Colorado College; his stories about the justice system, historic crimes, high-security prisons and death by misadventure have won numerous awards and appeared in a wide range of magazines and anthologies.
Contact: Alan Prendergast