• Image about greg-raymer-eli-elezra-crispin-leyser-jamie-gold-americanway

If you think Wall Street is the only place to invest your money, a former card counter (who wishes to remain anonymous) has one question: Wanna bet?

THERE WAS A TIME IN MY LIFE WHEN A TRIP TO LAS VEGAS USUALLY KICKED OFF WITH MY DRIVING A RENTAL CAR FROM MCCARRAN INTERNATIONAL AIRPORT TO A GARDEN APARTMENT IN THE SUBURBS. THAT’S WHERE A MAN WE’LL CALL TEDDY WOULD AWAIT ME. ROUTINELY, ON A DESK IN HIS HOME OFFICE, THERE RESTED A LEGAL PAD, A CALCULATOR, AND A STRONGBOX FULL OF CASH. TEDDY WASN’T MUCH INTO SMALL TALK AND WORKED QUICKLY. WITHIN MINUTES, I’D BE OUT THE DOOR, with $50,000 packed into a pouch that zipped closed, belted around my waist, and fit inside my pants. I liked to wear baggy shirts to cover the bulge caused by a combination of banded $100 bills and black, purple, and yellow chips from several different casinos (these colors denote denominations of $100, $500, and $1,000, respectively). Secure that my bankroll wasn’t going anywhere, I’d drive to a top hotel/casino, check into a fine room, and get ready to do my job.

  • Image about greg-raymer-eli-elezra-crispin-leyser-jamie-gold-americanway
Back then, for a few years following my graduation from college, my job was counting cards. I played on a blackjack team, similar to the one depicted in the movie 21, and earned (or sometimes lost) money for myself as well as for a group of investors.

These moneymen, it should be noted, were far from shady gangsters who belonged to some kind of underworld society. Actually, they were straitlaced guys who worked in technology, practiced law, or maintained small businesses. As should always be the case with backing gamblers in legal enterprises, this was completely aboveboard and in compliance with the law (we paid taxes and received IRS 1099 forms). The investors viewed blackjack as a good use of their money. And it is when you have a team of well-trained card counters playing against the house with a small edge (less than two percent, but that clearly adds up in light of how much money gets churned through many sessions of high-stakes play).

For a while, blackjack was a great investment. We had a bankroll in excess of $500,000, and we split the profits (between players, investors, and management) in a fair and equitable manner. Yeah, it was a lot of fun to bet high and play at being a rich kid who gets comped by casinos, but at its core, this was all business, just a way to make money. Investors received 40 percent of our profits. The remainder went to managers and players. During our best quarter, I was paid upwards of $100 per hour.

These days, in a world where corporate executives bleed cash out of publicly traded companies, major investment firms suddenly go out of business, and mortgages are deeply underwater, entrusting your funds to a person with the ability to win money from casinos or other players starts to sound like a fairly legitimate alternative way to invest. That’s the case among poker players, and for high-stakes practitioners, splitting the action serves as a hedge. “When there is a good game that is too big for my bankroll, I sell off a piece of myself,” a pro explains to me. “If I can realistically win $200,000 but have a risk of losing $50,000 and my bankroll can’t withstand it, I find a backer.”

The most outré example of this came when a billionaire banker from Texas wanted to play poker against the most skilled professionals in the world. Presented with an opportunity to buy in for lots of money against an amateur, a contingent of top players had such an enormous edge that they couldn’t possibly turn it down. But as Amarillo Slim Preston once said, “Sometimes, the lambs slaughter the butcher,” and none of the pros could individually afford to take the risk -- especially when going up against someone with banker-size resources. So they put together a syndicate of players/investors and together, with a few of the players going heads-up against the billionaire, managed to win many millions of dollars.

Eli Elezra, a high-stakes poker player who was part of the group that was dubbed the Corporation, served as the pros’ point person for one of the profitable showdowns against the Texas banker. Each of 20 investors put in $500,000, and it was left to Elezra to collect the money and transport it to the site of the game. Elezra had $10 million on him, all in $25,000 chips. He casually carried the loot in a shopping bag, taking it from the Bellagio to a second casino on the Strip, where the game was scheduled to take place. Nobody outside their tight circle knew that the money was being transported, but, just to be sure, Elezra drove his Escalade and was followed by a second car.

Days later, after everything had gone as planned, the Corporation amassed $27 million, for a profit of $17 million. Concerned about security, Elezra received an armed escort out of the casino and to a waiting limo, which whisked him back to the Bellagio. Within minutes, the winnings were carved up and a fresh poker game was in action.

AS COLORFUL AS THAT SOUNDS, it was an extremely unusual situation. More typical is the backing of individual players for smaller stakes. And the business of backing is not limited to poker. Good golfers with small bankrolls or minimal gambling instincts are frequently staked. Games get made, money is put up, and at the end of the round, proceeds are chopped between players and investors. “The split can vary,” says a young golfer who enjoys this sort of backing by one of the world’s top poker pros. “I get 40 percent of the winnings. That’s pretty good when you consider that we frequently play for $10,000 per hole,” he says.

What happens if you lose? “There is a makeup number. This means that I have to win back what we’ve blown before I can resume getting my cut. Otherwise, it’s not fair to the investor. You can’t expect him to carry all the downside.”

