Archive | February, 2015

A $1.5 million mistake! Do you just let it go?

15 Feb

Golden-nugget-dealer

I once made a painful mistake and was absolved. Recently, a much larger mistake was made by an Atlantic City casino. It, too, was absolved.

I considered my absolution reasonably fair. I’m not sure about the Golden Nugget’s.

It would be nice to know what others think, so please keep reading.

I was in college when I committed my blunder (neither my first nor my last). My classmates were finishing their final exam in political science when I realized I was supposed to be there. Upset and perplexed, I ran to the class and arrived as everyone was leaving. With exceptional humbleness I told the professor what happened and apologized, repeatedly.

His reaction stunned me: He laughed.

“You’ve had an ‘A’ all semester. Forget it.”

And so I wondered if the folk at the Golden Nugget were equally stunned – or more so — this week when their mistake was wiped clean by the State Superior Court of New Jersey.

golden-nugget-buildingAccording to the Associated Press, the case dates to 2012 and a game of mini-baccarat. Fourteen players who had been betting $10 a hand suddenly up their bets to $5,000 and won 41 straight hands. Their total winnings were $1.5 million.

The court, ruling in favor of the Golden Nugget, ordered them to give it back.

They didn’t cheat. They broke no rules.

What they did was notice that the cards being dealt had not been shuffled. As the cards came off the deck, they showed a consistent, predictable pattern. The players took advantage of this pattern to win.

The dealer was not shuffling the cards because the decks were supposed to have been pre-shuffled by the manufacturer. The cards came from a Kansas City company that admitted its error in court.

The judge’s ruling said New Jersey’s Casino Control Act requires that cards be shuffled. Since they were not, the mini-baccarat play was illegal, unauthorized and therefore void.

The court ordered the 14 players to return their winnings, minus their original bankrolls.

Years ago when I learned I had screwed up, I was willing to accept the consequences. Naturally, I felt that the Golden Nugget should accept its loss, or at least go get the $1.5 million from the company – Gemaco — that didn’t shuffle the cards. (They reached an undisclosed settlement.)

I changed my mind when I learned more about the case. Now I don’t know what to think.

The additional details and background came from the website Cardplayer.com.

It seems that back in 2012 a lower court actually ruled in favor of the gamblers. It was willing to award them their winnings – which they had not fully collected. The Golden Nugget suspected it was being scammed and paid out only $500,000. The 14 gamblers were forced to hold the rest in chips.

The gamblers, all of Asian descent, were not happy with this first ruling. They wanted more than their winnings. They wanted damages and made allegations of illegal detention and racial discrimination.

The owner of the casino, Texas billionaire Tillman Fertitta, said he would gladly pay the $1.5 million if all other charges were dropped. The 14 gamblers refused.

Now they have lost, and most likely will appeal.

Even for a guy who got As in political science, I’m not sure who is right or wrong; who is being fair or unfair. I’d like to hear from others on how they would rule.

The one resounding thought I’m left with is this: If I had been playing mini-baccarat and the cards started showing a pattern, would I have been smart enough to take advantage of this, or would I have been kicking myself for the rest of my life for missing the opportunity?

A final footnote: Gemaco, the company that didn’t shuffle the cards for the Golden Nugget, once manufactured cards for the Borgata that had flaws on the side. Ten-time World Series of Poker champion Phil Ivey was dealt those cards. He noticed the flaws and used them to win $9.6 million.

Lanny Morgnanesi

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The Black Death, a killer of 20 million, had its good points

7 Feb

black-death

Being the progeny of immigrants, I’m sympathetic to their cause. Still, I’m convinced large-scale, legal immigration has hastened the withering of the middle class.

There have been other causes, including changes in tax policy and the global economy. But I was surprised to learn recently how significant an impact immigration had on the downward spiral of wages.

With thousands and thousands of Baby Boomers leaving the work force for retirement, wages should be going up. That’s the simple law of supply and demand. Immigration, however, has provided a counter balance and prevented this. Indeed, opening the borders sometimes seems like a purposeful antidote designed to help labor-intensive corporations. This is mostly likely why the U.S. Chamber of Commerce is a strong advocate of robust immigration.

Congress, perhaps responding to appeals by business, has frequently and consistently raised the level of legal immigration. In 1965 it was at 290,000 annually. Today it is about 1.1 million. This is legal immigration, and it is four times higher than any other country.

how-many-is-too-manyPhilip Cafaro, author of “How Many Is Too Many? The Progressive Argument for Reducing Immigration Into the United States,” gives a thorough accounting of all this in a recent edition of the Chronicle of Higher Education.

Cafaro sites studies by Harvard University economist George J. Borjas, a leading authority on the economic impact of immigration. Borjas found that in the 70s and 80s, a 10 percent increase in the number of workers in a given field decreased wages there by 3.5 percent. A more recent study showed that such an increase reduced wages of African-Americans by 4 percent, lowered their employment rate by 3.5 percent and increased their incarceration rate by almost one percent.

It’s good at least that today there is a great deal of talk about the withering middle class. Even Republicans now recognize it will be a critical issue in the 2016 presidential race. In an attempt to get in front of the issue, candidates like Jeb Bush are already saying they want to reverse the trend, although they provide few details.

If politics were not a factor, a solution could be easily found.

The strong post-war middle class in the U.S. was created primarily by tax policy. This policy was heavily graduated, meaning you paid a lot more if you made more a lot more. That policy no longer exists. Returning to it would easily restore the middle class, but it is unlikely the Republican Congress will choose this route.

Jeb-bushThere is, however, a consensus that a middle class, if one is desired, must be created, otherwise there will only be rich and poor. One was created in Europe during the 14th and 15th centuries. Unfortunately, the creative force was the Black Death — the bubonic plague that may have killed one out of every three Europeans (about 20 million). With the labor force devastated, there was upward pressure on wages and the ability of farmers to earn a much better living. Some reports say farm income increased by 50 percent.

In addition to creating the middle class, the plague often is credited with spawning the cultural rebirth known as the Renaissance.

The Black Death is a high price to pay for a middle class, even if it is accompanied by a renaissance. Changes in the tax and immigration policies might be a better way. But because government move in micro increments, this is unlikely. Any significant change probably will have to come through some unseen, forced hand.

If this is true, let’s hope it’s a kind one.

By Lanny Morgnanesi

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