GAMBLING: How to Win a Buck

Raymond I. (for Ingram) Smith is a 66-year-old ex-Vermonter, ditchdigger and news butcher who got his start in business running a carnival wheel of fortune and is now a leading citizen of Nevada. Every year Smith hands out $90,000 or more in scholarships to deserving high-school seniors, another $100.000 or so to such organizations as the Boy Scouts and Community Chest. The Reno Day Home, a nursery run by Catholic sisters, is a Smith philanthropy; the local Methodist Church paid off its mortgage with $5,000 from Smith; Mormons and members of the Church of the Nazarene have also benefited from his bounty. The source of Smith’s largess: gambling. As head of Reno’s famed Harold’s Club, Ray Smith is the greatest crapshooter. blackjack player, roulette fan and bookmaker of them all—and he aims to stay that way by creating all the good will he can among the local citizens.

To Smith, gambling is not a gamble at all; it is a cold business deal that he has made with the law of averages. By combining the caution of a banker, the calculations of a mathematician and the promotional genius of a crack retailer. Smith has made Harold’s Club the biggest business in Reno and the biggest gambling house in the U.S. Last year an average of 10.000 customers jammed into Harold’s every day. bet well over $100 million over the year that they could beat Ray Smith’s partnership with chance. Upwards of 30% of them succeeded. But from the rest. Harold’s Club grossed an estimated $15 million for a net which outsiders put at $2,000,000. Last week, as the big Nevada tourist season got under way, Ray Smith predicted that 1953 would be his best year ever. From the looks of his traffic-flow charts, it seemed a safe prediction. In the first quarter of this year, attendance at Harold’s was up a whopping 53% from a year ago.

Big Casino. Smith, who owns no part of Harold’s but runs it on salary for his two sons, Raymond Alonzo and Harold, decided long ago that volume was the key to casino success. The operator of a smalltime roulette wheel in Modesto, Calif., Smith had to close up shop in the ’30s when he “backed the wrong man for district attorney.” Ray sent his son Harold to Reno, and soon the young man started Harold’s Club with the old family roulette wheel and two battered nickel slot machines. Then Smith and his other son joined Harold.

They started advertising far & wide (current ad budget: $500.000 a year), put up 2,000 road signs all over the U.S. touting Harold’s. At the casino itself, Ray and his sons follow the best retailing traditions. They don’t primarily want big gamblers, instead go after volume from the little fellow who has a few dollars to shoot. Just like any smart supermarket, Harold’s tries to keep its customers on the move, tempting them with “impulse buying” gimmicks along the way.

To lure in people, the Smiths spot slot machines ( 3¢ to $1) strategically, fix them so that they pay out 97% of what is put into them. By thus keeping the house take low on their 800 slots, they build up customers’ confidence for bigger bets—at eleven crap tables (where the house has a mathematical edge of 1.4%), 29 blackjack tables (2½%), nine roulette wheels (5.2%) and the horses. Winners are always paid off in silver dollars (except for big games). The Smiths have found that a pocketful of silver dollars is a temptation to keep on gambling, and $50,000 in dollars are always kept on hand. As an invitation to female gamblers, 60% of Harold’s 330 carefully schooled dealers are women (who they have also discovered are “more reliable, more honest and possess better personalities [as dealers] than do men”). For customers who want to relax between long stretches at the tables, five bars are always open. But Harold’s, which does not want them to relax so much that they have no time to gamble, sells no food.

Lady Luck. On every game and table, detailed statistics are compiled for each shift in Harold’s 24-hour day and seven-day week (the club has been closed on only three occasions: V-E and V-J days and the day of Franklin Roosevelt’s funeral). There is almost no guesswork at Harold’s. The statistical department, headed by Guy Lent, 55, formerly a chief statistician for Cities Service Co. in New York, knows the odds on every angle of the business. From a quick count of the license plates outside, the Smiths can tell how they should be doing (Californians are the biggest spenders, New Englanders the smallest). When one game starts to lose favor with Harold’s clientele, it is moved to a more advantageous spot in the building; when a dealer’s take varies too much from the norm, he is immediately investigated.

Nevertheless, there are occasions when even the Smiths are called upon to display their gambler’s spirit. A few years ago a professional gambler lost $180,000 at Harold’s in 32 straight hours of crapshooting. As he was leaving, the gambler challenged Harold Smith to a double-or-nothing roll, with one die apiece and high man the winner. Smith accepted. He rolled an ace. The gambler made his roll—another ace. Smith rolled again—a three. The gambler rolled a four—and walked out with the $180,000 he had lost at the dice table. The Smiths took it as part of the day’s work.