The time frame of your investment in a gambler’s activities can vary. Sometimes, investors will buy a piece of a player for one year at a time. That was the case with Greg Raymer, who went on to win the 2004 World Series of Poker. A couple of years before winning the WSOP, he sold pieces of himself for $500 per share. Raymer, who maintained a day job as a patent attorney but was also a serious amateur poker player, wanted to increase his $15,000 poker bankroll without tapping into his savings. The deal was structured so that if he lost money at the table, all investors lost evenly. If he won, he got 35 percent for time and effort, and the remainder was split among the investors, including himself.

Most of the people who kicked in were friends of Raymer, though some outsiders stepped up as well. Initially, the results were lackluster. During the first year, Raymer’s investors lost $12 per share. A year after that, he finished ahead by $67 per share. So someone who was in from the beginning made $55 per $500 investment. Not bad but not exactly great either. Then, the unexpected happened: Raymer won the WSOP, and suddenly, each of those $500 shares was worth $36,300. Raymer’s biggest investor cashed out for $363,000.

Was Raymer bummed about having to share his winnings? “Not at all,” he replied at the time. “I was happy to do it. Without the backers, I might not have been able to play in the World Series.”

Raymer, who no longer needs to have investors, knew enough to cover all eventualities in writing. Though professional poker players are notorious for making major deals with nothing more than a handshake -- burly pro Gavin Smith, for example, has been backed in tournaments for years and has won close to $4 million since 2005 but has nothing documented in writing and has had no issues with the professional gambler who stakes him -- it’s probably best to have the terms mapped out, especially if the sums of money can be substantial.

Just ask Crispin Leyser, who claimed to have a verbal agreement with Jamie Gold for half of Gold’s 2006 WSOP winnings. Of course, when the deal was made, neither party expected Gold to win that year’s first prize of $12 million. But he did, and he failed to pay off Leyser immediately. Leyser filed a lawsuit and the dispute got settled, but not without loads of unseemly gossip. To the old-school poker players, for whom word is bond, this conflict seemed ridiculous. “The whole thing sounds [messed up],” said veteran gambler Billy Baxter not long after Gold supposedly reneged. “But we don’t know what the real deal was, and six million is an awful lot to pay if you think you don’t really owe it.”

The point being that having things in writing removes the guesswork and reduces the potential headaches.

BEFORE INVESTING MONEY in a gambler, you need to be aware of the potential pitfalls. For starters, this isn’t like buying stock and being protected by the U.S. Securities and Exchange Commission. It’s a pretty roguish investment, and you want to be sure that your racehorse isn’t going to run away with your money. So invest with someone you trust, not some dude who approaches you in the Bellagio coffee shop, claiming to have left his bankroll at his girlfriend’s house.

You also want to make sure that your player can do what he says he can. The tricky thing here is the reality that the people you want to back are usually the very people who don’t need to be backed. But there are plenty of reasons -- beyond an inability to keep from losing -- why a successful player would opt not to gamble with his own bankroll. Maybe he’s been performing well but running badly, maybe he plays better when someone else’s money is at risk, maybe his bankroll can’t handle the stakes of an ideal game, or maybe he simply has no interest in withstanding the swings that come with certain kinds of gambling. Such has been the case, at one time or another, for well-known pros, including Daniel Negreanu, Annie Duke, and Phil Hellmuth.

Critically, make sure that your guy is playing a game he can beat. This goes beyond your player sticking to poker, blackjack, golf, and sports betting -- the four forms of gambling in which astute practitioners can typically find edges (be suspicious of anyone who says he can beat craps) -- and gets more into game selection. “When someone talks about a good game,” I’ve been told by many a poker pro, “he’s talking about a game he can beat, not about a game that is competitive or filled with skillful players.” Taking the time to find soft games, and ascertaining that the player will buy into them, rather than taking shots at tougher situations with more profit potential, often makes the difference between winning and losing.

Before a single hand is dealt, make sure that the person you’re backing is properly bankrolled. It’s nice to sit down in a high-stakes poker game. But it’s not nice to go broke while playing in it. Generally speaking, it’s suggested that a player trying to make a go of it at no-limit Texas Hold ’Em needs to have a bankroll that can cover 2,000 big blinds. This means that someone playing in a $2/$4 no-limit game should have $8,000 at his disposal. And as an investor, acquaint yourself with the negative swings that are possible, along with the sums that you and your player can reasonably expect to win.

Finally, be sure that you can afford to lose the money you’re putting up. Even under the best circumstances, this is, after all, gambling, and once you step into that realm, the notion of a sure thing is more elusive than a royal flush.

ANONYMOUS is a writer based in New York City.

If you feel compelled to do your own gambling in a casino, here are a few moves that will help to preserve capital.

Avoid insurance: The insurance bet at a blackjack table -- in which you get back your bet if the dealer hits a blackjack but lose half of it if he doesn’t -- can be a great one if you have an idea as to how many tens remain to be dealt. Card counters are able to estimate this. Hence, when the dealer shows an ace and the deck is rich in tens, it’s a strong bet. If you don’t know the count, it’s a sucker bet and should be avoided.

Play the odds: The best bet at a craps table is “taking odds.” This is essentially an even-money bet, and when playing against the house, it doesn’t get much better than that. So forget about spraying money all over the felt. Make a pass-line bet, and once the dice thrower establishes a point (that is, the number that he needs to roll again), take an odds bet for as much money as possible.

Follow the tourists: Tourist traps are not where you want to stay, but they are where you want to play poker. Stay away from games that are filled with locals who spend their days folding, raising, and bilking out-of-towners. Instead, seek out the games that attract tourists, who are likelier to be unseasoned and unsure of optimal plays.