Jeffrey Ma made a successful living out of mastering the art of blackjack by resolutely following a basic strategy that brought him and his team around US$5 million over a few short years of play. He is also the subject of the best selling books Bringing Down the House and 21 (the latter turned into a movie). Last month Ma shared some of his life lessons with a packed audience at the Cayman Captive Forum.
A self-confessed MIT “nerd”, Jeffrey Ma said he began playing blackjack at the age of 21 at Caesar’s Palace, Las Vegas following a tried and tested method of statistics and mathematics to gain an advantage over the casino.
“Everything was objective, so no subjectivity was involved,” he confirms. “You can’t be emotional in these circumstances; it’s a simple business transaction.”
Over a seven year period, Ma and his team targeted blackjack tables across Las Vegas, following what he terms a basic matrix which would guide his every move.
“We never played poker,” he confirms. “Poker is gambling. Blackjack is different because you know at all times how the game is played; there’s no change in the rules.”
Ma uses a basic theory of counting cards to judge the probability of the next hand and thus adjusts his bet accordingly. It’s not a difficult concept to master, apparently, but difficult to actually execute successfully.
“I can teach the basics of counting in 20 to 30 minutes,” he confirms.
“But you need to possess the discipline to practice and it is hard to put those lessons into practice.”
Ma says most people go to Vegas not just to gamble, but to have a general good time which might include drinking and girls as well. He and his team, however, approached the exercise as a business transaction and were totally focused on the job in hand.
A distinct advantage
Ma then described how employing his strategy would take the average blackjack player from his or her starting point at a distinct disadvantage point compared to the casino; through to having such an advantage that he said eventually it would not actually be gambling, so improved were the odds of winning.
Ma said that the average blackjack player starts with an immediate 3 per cent disadvantage if they don’t know the basic strategy (i.e. for every $100 they gamble they will always lose $3).
Omission bias, the term describing a situation whereby the player does not want to proactively make a move that their emotions tell them might hurt them (lose them money), also had to be overcome if the casino was to be beaten.
Ma likened the issue to any business or personal decision which was simply easier not to make.
“Sometimes it’s just easier not to make the decision. For example, in the captive industry business, if you don’t allocate or diversify enough,” he says.
“Overcoming omissions bias means having the faith to overcome the worry of making the decision.”
Ma recounted a personal experience in which this advice proved to be a life-saver, whereby his family had to make a quick decision as to whether his mother – in her early 70s – should be operated on, following a stroke.
“We could just leave the situation and hope that she would recover or consent to an operation, which could have been risky at her age.”
Saying that he referred to the life lessons he had learnt through blackjack strategy and encouraged his family to consent to the operation.
“Sometimes you just cannot sit back and hope for the best when a decision has to be made, even if it is risky,” he says, confirming that his mother was now in recovery.
Employing the strategy and overcoming omissions bias should put the punter at a slight advantage over the casino.
“At this point the odds are technically in the punter’s favour and it’s not gambling,” he says. “But you want to increase your odds of winning even further by counting cards.”
According to Ma, in the 1960s a project was developed to see how the rules of the game changed when certain cards were subtracted from the hand.
“They found out that if just low cards were left in the pack it was bad for play; if middle cards were left it made no difference and if high cards were left it was good for play,” he explains.
Thus when high cards were still left in the pack it made sense to bet higher than when low cards were left in. Ma says this strategy increases the punter’s chances even further to a 2 per cent advantage over the casino.
More life lessons
Taking the risk out of gambling was a life lesson which could be employed for any business during and after the economic meltdown, he said.
“Look to the stock markets over the last 50 years and you will see a ‘once in a lifetime’ meltdown every 10 years or so,” he states.
“You have got to account for it; you can’t let it ruin you.”
Ma suggests that once an individual has found a winning strategy they should stick with it: “Don’t put all your eggs in one basket. Diversify,” he warns.
Trust was a basic element that he looked for when employing his team of blackjack players, another life lesson that had stuck with him.
Ma spoke about a venture capitalist friend of his who barely listened to the content of an entrepreneur’s conversation for the first ten minutes of meeting, as he spent that time deciding whether he could trust them or not.
Ensuring that the entire team had common goals was another important life lesson that he had learnt.
“Our team functioned well because we all benefited when one member of the team won. Common goals need to be transparent and simple. When there are common goals everyone is a winner,” he confirms.
Needless to say that Ma is now banned from blackjack tables in Las Vegas. He has gone on to founder a variety of internet companies and says his travels across the world speaking at forums such as the Cayman Captive Conference allows him to take in a diverse selection of the business world which, in turn, is helping him to formulate his next business venture.