People say you play perfectly. If you play long enough, you will win. Is it luck or is it skill . Join me for the story of how one blackjack player took on the casinos in a whole new way. 40 Million People flock to the vegas strip every year but most only get a peek at the spectacle that is las vegas. You need to be a high roller to see it all. Someone like don johnson. Don is a whale, meaning he risks millions at the casinos and makes millions as well. He is a legendary gambler. He won 15 million in one streak. His game is blackjack. He hits the casinos when they can least afford it. When he walks into a club, dancers show off his initials and celebrities pay their respects. The scene is all engineered by the casinos because they want to win his money. I want don to show me how he beats the casinos at their own game. Hi. So nice to meet you. He treats the casino like a battlefield. He studies the industry, its strengths, and its shortcomings. He says you have to start at the beginning. Where are we heading right now . Where all of vegas started. You come here and gamble . More to just play around and have fun. Gamblers often learn to play here because the bets are low and it is relaxed, friendly. The first vegas casinos opened here back in the 1930s. This is history. This is the beginning of what became the vegas strip. This is the famous vegas strip and it lives up to its reputation. Full of possibility and excitement. Two giant companies dominate the strip mgm and caesars. Don played at a caesars property, he walked out the door with 4 million at caesars. They determine they cant make money off people like me. I can accept that. He says hes been barred from caesars for life. Is that because he is too good . We cant nor would we bar you. We will not solicit him with expensive inducements. While he may not offer perks anymore, nearly all the other Big Companies spend hundreds of thousands on him just to get him through the door. If they want you to spend and they know you can spend, they will make it really easy for you to be here. They are catering to highend players which starts before they even think of coming here. They will bring a player from the east coast to las vegas. The mgm property has the mansion which is 29 villas under a climatecontrolled dome. You get to stay for free . Nothing is free. It is factored into the game. I will give you a secret inside baseball on casinos. Jim murren is the ceo of mgm and don is getting perks at every single one of his casinos. Theoretically, we are going to win from you a percentage of the money that you circulate. The house engineers a statistical advantage. On average, you will lose 20 of the money you play. Are there certain games where you have a better edge over the player . The best chance of beating the casino is with baccarat. That is followed by perfect strategy at blackjack, playing straight up craps, and every game in between has a different set of holes. If you play the big wheel that we put in the front of the casino, you dont have much of a chance. My guys will hate me for saying this. If the house wins so predictably, how do casinos keep gamblers coming back . The answer is perks. I can comp you to induce you to come out here. I will give you 80 worth of stuff. The more money spent, the more money casinos make. The whale will lose thousands of dollars. I should be able to give him 80,000 worth of stuff. Even if i fly you from point a to point b, i am probably not burning that much fuel. The margin on the highend the whales is higher. Highrollers generate an estimated 25 of all gaming revenue on the strip. You have to have their length of play. The longer they play, statistically the house will win. Which is why casinos would do just about anything to keep the whales playing. Easy transportation . Yes. A nice room . Alcohol . They will try to customize a package and try to give him what he wants. Don johnson is no ordinary whale because the more he plays, the more he wins. His biggest single night was at the tropicana. Take me back. I beat them big. When i had a 700,000 hand, i won those. It is difficult to lose those big bets. He racked up millions of dollars of chips before management cut him off. It spread through the entire town and then when i woke up later on, i got several phone calls from different casinos. The casinos were calling you to see if you wanted to play at their place . Why not get him to come over here and see if he can lose part of it back or all of it back . But, don rarely loses. He went on to gamble at two more casinos and won another 10 million before he quit. Anybody watching this right now probably thinks you were counting cards. Was there more to it . Monkeys can count cards. Card counting alone will not get you there. I knew i had a better chance of winning than i did of losing so i took advantage of it. People say you do play perfectly. If you have an edge, if you play long enough, you will win. What gave him an edge, he says, was knowing the game, the players, and most importantly, understanding the odds on the casino floor. All of it is math. Just like on wall street. You are trying to find inefficiencies in the way they offer their games and when you find it, you will take advantage of it. He found an inefficiency in the casinos perk system. Sometimes they give away too much. There is a natural collision of interest between the marketing side and the Operations Side of the casinos. The marketing side wants to buy the business and give away as much as possible to get players in. He could resist all the superficial enticements. He realized he could negotiate something far more valuable. They will test you a lot and it is hard. How don johnson turned the perk system to his advantage when we come back. The bellagio. One of the most dazzling casinos on the strip. A lot of people gather right here because this has one of the best views in vegas. You can see pretty