1994-04-18 - Re: Laundering money through commodity futures

Header Data

From: tim werner <werner@mc.ab.com>
To: cypherpunks@toad.com
Message Hash: 7ecb4de92f79397caf5c48d92868c3e964068e17035d7aad8a26968e1cf1cc29
Message ID: <199404181554.LAA13178@sparcserver.mc.ab.com>
Reply To: N/A
UTC Datetime: 1994-04-18 15:54:20 UTC
Raw Date: Mon, 18 Apr 94 08:54:20 PDT

Raw message

From: tim werner <werner@mc.ab.com>
Date: Mon, 18 Apr 94 08:54:20 PDT
To: cypherpunks@toad.com
Subject: Re: Laundering money through commodity futures
Message-ID: <199404181554.LAA13178@sparcserver.mc.ab.com>
MIME-Version: 1.0
Content-Type: text/plain

>Date: Mon, 18 Apr 1994 10:01:52 -0400
>From: "Perry E. Metzger" <perry@snark.imsi.com>
>tim werner says:
>> A man went to the casino with several suitcases full of money and proceeded
>> to play roulette using the progressive betting strategy.  Eventually he
>> broke the bank.  That's when casinos started imposing house limits on the
>> tables.  I don't think this story is apocryphal.
>In that case, please provide the time, place, and location -- also
>provide references to original sources so that we can look it up

I took a probability class in the early '70s.  The prof explained the
progressive betting system and told us the Monte Carlo story.  As I recall,
it took place in the late 1700s.  That's all I can remember, except that he
made it clear the system was not guaranteed to work even with no house
limit unless you have unlimited funds.  Just that someone actually did
break the bank at Monte Carlo.

I have used the system twice and won both times.  The second time I almost
got burned when red came up 6 times in a row.  On the 7th time I had $320
riding on black and it came up black.  My profit on the 7 spins: $5.  I was
only 1 spin away from the house limit.  If it had come up red, I could have
bet $640 on black one more time, but that would have been the end.  The
limit was $1250.  I almost switched the $320 to red.

After that experience I decided to do some analysis of the system, and
finally managed to convince myself of something that I should have known
all along: the house limits are set so that you will lose the same amount
of money in the long run if you bet progressively as you will if you just
bet $5 on black each time.

Next time I get to a library I will see if I can find out anything else
about it, if you are really interested.

>> I don't think the commodity exchanges have the same sort of limits set up.
>You don't know anything about the commodities market, then.

That's not entirely true.  I do know that the commodities market is another
place where you can lose a lot of money real quick. :)

Actually, when I said 'the same sort of limits', what I meant was limits
that are specifically designed to ensure that you will lose eventually,
like they have at casinos.  For instance, the house limit at a casino is
generally such that you can only double your bet 7 times (e.g., $1250 limit
on a $5 table, or $500 limit at a $2 table).

Is the same sort of low limit placed on commodities trades?