Guide to Gambling
This is the forgotten system that took the gambling world by storm for a few
brief weeks in the early 1970s. After we first mentioned the Parity Hedge System
in 1998, we have received literally thousands of e-mails requesting more information
about the system, who developed it, why it never became public information,
and what happened to it.
The Parity Hedge System derives in part from the Doey-Don't System
immortalized in Frank Scoblete's classic book: Beat
the Craps Out of the Casinos and Play Craps and Win, p. 39 (Bonus Books,
1991). You have to understand what makes that strategy successful before you
can delve into the intricacies of the Parity Hedge System.
The Unofficial History of the Parity Hedge System
The originators of the Parity
Hedge System were too smart to make themselves known. It is believed that they
were nuclear physicists and theoretical mathematicians who were working at the
Nevada Test Range, located just north of Las Vegas. During the daytime, they
put their skills to the test by creating new and unusual types of hydrogen bombs
and measuring their yields. In the evening, they made their way into Las Vegas
where they put their statistical know-how to the test on the Blackjack and Craps
tables. This was a group of very sharp young minds who had studied under such
geniuses as Von Neumann and Teller, and who knew how to "think outside the box".
Whether they picked up the Doey-Don't
from other gamblers, or they figured the system out themselves is not known.
At any rate, they quickly realized the nearly risk-free arbitrage nature of
the "DD", and in their slack time at the test range began to theorize about
how to improve on the Doey-Don't. Eventually, they were to develop their strategy
into a situational algorithm that is much like a basic computer program. Depending
on the situation, betting a certain way will either slightly improve the odds,
or will negate odds that have become heavily in the house's favor.
Realizing that an overly-complex
system was unworkable with a fast-paced game such as craps, these kid geniuses
simplified the system into the "11 keys" that characterizes the system. They
also realized that if the casinos ever figured out the Parity Hedge System,
the casinos could make slight rule changes to negate the system's advantages
(To jump ahead for a moment, they were wrong - even years after studying the
few film tapes of people using the Parity Hedge System, the casino's mathematicians
were unable to crack the system, and so no changes were ever made. But the casinos
were to handle the matter differently, as we will soon relate).
Of course, the kid geniuses tried
to keep the system to themselves. They wouldn't play when other experienced
gamblers were around, but played only in the early morning hours while the least
knowledgeable security crews were working and most of the casino personnel were
focused on clearing the slot machines' take from the previous night. They made
small bets, and were for awhile content to supplement their government salaries
with repeated small but consistent payoffs.
But greed begets greed. As détente
and the nuclear arms accords began to spell an end to many of the nuclear testing
programs, some of those knowledgeable about the system began to think of ways
to make a really big "hit" on the casino.
The Parity Hedge System gives
gamblers a slight edge over the casino. For small bets, this means small gains.
Bigger gains requires bigger bets, and bigger bets attract more attention. And
the kid geniuses did not want their system to go away. But they didn't want
to retire on their government pensions, either.
Eventually, they settled on a
Japanese businessman who they knew through their defense contacts. The Japanese
businessman had cash and the mathematical skills necessary to run the Parity
Hedge System on a big-time basis. More importantly, the Japanese businessman
was already known around Las Vegas as a "whale" who regularly dropped tens of
thousands (remember, this was the mid-1970s) on a single weekend - and even
better the casinos knew him as a "hard luck" gambler. If the Japanese businessman
suddenly started winning, the casinos would figure that his luck had simply
changed and it would not attract attention.
So it was that on one of his many
trips to Las Vegas to oversee a construction contract that the kid geniuses
took the Japanese businessman aside, and over the course of a weekend had instructed
him in the "basic" Parity Hedge System.
Early on the following Monday
morning, during the casino's most quiet time, the Japanese businessman made
his way to the crap table, took over an end, flopped down $10,000 in cash, and
started working the system. At first, the crew working the table and the boxmen
thought we was nuts, playing "offsetting" bets that seemingly couldn't win.
Yet, of the course of an hour and a half, the Japanese businessman had very
quietly doubled his money.
It had been decided beforehand
that the Japanese businessman would spread his money around several casinos,
and so he did for the remainder of the week always playing around the breakfast
hour. He lost on one day only, and then by little more than $200 after an hour
and a half of play. The Japanese businessman concluded his first visit up more
than $15,000 - of which he split $7,500 with the kid geniuses, as well as a
promise to return. Everything had gone so smoothly that the casinos hardly took
notice of the Japanese businessman's suddenly improved play.
The kid geniuses continued to
perfect the Parity Hedge System, sublime in the context of doing this over coffee
while measuring underground atomic tests. But they awaited the Japanese businessman's
return, and their big payday.
The Japanese businessman played
the role well, waiting until the several casino's inevitable calls inviting
him to return. He at first refused, and then acquiesced on the condition that
the casinos would allow him to play craps at a very high dollar amount - placing
up to $10,000 per roll. The casinos were probably overjoyed when they heard
this, and assured him that if he could bankroll it, they would take his money.
So, the Japanese businessman took the time to schedule another "construction
visit" to the Las Vegas area, this time wiring to each of these casinos a large
sum (believed to be around $600,000 each). Thus it was that the Japanese businessman
landed in Las Vegas on a Thursday, stayed holed up in his hotel room through
the weekend (except for a brief visit to the Atomic Test Range), and then showed
up at precisely 6:00 a.m. on Monday to start gambling.
And gamble he did. Helped by an
enormous streak of "good numbers", the Japanese businessman was up $1 million
by breakfast. He then spent the day making a circuit of the other casinos, only
losing once and cleaning the rest out for amounts up to $2 million. At the end
of the day, by making progressively bigger bets with the casino's money that
he had won, the Japanese businessman was ahead a cool $11 million.