much the whole strip. Everything from Caesars Palace all the way down to Treasure Island and, of course, the eiffel tower. Highrollers come here to enjoy one of the most expensive perks in the city. I like this table. Absolutely gorgeous. What makes this table worth 250,000 a night . This red button. Wow. Now i believe it. It costs them 10,000 every time they fire these things off. I just want to keep hitting the button. The casino and its sibling property transformed the vegas strip in the 1990s. They were both designed by one man steve wynn. What it takes to dazzle everybody today is 100 times more ambitious and complex and challenging than before. He is the nemesis of every whale in the strip because he is always inventing new temptations to keep them in the casino. From nightclubs to shows. They are all coming here for the experience . We have trained the public and raised their expectations. A good thing. A good thing for steve wynn because when don johnson is on a winning streak, he goes to the clubs to celebrate. What is it about his properties that are different from Everything Else here . He is a perfectionist. Spare no expense. If they build it, people would come and they do. He went from an unlikely candidate to the most influential casino developer in history. How does an english major from the university of pennsylvania wind up becoming a casino mogul . The question is how does a boy of opportunity take up a life of crime . He was one of the first casino moguls without ties to the mob. His casinos are financed by wall street and inspired by highend hotels. I would go on vacation to the hotel and i would watch the people behave in this place with such joy and happiness. It was utopian and the guy who built the place marched around with his beautiful wife and the only thing i could think of is, it is good to be king. Thats what it looked like to me. He eventually would become king of las vegas but he started out small working with his father. He took over the Golden Nugget casino in the early 1970s. It wasnt until he opened mirage was when he showed off his talents. I think every developer demonstrates what he thinks of the public by the product he creates. If people have discretion and know the difference and will respond to it, then you will do that even if it costs more. That is the key to winning in las vegas. Keep them entertained and gamblers will lose every single one of them. My father was a problem gambler. He just liked the game more than the money. I will go and grab the biggest players in the building. I will ask them why they are risking 50,000 a roll on dice. Why are you doing it . To amuse myself. I like the game. Are you ever worried that you have a problem with gambling . You worry at times. You want to make sure that your mind is sound and it will test you a lot and it is hard. How do you know when to stop . If you are up 1 million, 2 million. What keeps you going to 5. 8 million . They ran out of chips. Don says he wins because as much as he likes the fun, he doesnt like the biggest life out to distract him. He stays focused. A couple of years ago, he noticed something that would give him the ultimate edge. I dont see as many big players as when i did just five years ago. I dont see the big action, not in vegas. I think a lot of it is a result of the economy and i think a lot of the asian players are playing overseas now. All the more reason for casinos to try and woo someone like you and get you into the door. The recession left casinos vulnerable to an attack by a killer whale like him. Are you exploiting weaknesses . Im not doing anything different than what a very smart Hedge Fund Operator would do on wall street. How the struggling Casino Industry provided don johnson with the biggest opportunity of his career when we come back. 4. 25 million in the span of what . Less than 24 hours . Probably around 12 hours. At night, las vegas looks invincible. Fly over the strip at dawn and its secrets are revealed. These steel and concrete skeletons have haunted the city for five years, evidence of the biggest commercial real estate bubble in history and its spectacular implosion. There is an awful lot of pain out here in las vegas. A lot of fear. Jim murren was halfway through building a casino complex the size of a small city when wall street crashed. We had 10,000 construction workers working on site and the banks stopped lending. It was very difficult. More Casino Companies are abandoning casino projects midconstruction. Do you think it has had a lasting change . The recession in las vegas stripped away the scab that was covering that the companies had a capital structure that was reckless and naive. His luxury towers now look out over the ruins of a casino project planned by the boyds. In your entire time in vegas, have you seen anything like 2008 . No, never. The boyds are really nice people. They drank the koolaid a little bit on this development. Many in vegas blame steve wynn saying that it was he who started the commercial real estate bubble. The new strip is like the house that steve built. Before he built his palaces, vegas casinos were nearly impossible to finance. Most were funded by millionaires or the mob and they relied on slot machines for revenue. I understood what to trust and what not to trust and it was not the slot machines. Wynn brought new ambition to vegas targeting players with expensive tastes. They have a pentup demand for the good life. It was having a cadillac and going to las vegas and gambling. And gambling was part of the good life. That is what the swells did. He turned to wall street and offered investors bonds. When he did his masterpiece of the casino, you get to experience it. The company plummeted and mgm seized the opportunity to take over his property. Wynn had gambled and lost. If you want to criticize or find fault with guys like us, it is easy. We are so flawed in many ways. It is a turkey shoot. His first strip casinos started a vegas casino arms race. Suddenly, banks are writing blank checks for anyone willing to tear down an old casino and build one that can compete with steve wynn. The boyds, a vegas family known for building small local casinos, are inspired to tear down the old stardust on the strip. This was all blown up in 2008 to make way for one of the biggest casinos the strip has ever seen. The echelon would cover 88 acres and cost a staggering 4. 