
The King of Online Gambling - adamio
http://www.forbes.com/sites/nathanvardi/2014/12/01/the-king-of-online-gambling-is-34/
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unimportant
Usual dodgy rags to riches story.

I'm rather sure the Scheinberg family (the founders and previous owners of
PokerStars) engineered the takeover due to the bad outlook for online gaming
in general (market segmentation via government regulations everywhere in
combination with high taxation) and it had little to do with Baazovs business
acumen.

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nl
That's some leverage!

I was hoping this was going to be about David Walsh. He made hundreds of
millions by creating "statistical models that allowed them to exploit
mispricings in betting odds wherever they could be found."[1]

He spent a lot of his money on building the (Tasmanian) Museum of New and Old
Art[2], which is everything an art museum should be.

Anyway, I'd call him the real king of online gambling.

[1]
[http://www.afr.com/f/free/blogs/christopher_joye/david_walsh...](http://www.afr.com/f/free/blogs/christopher_joye/david_walsh_wisdom_beats_the_odds_jNn5N3DuXxfFPVghVTD0PM)

[2] [http://travel.cnn.com/sydney/visit/mona-worlds-most-far-
out-...](http://travel.cnn.com/sydney/visit/mona-worlds-most-far-out-
museum-519376)

~~~
femto
From my understanding, the money wasn't made from the odds per se, but from
the rebates that the betting agencies offered because of the amount of money
being wagered. When all the maths was done, the limited downside (losing the
stake) and unlimited upside (winning much more than the stake) combined with
the rebates to give a payout, win or lose.

[http://www.afr.com/p/national/the_gambler_GwoSmf5IXaVFjmpyYX...](http://www.afr.com/p/national/the_gambler_GwoSmf5IXaVFjmpyYXNu9J)

~~~
femto
Here is the recipe for guaranteed "gambling" success, from the linked to
article. Quotes used, because it is not gambling, since profit is guaranteed
by the odds (ie. you are effectively part of the house):

[http://www.afr.com/p/national/no_humbling_great_gambler_1Rah...](http://www.afr.com/p/national/no_humbling_great_gambler_1RahGi92iAkDFfUmE87CeO)

 _It is a great system, although the smartest aspect of it was not the maths
or computers. It was the psychology._

 _As former card-counting blackjack players, Walsh and Ranogajec knew the
house will always seek to maintain its advantage._

 _In its crudest form, this involves barring those who become too successful.
And so over the longer term, being able to stay in the game becomes almost as
important as winning. For the syndicate, that meant being “with” the house
rather than against it. In both Keno and “parimutuel betting” via the TAB, the
house can’t lose, as it takes a fixed percentage of the overall pool._

 _And so by pumping huge amounts of money through Keno and the TAB, the
syndicate was inflating the profits of the house rather than taking money from
it._

 _It was a symbiotic relationship, but one that neither side wished to
publicise as it was ordinary punters who lost out. For Walsh and Ranogajec,
their Keno exploits in Tasmania were hugely ironic._

In other words:

1) Pick a game where the jackpot accumulates, for example, the "Jackpot growth
pool" in Keno, and the house takes a fixed percentage of turnover.

2) Cut a deal with the house for a rebate that swings the total odds
(including the accumulated jackpot) in your favour.

3) Gamble as much money as possible, so you have a significant chance of
capturing the accumulated jackpot before anyone else, thus reducing the odds
of an average punter winning an accumulated jackpot.

4) Effectively, you will be acting a a proxy for the house, allowing it to
reclaim jackpots (via their percentage on your turnover), that would otherwise
go to the average punter, and collecting your own percentage for your trouble.

The house makes a profit on the additional turnover that you generate. You
make a profit by collecting jackpots at odds+rebate that guarantee a net
payout. The average punter loses as they are unlikely to win the jackpot
before you do, so their average payout is reduced.

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devanti
So they basically took PokerStars and IPOed it for them, since the owners
didn't want to, as that would mean they would get stuck in the business.

~~~
unimportant
For the previous owners there was never a point in taking the company public
because they didn't need additional funds and it allowed them to do things
that public companies like party gaming could not do for legal reasons.

Another reason for the sale was the fact that they were never able to convince
US regulators that isai Scheinberg had nothing to do with the company anymore
( mark had taken over on paper ) which prevented them from getting a new
jersey license.

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pgcudahy
Why did Blackstone agree to go through this shady guy rather than just make
the deal themselves? What does he bring to the deal?

~~~
charlesdm
Why wouldn't they? They might not have been able to get the deal on their own,
nor did they necessarily have the right experience or a CEO ready to run it.

Don't forget, there is _a lot_ of capital in the world. We're talking
trillions. To get the returns Blackstone is after, things need to move fast.
It would be foolish to spend 6 months looking for a CEO when a suitable one
comes knocking on your door. Especially when he might be the only one who can
do a deal.

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donmb
Why is a one year old article featured here? Pretty old story.

