The downfall of the FTX cryptocurrency exchange has been in the news all month. Wouldn’t it be interesting if different gambling strategies helped push the company to the brink?
Well, it appears as though poker and blackjack strategy may have played a role in one of the biggest stories of the year.
The former co-CEO of Alameda Research, Sam Trabucco, is a gambler. Alameda is a sister company of FTX.
Trabucco unexpectedly stepped down as co-CEO of the company in August. It appears as though his risky maneuvers at Alameda may have assisted in the collapse of FTX.
Trabucco used strategy from the blackjack and poker tables while running the business. He was both a card counter in blackjack and a poker player. He participated in the World Series of Poker in Las Vegas earlier this year.
Experienced and advantage gamblers often call their bets “investments” as they typically play when the house edge for the casino is nullified. Investors are always looking for an edge and that was how Trabucco operated his company.
Trabucco’s Gambling Strategies
Trabucco shared some of his gambling/trading tactics in a Twitter thread last year. He said “Bigger is Bigger (when Betting is Better)” and shared the following starting with poker:
“Getting it in good is a poker term referring to the idea that, when your odds are best (strictly speaking, EV of winnings, not odds per se), you wanna bet more. For many players, the ability to recognize spots where this matters is the difference between playing + and -EV poker.”
He laid out some examples from the poker room before touching on blackjack.
“Blackjack is a casino staple — and counting cards while playing is a Hollywood staple. But it’s actually a strategy that does work under some conditions! And it all comes down to getting it in good.
Some blackjack tables don’t shuffle too often, and sometimes that means that deck composition can get “screwy.” If there are more AKQJT cards left than usual (vs. the really low cards), it turns out that the odds can shift to the player’s advantage.
Counters are just tracking this, and betting max when it gets good to do so — betting min otherwise. This is a pure example of getting it in good! And really, it’s analogous to trading — using the count as a signal and putting on a bet when the signal tells you to.”
Trabucco appears to be proud of his card counting skills tweeting that he “may or may not be banned from 3 casinos for this.”
The thread continued to show how creating an edge in the casino can also be used on the trading floor. There’s nothing too earth-shattering to experienced blackjack players here. However, it’s always interesting to see how gambling strategies can be used outside of the casino.
Alameda And FTX
Alameda Research is a company related to FTX. Trabbuco may have been sharp in the casino but it appears as though his gambling aptitude didn’t translate to his day job.
He may not be a great gambler despite his blackjack and poker skills. He tweeted “I should stick to trading” during a trip to Las Vegas.
Bloomberg describes his deals as “risky bets.” The business magazine shares:
“Much is still unknown about the exact details of Alameda’s troubles and how its losses helped send it, FTX, and more than 130 related entities into bankruptcy court.”
This isn’t a financial blog so we’ll stick to the blackjack of it all. Outlets like Bloomberg can offer greater inside to Alameda, FTX, and other companies.
Counting Cards is a skill that can help swing the house edge from the casino to a player in a blackjack game. Learning this skill can turn a recreational blackjack player into an advantage player or professional.
Counting cards in blackjack isn’t illegal. However, many casinos will restrict counters from playing. It appears as though three casinos identified the former CEO of Alameda as a legitimate card counter and banned him.
There are numerous card counting methods to help a player get an advantage over the casino. Since the cards are shuffled and random counting cards is not a get-rich-quick scheme.
Card counters can have a small edge over the casino over time. However, just like recreational players, there are ups and downs as the cards in play are random.
Not every blackjack session is a winner for players counting cards. This is a long-term advantage and players should have a lot of patience and ample bankroll if they want to make money playing blackjack.