8 billion. Three times the cost of the bellagio. I dont know that echelon was the right idea for them. What wouldve been wrong with a brandnew stardust. It was a great name. Something simple it wouldve knocked everybody out. They had to build five hotels. Do you think theres an element of being a gambler yourself in business . When we imploded the stardust and started to build the echelon, we could not see the recession coming. When we shut it down in 2008, we thought we will be down for six months to a year at the most and then we will restart. Nobody predicted what came next, including steve wynn. I had just opened it. If i had benefited from timing, this was payback time. Wham. Hello, december 22, 2008. The bottom of the barrel. Wynn struggled, but mgm was on life support. The company had gambled 9 billion on city center, more than any project in history. You rolled the dice . We were all in. Our stock went from 100 to the banks said, we are done. 2 a share. 1. 81, actually. 1. 81 a share . They felt if we went bankrupt, mgm would not be far behind. If mgm went bankrupt, struggling las vegas was doomed. But, city center opened defiantly in 2009. We raised 23 billion of capital. Where did you get the money . Equity investors that believed in us and the team. Banks that did know us. How do you grow your way out of that . The crash in las vegas sent shockwaves through the entire Casino Industry. By 2009, the fallout was being felt across the country. In Atlantic City, casinos were desperate for quick profit and were willing to offer whales major incentives. Don sees this as his opportunity. Right now, he is no whale, he is just an average blackjack player who needs to improve his game. I dont look at myself as a professional blackjack player. I have only become a shortterm professional blackjack player because they presented a deal that was so good, it was worth playing. How he transformed himself from casual gambler into a killer whale next. Less than two hours from the Atlantic City boardwalk, and over the pennsylvania border, sits the small town of bensalem, the home of the parks casino and don johnson. The casino owns everything on that side. He shocked the gaming industry by winning 15 million at the blackjack table but he had been prepped for this moment. He learned to gamble here in rural pennsylvania, not at the blackjack table, but at the racetrack. He started out as a jockey. It was a different lifetime ago. You are little taller, broader. You mustve been the biggest jockey they had ever seen. His days as a jockey numbered, he found work as a gaming regulator before becoming an employee at the racetrack. You work your way up managing and then you become a ceo of the track and running things for the corporation. I had never really crossed over to the player side that much. He wanted to gamble like the pros. I watched them as a regulator, observed them as an operator, but never actually participated. In 2003, he quit to become a professional horse bettor. He would run sophisticated mathematical equations in an attempt to predict race outcomes. He started playing cards in Atlantic City to relax. I used to play recreationally, not for big money. 25 bets would be 100 bets which would be a huge gamble. He became a regular player over time. Soon, he was betting 15,000 a game. Talk about Atlantic City. How do you walk into casinos here and in a span of four months time get 15 million . They were desperate for business and overpitching the games. Atlantic city casinos, owned by mgm, the boyds, and caesars, began calling don offering 50,000 in free bets to get him into the door. The deals were so good, he said Atlantic City was in worse shape than ever. Vegas has enough Critical Mass and they have a huge convention center. Some fairly Major Properties that can do a lot of Cross Marketing with Different Properties they own around the country now. The Cross Marketing strategy to keep las vegas strong also steals business from Atlantic City. Vegas casinos anxious to grow profits outside of the strip are pitching small casinos all around the country. States are embracing these casinos. I call it a winwin. It will generate hundreds of millions of dollars in revenue. Lets take the first step in gaming this year. New competition means big losses. Since 2006, 16 local casinos have sprung up around Atlantic City. I think they are losing too much of their business now. There is too much competition in surrounding states. It started with delaware. Pennsylvania has put a lot of pressure on them. New york has gaming now. It is a matter of time before Atlantic City will go back to being a beach town. Atlantic city is a very challenged place. What is your take on it . I am concerned. Jim murren, the ceo of mgm. We want to make the city come back. Are you worried there is a lot of saturation in that market . We have to be very targeted. We have to remember Lessons Learned during the recession and not repeat them. Mgms rival caesars have an appetite for building. Ceo gary loveman has built casinos in pennsylvania and maryland that will compete with the companys flagship in Atlantic City. We had so much expansion. In every instance where a state legalizes it and puts pressure on an incumbent state, that is a business problem. He argues regional casinos are necessary because they drive business back to his vegas property. A lot of locals are hopefully loyal to the brand. You have been