I have spent the week reading about this massive bank rip-off at the Societe General Bank in Paris. This 31 year old guy lost 7 billion dollars of the bank’s money. That’s a lot of bread in anyone’s language. In bank terms it’s probably the beginning of a disaster. As I understand it, the money was lost through poor gambling. It’s playing the double up strategy which every gambler knows does not work, for the simple reason that the gambler never has enough money to keep doubling his bets when the odds are going against him. Here, I’ll try it on the roulette wheel. I log into an online casino and check my balance. I have a credit balance of $2,000 in my account.

I select roulette and bet $10 on red. I spin the wheel and black comes up. I double the bet to get back my loss and win a little extra. I bet $20 and spin the wheel. Black comes up again. Double the bet. $40 and spin. Black again. Double the bet. $80 and spin. Black again. Double the bet. $160 and spin. Black again. Double the bet. $320 and spin. Black again. Double the bet. $640 and spin. Black again. Double the bet. $1,280 and spin. Black again.  $1,280 and spin. Black again. Whoa, I cannot double again - I will go into minus and the casino won’t allow it! I doubled only 9 times and I am out of money. I am also betting 128 times the amount of the original bet that I was trying to win back.

Now if he is a dealer in the bank and he starts his online gambling effort by buying securities or futures or who know what else, starting with say $10,000 to make a bit of money for himself and he loses that bet and starts chasing it, it’s easy to see what can happen. He never needs to stop because he has the bank’s billions to play with. I wonder, and I’m sure he is too, just how many times in a row the black can come up. I guess he will have lots of time to think about this.

Posted on: January 28, 2008

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