The Good Life

The Greatest Slot Machine Designer in the World

A former stockbroker creates a lucrative new video poker game
| By Michael Kaplan | From Steve Wynn, Jan/Feb 03

In the gargantuan room at the Las Vegas Convention Center is wall-to-wall slot machines, poker machines, gimmicky table games, video roulette and novel forms of blackjack. Bikini-clad women toss T-shirts to attendees and silver-dipped beauties twist as if it were 1960.

Officially this event is called the Global Gaming Expo, but it feels more like a pickpockets convention -- albeit, one with beautiful women. The pickpockets are gambling machines: flashy, tarted-up devices guaranteed to separate suckers from their money. Garish as hookers, some slot machines beckon with alluring names such as Go to the Green,

Most of the time, of course, looking for an edge in a gaming machine is foolish at best and, more likely, totally devastating. the machines, after all, are meticulously designed: to win.

Follow the Stars, and Flame of Olympus. Others tie into movies or TV shows or celebrities. Invariably, they provide worse payouts than the garden variety and gimmick-free slots, which casinos purchase for $8,000 and own forever (fancier, bubble-topped machines are licensed and leased). At their core, however, all of these machines are nothing more than good old-fashioned one-armed bandits.

Drawn to the Expo is a veritable who's who of the gaming world. Among the attendees are casino executives from across the country, food-and-beverage types sampling coffee-flavored smoothies dispensed by models, ultra-successful game designers, and serious players who come to snoop around and preview games that might inadvertently have mathematical chinks ripe for exploitation.

Most of the time, of course, looking for an edge in a gaming machine is foolish at best and, more likely, totally devastating. The machines, after all, are meticulously designed: to win. Maybe if you play perfectly (which hardly anyone does), a poker machine might pay back a bit more than 99 percent of its money. Still, over time, it's a losing proposition. Slots are even worse. With their continually spinning random-number generators, they are designed to pay back as little as 85 percent of the money dumped into them. No wonder machines account for 70 to 80 percent of a typical casino's revenue.

Bob Dancer, who's cruising the convention and previewing games, had considered all of this before he decided to devote his life to playing video poker machines. Slender, gray-haired, mellow and matter-of-fact, Dancer knew that they were rigged against him, but he also wondered if there was a way to turn them into an advantage play. A former database administrator, who, in 1993, moved from Los Angeles to Vegas with the intention of making it as a card counter, he quickly found himself banned from the blackjack pits. He had a bankroll of only $6,000 and dreaded the thought of returning to the corporate grind. "I needed to find a game in Vegas where I had an advantage," says Dancer, who chronicles his years as a video poker savant in a book called Million Dollar Video Poker, which will be published by Huntington Press in March.

"I spent 200 hours on the computer, perfecting a strategy for the deuces-wild machine. Today you can get the strategy for any poker game in three seconds. Then you practice on a computer that lets you know when you make a mistake."

Dancer had no such luxury and was forced to learn on the job, starting out on 25 cent machines and graduating to bet upwards of $500 per hand. He realized that if he played perfect video poker, the house had a very slight mathematical advantage. But that advantage tips in the player's favor after paybacks are factored in (the modest refunds casinos give for every dollar of play), bonuses (one year Dancer received six cars from the MGM Grand, including the Benz he drives today), and assorted perks (he accumulated 6 million American Airlines miles thanks to a video poker promotion offered by one casino that didn't expect a player to generate $700,000 of action in a single day, as Dancer was wont to do when the perks ran in his favor).

Wagering huge sums of money with what generally amounted to a 2 percent advantage allowed Dancer to realize a $1,200 return (in the long term) for every eight hours of play. While he occasionally benefited from underhanded flukes -- a disgruntled casino employee, for instance, sold $10 coupons, normally given when players hit four of a kind, for $1 each -- Dancer mostly profited from skillful play and casino inducements. "I am not interested in playing just to play," says Dancer. "Playing when the casino has an advantage is against my religion. Plus, I get satisfaction out of kicking the casino's butt."

Despite losing streaks that have cost him as much as $300,000 in a single week, Dancer insists that he is a clear-cut winner who had been severely underestimated by the casinos. The latter condition changed one day in 2001 when he hit a royal flush for $100,000 (he was playing on a $125-per-hand machine) just 30 minutes before his wife, Shirley, hit the same megahand, on a $500-per-play machine, for $400,000. They defied the 40,000-to-1 odds of getting a royal flush and benefited from the machines' continual shuffling of their virtual cards. This means that every hand has the same odds regardless of what turned up on the previous deal. "The timing on any royal flush is luck," he continues. "The cards you get dealt depend on the nanosecond in which you press the button."

Nevertheless, the MGM Grand took the hit hard and cut off the perks that made it an appealing place for Dancer. He says that he and his wife were down $80,000 on the $500 machines before he hit the royal, and he explains that nothing could stop the next person from hitting one as well. But, he adds, there is a big difference between his style of play and that of the typical sucker. "The skill of a video poker player is how much you lose between royals," says Dancer, insisting that the real difficulty of mastering video poker is not the mathematics or the money management. "The hard part is surviving the swings. Try losing hundreds of thousands of dollars in a day and see what that does to your psyche. On top of that, video poker is a boring game. Most people cannot maintain their concentration while playing a game like that." Dancer considers this for a beat, then acknowledges that his ability to do it confounds the expectations of some: "People are amazed that I can make a living playing video poker. My feeling is this: let them be amazed."

