Investing in a lone wolf

[Cardguy]

I've been counting for about 8 months and I'm up about $3,400 after 50 hours of play (I only play a couple of hours per week). I now have a few friends and family who are interested in investing in me. The obvious advantage is that I could double my bankroll from 20K to 40K allowing me increase my win rate without changing my ROR. I nevertheless have a bunch of questions/concerns:
1) Despite explaining the huge variance involved, I'm still quite worried that they won't understand that they might lose money (especially given the small number of hours I play) and would this strain our relationship at all?
2) By doubling my bets, I will potentially double my heat but I won't double my personal income (since I have to pay the investors their share)
3) How do you split the profits/losses equitably (I have a few options listed below)
4) Is the player paid an hourly rate and if so how much?
5) When do you make distributions (after doubling the bankroll or after x number of hours, maybe 100)
6) Has anyone here taken investor money as a lone wolf and, if so, how did it work out?

I currently have a 20K bankroll. I play Hi-Lo with 40 indices on a 6D game and spread from $25-$300 with some Wonging giving me an hourly win rate of about $40/hour and ROR 1.9%. If I double my bankroll and my bets, I can increase that to $80/hour while dropping my ROR to 1.4% (based on CVCX). Here are the options I've considered for splitting the wins/losses:
a) Pay me an hourly rate for counting and then split the profits based on investment proportion. If I'm paid $25/hr this would yield an expected return of 13.75% after 100 hours (1 year of play) for an investor.
b) Split the profits 50/50 between players (me) and investors. Thus, if I win the expected $8,000 after 100 hours, 6K would go to me (4K as player and 2K as investor) and 2K would go to the investors who put up 20K (10% return).

In both scenarios, my own take home pay goes up between 20-50% and my ROR goes down slightly. Scenario A definitely smooths the ride a bit as I'm paid an hourly rate.

Thoughts?

[Boz]

You would traditionally make a distribution after you increase your BR by 20K, which is 100% return on the outside investment.

I would definitely explain the potential for loss to your investors, and I would suggest a lower ROR of 1% rather than 1.4%.

50/50 split works better than hourly, but you're paying yourself twice since you're both an investor and player. Did they beg you to invest or did you beg them to invest? They could potentially make more in the stock market. If you're a charity case, consider a 33/67 player/investor split.

[Bigdaddy]

I don't think you're playing enough to be reasonably assured of a significant profit. At 100 hours per year (10,000 rounds), you're only about half way to N0 at your 6-deck game after a full year of play (about a 70% chance of being ahead by any amount at all). You can use the CVCX tools to see the probabilities of winning a specified amount after a specified number of rounds at your game.

Also consider additional heat factors and your personal comfort level. Are you ready to double your bets? Will they take that action?

To me, it sounds like you have a nice hobby going right now that you enjoy. I wouldn't complicate it with the burden of taking other folks money...

[Stealth]

I've been counting for about 8 months and I'm up about $3,400 after 50 hours of play (I only play a couple of hours per week). I now have a few friends and family who are interested in investing in me. The obvious advantage is that I could double my bankroll from 20K to 40K allowing me increase my win rate without changing my ROR. I nevertheless have a bunch of questions/concerns:
1) Despite explaining the huge variance involved, I'm still quite worried that they won't understand that they might lose money (especially given the small number of hours I play) and would this strain our relationship at all?
Very likely if you hit a losing streak. Money transactions always add a new dimension and are often difficult in adverse conditions. Think through what happens in a loss, trespassed from casino and can't play, etc.
If you are going to have this type of investor do not just tell them about variance, show them the range of probable results by presenting three standard deviations at various numbers of rounds. Example:Range.JPG

2) By doubling my bets, I will potentially double my heat but I won't double my personal income (since I have to pay the investors their share)
Yes, you are increasing your heat and if you do not increase your personal income then why have investors?
3) How do you split the profits/losses equitably (I have a few options listed below)
There are no "standards" for this. Generally, 50/50 between investors and players is normal, with the investors taking all losses. There are many alternatives.
4) Is the player paid an hourly rate and if so how much?
Player share of earning are distributed by their accumulated CE. How are your investors going to feel when you are down half your bankroll and paying yourself to play?
5) When do you make distributions (after doubling the bankroll or after x number of hours, maybe 100)
Very dangerous topic. Goal related solutions expose you to players losing interest in playing if you are losing. Consider, a goal that includes being beyond N0 in rounds to smooth the variance.
6) Has anyone here taken investor money as a lone wolf and, if so, how did it work out?
Realize that your investors not only take the risk of blackjack variance they also take the risk of what happens to you. You get hurt, sick, banned, steal, etc. or can not play. When they invest in a mutual fund there is little risk that the fund will go bankrupt.

