Playing Craps the Smart Way
Uncle doesn’t gamble – which is good, because I love to. When I go to Vegas, I don’t play the slot machines because it has an inflated reputation of paying out big time with the reality of a fast way to lose money. It is hope without much odds, but it makes for a fun way to sit and have free drinks.
I like to play poker, especially when I get good hands. Of course that is the only time I raise the bets and jubilantly call out “All in!” If you are smart, you won’t call me…
The game I love is craps. I don’t always play, but I do always watch. It is not the roll of the dice that fascinates me (unless I am in active play and betting on my sixes and hard eights), but the behavior and methods of the players.
Good friend Chang is my craps mentor, but I still don’t play like him because he is quite aggressive. He usually walks away with money, or loses his allowance for the night. I play more chicken craps, and usually walk away with money, or lose just part of my allowance. I think Chang and I play craps the smart way.
Each person develops their own method of playing craps. You can see it on the same table, where the chips are stacked high and dense on one side, and sparse and few on the other. Different strategies, different pockets, different levels of risk.
The hot tables are the most educational and fun. The rolls are long, the excitement is high, the chips fall on the felt with accelerated vigor. I’ll get my sixes and eights paid off and pull it from the table and sometimes take more risk with numbers outside of my comfort zone (with higher payoffs), or double up on some bets. My rack (the chips in front of me) grows slowly because I always pull at first instead of letting the bets ride. Chang will pull back or let it ride to his piles on the table, and sometimes pulls from his rack to open up a new combination if the roller is hot. We both like to put in a few chips for the dealer bet (giving back seems to help us win).
Some people, especially the loud rollers, like to put whatever they get paid on back on the table. It increases their potential win by the powers of 2, and it seems like all the planets are in alignment and the numbers go on and on – each roll increasing their chips on the table, every number raking in more chips. When a number shows up that they do not have a bet on, they toss out their racked chips to play the rolled number for the future. Many of these high rollers have nothing in front of them on their rack and thousands of dollars on the table, growing with each roll. Then, number 7 shows up.
Number 7 (called craps) has the highest possible odds of turning up over any other number. One of the guarantees on the craps table and life is that the number 7 will turn up. The unknown is when. If it shows up on the very first rolls (come out rolls), everyone wins if they are playing on the Pass Line. If it shows up anytime after that, it is crap. All the money on the table is wiped off the board and into the House’s hands. The only ones still in the game are the ones with chips on their rack in front of them, or the ones that bet on the “no pass” positions.
There is no right or wrong way to play craps. I think there is a smart and fools way to play. I play chicken craps and don’t make as much as I might, but I don’t lose as much either. Chang plays smart craps but sometimes I seem smarter than him when the rolls are unlucky. The ones who play like roosters and act like they can’t lose are playing fools craps and will lose everything, big time, unless they know when to walk away, or pull some chips off the table.
Correlating craps behavior to real estate is comparing rent and hold real estate to flipping real estate, and, when the guaranteed number 7 (market downturn) shows up, the walk away results are dramatically different.
Rent and holders put the money on the table to purchase cash flowing properties from rental income. The rental income goes onto the “rack”. When there is enough accumulating on the rack, the money is put down on the table for another property. This will increase the velocity of the rental income, and more rental income goes onto the rack. It will then take less time to accumulate enough on the rack to purchase another place, which will again increase the velocity of the rental income. If the real estate market tanks, the value of the properties decreases, but they are still generating income, every month, as long as they are rented.
The flippers put all or most of their money on the table and purchase a property. If the price they pay is at a discount to fair market value, it can be sold to someone else for a profit. The property is taken off the table, and their rack is flush with profit. As often and as high as possible, another property is purchased, and sold for a profit. This can go on for a long time – like a high roller with a long ride. When the market drops or gets stale, the profit disappears and can even run negative. Timing is critical for this strategy. You can make a lot of money flipping properties, just be smart when the market turns.
Robert Kiyosaki’s real estate strategy is rent and hold. He rarely flips. It is a slower way to wealth and not as exciting as buy low and sell higher, but it is a strategy I like. It matches my chicken crap strategy. If you are a high roller, please be a smart high roller.
Disclaimer: Gambling is not recommended by Aunty. If you do gamble, only play with what you can afford to lose, i.e. your Starbucks allowance.