Even if video poker is beatable under certain conditions -- keep in mind that machines display their pay schedules and that the better paying ones are often located in the rear of the casino rather than in the front -- the real winners are not the Bob Dancers of the world. For truly stunning revenues, look at Ernie Moody, the stocky, mustachioed inventor of the Triple Play Poker machine.

Triple Play Poker is the first machine that lets players play three hands of poker at the same time. It satisfies a major frustration of poker -- being one card off from making a fabulous hand -- by giving players two more chances to draw their desired cards. Dancer says that the machines generate royalties of $15 to $20 per day, out of which Moody is said to receive a substantial percentage. A source close to Moody maintains that Moody has pulled down as much as $15 million in a single month from these insanely popular poker machines. "The key thing is that a game needs to be simple," says Dwight Crevelt, a veteran of the gaming machine business. "People go to casinos to relax and have fun. They don't want to spend 15 minutes figuring out how to play a game." How does that thinking tie into Triple Play Poker? "It is so simple that you play the game and think, 'Damn it! Why didn't I come up with that?'"

When not in Las Vegas, Moody vacations in a starkly modern house on the beach near San Diego, where he tools around in his silver BMW. He also has visited Cabo San Lucas with his brother (Moody needed to unwind from September's Expo, where he was a magnet of attention), time-shares on a yacht with Baron Hilton, the chairman and chief executive officer of the Hilton Corp., and recently has begun breeding thoroughbred racehorses. Ernie Moody is the first to acknowledge that he's got quite the life, but he'll also remind you that he had to work hard for it.

Back in 1990 Moody was a stockbroker in Denver. When gambling became legalized in the nearby towns of Blackhawk and Central City, he decided to get in on it. Moody and a friend teamed with investors and bought Blackhawk land that was to be developed into a casino. One of Moody's responsibilities was to buy gaming machines and tables for the casino. He went to conventions very much like the Global Gaming Expo and looked at the merchandise. One exhibitor stuck in his mind: a truck driver with a small booth and a company called ShuffleMaster. "The guy told me that he wanted to lease his shuffling machines around the world," remembers Moody, dressed down today in shorts and a golf shirt. "I figured it would never happen. Then he came out with Let It Ride, a $25 million-per-year table game."

Moody's company, christened Blackhawk Gaming, went public soon after its founding and Moody ultimately got edged out of the business. Rather than go back to being a broker, and inspired by Mr. ShuffleMaster, he cashed in his stock and vowed to live off of the proceeds while successfully developing a casino game. "I decided to set my sights on the poker market because nobody had come up with a good video poker game for the last couple years," says Moody, who spent the next seven years conceiving various ideas. "I had a game called King's Court, a table game where everybody got five cards and there were three rows of replacement cards in a pyramid [if you wanted three replacement cards, you selected from the bottom of the pyramid, for two you went for the middle, and for one you went for the top]. I got a variation of that game into the Riviera, but it played slow, and the dealers, who were accustomed to blackjack, had a hard time figuring out poker hands." That one came close to making it and so did another game -- Navigator Poker, in which players take cards from various points on
a compass.

By this time, Moody was beginning to run out of money. He borrowed from his father, refinanced his home and kept plugging away. Typically he would brainstorm by dealing out hands of poker and trying to invent variations on the game. It was late one night when he dealt himself three rows of five-card poker hands. "I was half asleep when I figured out that I could deal one row face up, two rows face down, and whatever cards you held in the first row would be in the second and third row as well," recounts Moody, sitting in a wood-paneled study, right on the beach, just a chip's throw from the roiling surf. "I lay in bed, thought about it some more, and wrote it down before falling asleep."

The game looked like a winner, and Moody ultimately released it through a company called International Gaming Technology, the number-one casino game distributor in the world. Moody and IGT were unprepared for how quickly players embraced the game (the concept has grown to the point that there is now 50-play poker -- where you get the chance to play your hand 50 times on a single screen). "I had a little board in my office that tracked the machines in various casinos and pretty soon I had to throw away the board," Moody says, remembering the day he witnessed 180 coins going into his machine for every 15 that went into a single-play machine alongside it. "There were too many casinos and too many machines to keep track of."

Though Moody soon found himself with zero money worries, other parties weren't thrilled with his fabulous profits: "Casinos do not enjoy paying the daily royalty fee, even though the games make more money [than machines that do not require royalties]," says Moody. "There is pressure on IGT to reduce the royalty fees. Casinos want to buy the game for not a lot of money, keep it on the gaming floor for 10 years, have it make money, and then trade it in for 80 percent of the original cost." Moody doesn't have to say that he finds this notion to be patently ridiculous, though he does allow that he never wanted anything to do with a buyout. "I was the person who believed in this game the most. And the idea was worth more to me than what someone who didn't believe in the game would be willing to pay."

Before Triple Play Poker gets overtaken by something bigger and better -- which, invariably, it will -- Ernie Moody hopes to produce a successor. He is not alone in this desire. The popularity of Triple Play has made video poker into a waiting gold mine of sorts, and game designers across the country are working hard to hit the mother lode. Moody himself has mathematicians working on innovative software and he has joined forces with a couple of other game designers in the hopes of being in on the next big thing -- even if it doesn't come directly from his brain. "The quest is rewarding," Moody says, ruminating in the way that only rich men can. "When this whole thing started, it was my dream to become successful, and the fun of getting there has been a big part of it. But it also felt good to know that I would not go out of business, that this thing would grow, and that I would continue to make money." He hesitates as if he needs to consider this. Then he adds, "Yeah, that feels good."

Michael Kaplan is Cigar Aficionado's gambling columnist.

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