treated very well in cleveland and now you want to go to las vegas so you have two options. You can be a traditional purchaser online or you can call your cleveland host who is engaged with his or her people and arrange exactly what you want. That is the proposition. It is a proposition that does deliver for vegas and it is part of the reason profits there only declined slightly in the past few years while Atlantic City lost 40 of its revenue. It is why Atlantic Citys casinos were desperate enough to offer high stake gamblers like don johnson whatever advantages they wanted. What happened to the house always winning . You are going to see big swings when you let people bet a lot each hand. Why not just keep playing . Find out exactly how don johnson did it coming up. Atlantic city, winter 2010. Casino profits are in a freefall. Casinos would do anything to win back high rollers. It is the opportunity of a lifetime for don johnson. He is about to stun the gaming industry. Walking away with 15 million. The key to the success is what he negotiates with the casino upfront. If you are playing enough, you can negotiate a discount policy. Three hands for 15,000 a swing. It may not give a player vip treatment in vegas, but when he bets that much in Atlantic City, it gets the casinos attention. The right game with the right odds for the right discount policy. Why do you think they gave you such a big discount and changed the rules . They were giving it to other players and had some success in beating other players. The casinos dont realize hes set a trap. He is not a midlevel player. He is an Industry Insider who knows exactly what terms to negotiate. He wants big bets. They were letting me bet 25,000 a hand by three hands. That is 75,000 a swing which is not hard to win 4 million. I did not have 4 million to lose. That was the key. He doesnt have 4 million to lose because he negotiates himself a discount a 20 rebate on all of his losses. If he gambles 4 million, he will only lose 3. 2 million and that matters over the entire course of play. I havent worked for a property that has been dumb enough to get themselves in that situation. He negotiates with high rollers. Some casinos have not paid enough attention. They havent thought through it all. Dont casinos have mathematical models they put in place to make sure someone like him cant come in and walk away with nearly 6 million in one night . They need to make an evaluation on you as a player, some kind of track record or past performance where they now judge you as a player and say this is a player we think we can beat. Why would the casinos think they could beat don . In the case of don johnson, why is it that your casino would be willing to negotiate terms that would not be as favorable to you but would benefit the player . We try not to do that after a certain point. We are doing this in a completely mathematical way. Caesars granted his request after a record of his past performances. Does it get logged into a computer so if a person plays extremely well, there is a note on their profile . Yes. The note on dons file says he was a mediocre player. How did you suddenly become such a great blackjack player . It helps to have some friends who understand the mathematics behind each of the games. Before taking Atlantic City for millions, he hooked up with a team of ivy league math phds. Did they help figure out how to best stack the odds . Different mathematicians have different skills. The mathematicians turned down a request for an interview with us. Don says they coached him, making him the perfect blackjack player. What are the odds i will get versus the odds you are getting . You will probably play a game that is 300 worse. The odds a player like me to beat the house is about 49 so while i may strike it lucky, the longer i play, the more likely i will lose. I believe in the statistical analysis, i do. Statistical analysis says even though the house has the edge, i can improve my odds if i improve my game. I want to win. You need to do some studying before you go in. Everybody can get the basic strategy card, it will make you at least a better than average player. This is a basic strategy table. It tells players when to hit, hold, and double down. Casinos do not allow a lot of these so once don secured the right advantages, he turned his attention to the rules of the game. You tweak two or three things one way or the other enough and the game goes from being negative to positive. Once he negotiates his edge, it is time for battle at the blackjack table. They make a mistake in your favor, you will collect on that. The art of casino warfare when the player continues. Every casino gambler knows when you play at the blackjack table, the odds are not in your favor. The house always wins and the rules are set in stone. What if you could change the rules and twist the odds . If you change one of the rules one way or the other in favor of the house or the player, it will change the odds of the game. Don johnson turned the table on the dealer and the casino never saw it coming. Some players have desires or wants. He is the ceo of boyd gaming. His marketers were so anxious for dons business, they allowed him to tweak the rules of play. Touch the cards or dont touch the cards. If it does not affect the odds of the game, it is not in violation of regulations. When you played at the borgata, the rules he negotiated helped line your pockets with 5 million. Walk me through the rules they gave you. Standing on soft 17. If the dealer gets an ace6, they have to stand on that hand. If i am sitting on 19 or 20 or 21, you will win. Doubling on any two cards. Some places have rules that would not allow you to do that. They only let you double if you have a 9, 10, or an 11. Splitting hands up to four hands. You are going to split the hand because you have two 2s. You can split them against the dealers. You can split up to