Nothing travels fasted in Las
Vegas than the news of a big winner. While each casino had "spotters" on the
Japanese businessman - more looking for ways to lure him back to their casino
when his run of "luck" finally broke - the casino bosses were meeting with their
staffs to try to figure out what had happened. Keep in mind that at this juncture
in Las Vegas' history, the casinos were being run mostly be ex-mobsters (and
some not-so-ex-) and they simply couldn't grasp the Parity Hedge System. For
his part, the Japanese businessman greeted his casino-appointed hosts cordially,
and retired back to his hotel room.
Truth is, he should have taken
the first plane out of town. Instead, he again appears promptly at 6:00 a.m.
the next morning, per the kid geniuses' plan, and starts gambling at the highest
limit (which, of course, the casinos let him do to try to get their money back).
Again, the combination of his lucky streak, the Parity Hedge System, and that
he was now using the large sums of casino money he had won the day before, resulted
in gains of just under $10 million at each of a half-dozen casinos in town.
By this time, the casino bosses
are really starting to panic. In the mid-1970s, a $10 million loss was unthinkable.
Because there was still a great deal of "skimming" going on, the casinos basically
had no cash reserves. Fortunately, the Japanese businessman had deposited his
winnings with the casino at the end of each day as credit for the next day.
The casino bosses still didn't
understand what was happening. The first thought in their paranoid minds was
that the Japanese businessman was cheating. By this time, the Japanese businessman
was being watched by probably 20 or 30 people at each casino, so that was unlikely.
The casino bosses simply couldn't get it through their minds that there was
some system that gave the Japanese businessman a slight advantage over the house.
By the third morning, the casino
bosses were in a panic. They knew that the Japanese businessman was scheduled
to leave, and they knew the odds were low of winning his money back. And sure
enough, at 6:00 a.m., sharp, he steps into the first casino of the day, and
starts playing the system at the highest level allowed him by the house. And
he is still hot.
By a little after 11:00, he's
been through five casinos, and is up additional tens of millions. Thus, the
Japanese businessman (in a private limo - should have been his first clue that
something was amiss) started for the airport, where he had instructed each of
the casinos to meet him with a certified check made to his order for the funds
he had won.
He never made it to the casino
and his body was never recovered. Courtesy of the gang of Tony "The Ant" Spillotro,
The Mob's local enforcer, the Japanese businessman disappeared into the Las
Vegas traffic - vaporized in thin air as well as a direct hit by the kid geniuses'
atomic bombs could have done. And of course, the certified checks never made
it to the airport, either.
During the second and third days
of the Japanese businessman's run, the casinos made movie-quality films of the
Japanese businessman's play. Suspecting that the Japanese businessman had accomplices,
the casinos each made note of several of the hallmarks of the Parity Hedge System
(but they never really grasped the basics of the strategy).
So what of the kid geniuses? To
say that they were scared to death is an understatement. Yes, they had nuclear
weapons, but they weren't of much practical use. One of the kid geniuses knew
Benny Binion, the rough and tumble founder of the legendary Binion's casinos.
Whether or not the Japanese businessman visited Binion's is not known. Certainly,
Binion - and the casino owners who weren't visited by the Japanese businessman
- were as at risk to being tapped by future Parity Hedge System players as the
casinos that had suffered the (now disappeared) losses.
What seems to have happened is
that Benny Binion agreed, on behalf of the casino owners and doubtless The Mob,
to have accepted a complete analysis and breakdown of the Parity Hedge System
(and a promise not to use it anymore) in exchange for protection. Truth is,
only Binion was smart enough to understand the importance of getting the breakdown
on the Parity Hedge System, and was capable of bringing the casino owners and
The Mob together to cut the deal. Instead of further broadcasting the existence
of the system by bringing in people to analyze it (the only people who would
have the mathematical training and intellect to understand it could also run
the system, of course), Binion apparently just hid the system in his home vault
along with the last remaining film canisters of the Japanese businessman's fateful
The Parity Hedge System was apparently
safe with Benny Binion through his death in the early 1990s, then it was inherited
by Binion's son, Ted Binion. By this time, the Parity Hedge System and the Japanese
businessman had been long forgotten, and the canisters relating to the Parity
Hedge System had been moved out of Benny Binion's vault and into Ted Binion's
closet. The Parity Hedge System itself was cached in the desert, along with
some millions in silver that Ted Binion kept for emergencies.
At some point, Binion's new (former
stripper) wife and her boyfriend were apparently rummaging through Binion's
stuff and came across the film canisters. Watching the play, along with some
narrative by a gaming analyst, they realized the important of the Parity Hedge
System. Rumor has it that Ted Binion's stripper wife and her boyfriend then
waylaid Binion and force-fed him heroin in an attempt to make him reveal the
whereabouts of the analysis and summary done by the kid geniuses. But before
the now-widow and her boyfriend could get to the spot in the desert, they were
arrested for Ted Binion's murder.
So where is the Parity Hedge System
It is unknown where
the analysis and the summary that the kid geniuses did for old man Binion have
gone. What we do know is this: The group of mathematicians and physicists (probably
numbering less than a half dozen) whom we have referred to as the "kid geniuses"
knew about the system that they created. We also know there were a few people
who worked for the casino's during the Japanese businessman's remarkable run
that saw the system employed. There may have been other films made other than
those that Benny Binion ended up with. And we have no idea what the Japanese
businessman did to memorialize his rather amply-demonstrated knowledge of the
complexities of the system.
Pages Describing the Parity Hedge System
The following pages detail the Parity Hedge System.
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