four times and i have done it. It happened that night at the tropics. I had an 800,000 hand and it hit. Even with the 20 discount, his rules, and the big bets he negotiated the house still had an advantage. Not satisfied with those odds, he figured out how to tip the game in his favor. You need to be better than the dealer. If you can beat the dealer, you can beat the house. There arent enough players that they will deal 100,000 a hand to. They are nervous. And he insists on side bets and hand signals like surrender. If the dealer does not notice his gesture, it is a free bet for don. You had to establish up front before you even walk in to play . Yes. A lot of the dealers are not used to dealing these rules and they often make a mistake that is in your favor and you will collect on that. I like the pressure. David has been a dealer at Caesars Palace in las vegas for eight years. He sees a lot of highrollers like don. What is the biggest winnings you have seen . One million. How does the dealer know if a player is trying to trip him up . If it is a brandnew customer, you deal them out. When the odds at the table are nearly 5050, it comes down to this psychological warfare between the gamblers and the dealers. How does that unfold . If you are the dealer and you start noticing that the bets are getting sizablely larger, do you get your floor manager . The dealer has the power to do many things. Call a supervisor, take a break, change dealers. Do they try to change the circumstances of the game when you are winning that much . Of course, they do. It is not an easy thing to do to sit there and play for hours and hours and maintain the type of focus to not make mistakes. If you make mistakes, you will not get free play. It requires a lot of discipline . A lot of discipline. Is there something that you do when you sit down that effectively helps to intimidate the dealer or distract them . There are all kinds of distractions for dealers. I had porn stars play with me. I have had 5 to 8 Different Girls that would pose as a girlfriend. Just to distract the dealer . Does it work . There is always a circus going on. The more it looks like one giant party, the better it is for my side of the table. If there was a distraction, they make a mistake, what is the worst that can happen . I get a free bet. There is a reason a dealer does not want to say no to a gambler no matter how outrageous his behavior. All of our income is based on tips. What we make hourly is minimum. Even if the dealer talks a big game, don says the player is in control. They dont deal this type of game often enough to protect themselves from making mistakes. If they make three mistakes in a night, i have 300,000 in free bets. You make too many of those mistakes, you cant beat me, especially if you are giving me a 20 discount, especially if youre giving me 50,000 of free bets to start out with. You know when they made a mistake . I have caught every mistake they made that was not in my favor and made them give me the free bet because those are the rules of the game. He has won hundreds of thousands of dollars in free bets by outwitting the dealer. It allows him to finally erase the house advantage. Add in the special rules and discounts he negotiates before the game, and don now has an edge over the house. The more he plays, the more he wins. It is how don johnson took 4 million from caesars in a year when the casino giant posted some of its worst losses ever. It is how he beat the borgata out of 5 million. The ceo who authorized him at the tropicana got fired. It is how he took on the Casino Industry in Atlantic City, won 15 million, and became the legendary gambler who beat the house. Can dons success be replicated . Might he strike again . Find out how don johnson believes he will gain his next edge over the casino. He is a celebrity in vegas, a favorite at the club, and a household name at the casinos. Don johnson is now banned at nearly every table at the strip. His 15 million win in Atlantic City may have catapulted him to superstar status in vegas. But now, the casinos want his advice more than ever. He has hit the speaking circuit. You need to determine whether their skill level has changed. Despite all the advice he offers, don says many of the casinos are still vulnerable. I heard you actually won another 2 million at the tropicana . Did they not learn their lesson . They were still letting people bet big. Gaming profits have not rebounded since the recession. What do you think some of the biggest lessons for you were in 2008 . This used to be a place where gamblers would go on vacation. While the Casino Companies turned vegas into a playground, today it is a nonstop party that is bringing back profits lost on the casino floor. Last year, these clubs did 160 million. It was the only part of my business that was growing. To boost gambling revenue, wynn and his rivals tap into the lucrative Chinese Market where gambling is part of the culture. 70 of your revenue comes from macau. It is good to be at the right place at the right time. It is a twoway street. One asian casino is betting big on vegas. Theyre hoping to lure people into the u. S. And they are planning the first asian casino on the strip. Las vegas still represents the greatest vacation package available to world travelers. I see las vegas surviving. Don johnson is not so sure. Do you see anything on the horizon for vegas . I think it will be a long time before vegas comes back to its peak days. I dont think it is happening any time soon. He is still studying vegas, trying to exploit its inefficiencies from his home in pennsylvania. He is building a Software Program using data that maps the gaming industrys weak points and reveals where a player like him should strike next. I find it intriguing. I love it. I enjoy it and i will continue doing it. In another life, do you think you couldve worked on wall street . Im not done yet