I currently have a 20K bankroll. I play Hi-Lo with 40 indices on a 6D game and spread from $25-$300 with some Wonging giving me an hourly win rate of about $40/hour and ROR 1.9%. If I double my bankroll and my bets, I can increase that to $80/hour while dropping my ROR to 1.4% (based on CVCX). Here are the options I've considered for splitting the wins/losses:
a) Pay me an hourly rate for counting and then split the profits based on investment proportion. If I'm paid $25/hr this would yield an expected return of 13.75% after 100 hours (1 year of play) for an investor.
b) Split the profits 50/50 between players (me) and investors. Thus, if I win the expected $8,000 after 100 hours, 6K would go to me (4K as player and 2K as investor) and 2K would go to the investors who put up 20K (10% return).
Equitable returns for investors are always risk based and this is a very high risk investment. Your target return (10%) should be much higher.

In both scenarios, my own take home pay goes up between 20-50% and my ROR goes down slightly. Scenario A definitely smooths the ride a bit as I'm paid an hourly rate.
Investors want to see both real money and "skin equity" in an investment, especially one so dependent on one individual. Taking an hourly rate from a losing bank will be a big problem. In this situation, player pay needs to come from winnings and not subject the bank to a death spiral when losing. Losing bank reduces bet levels, increases RoR, makes recovery harder, etc.

Thoughts?

Hope these comments are helpful.

I (and 9 friends) once invested 10K each in a college golfer that was turning pro and needed financing. Since I was the organizer, I told the group that if our player made it to the Tour we could make a nice return, however, they should consider their 10K a gift as the chances of that happening are very small. The reason to do this was our friendship with the player and his family and, for me, the ability to "be a tour player" vicariously. And yes, we lost the money and he did not make it to the big show (Tour) but I do not regret the attempt and enjoyed the ride, so to speak.

I relate this experience as it is likely the type of thing that is going on with your friends and family investors. If they want to "be a part" of the excitement then be sure they understand the very high risk as I mentioned above. If they need this investment to produce and help with their lifestyle then I would advise them to look elsewhere.

[Dog Hand]

<snip>I currently have a 20K bankroll. I play Hi-Lo with 40 indices on a 6D game and spread from $25-$300 with some Wonging giving me an hourly win rate of about $40/hour and ROR 1.9%. If I double my bankroll and my bets, I can increase that to $80/hour while dropping my ROR to 1.4% (based on CVCX). <snip>

Cardguy,

I'm a bit confused by this assertion. If you play exactly the same game with the same conditions with a doubled BR and doubled bets, shouldn't the ROR be identical for both cases? Is the "doubled" game somehow better: S17 instead of H17, better pen, or fewer other players? Or are you perhaps using a different spread on the "doubled" game: for example, NOT doubling your waiting bets?

Dog Hand

[Bodarc]

I think it could be caused by CVCX using "Rational Bets", thereby not having the exact same 2X bet spread throughout the TC range.

[Cardguy]

Thanks for the responses. To answer some of the questions:
1) A good friend and my mother-in-law have approached me after seeing that I've won a few grand. I tried to talk my friend into learning to count so we could be teammates but he was more interested in potentially investing. They are certainly not begging to invest, nor am I begging them. Right now we're just playing around with the idea.
2) Regarding the comment that they "could potentially do better in the stock market" - if I could expect a 13.75% return on a stock investment, I would jump at the chance. I'm certainly not a stock broker, but it seems to me that investing in an ethical, disciplined and well-trained card counter is probably a better investment than investing in the stock market. After all, that's why I'm investing 20K in this venture myself rather than putting it in the stock market. Would you disagree?
3) I do have some concern about increased heat, but for an expected 20-50% increase in personal income, I think it might be worth it.
4) Bigdaddy, you're absolutely right that I don't play enough to be certain of a profit in a short span of time. I don't see myself being able to play much more than 100 hours per year. Furthermore, I think I'll be lucky to get 80 rounds per hour at my local stores. Finally, my N0 is probably around 20,000 depending how often I can play two hands (which isn't always easy at my crowded stores). As a result, it will probably take me almost 3 years to reach N0. Incidentally, this would also be about the amount of time required to reach 20K in profits. If I make a distribution after every 100 hours and I split the profits 30/70 between player/investors then their expected return is at least 14% ($2,800). If the investors alone are responsible for losses, then 1SD on the negative side would be about $2,000 lost/20K invested (10% loss), while 1SD on the positive side would be $6,500 earned/20K invested (32.5% profit). The chance of an investor losing money after 100 hours would be about 25%.
5) Yes, Bodarc is correct. I think the reason the ROR went down is because CVCX changed my bet spread slightly in order to make rational bets. If my bets were exactly twice what they were before and everything else was the same, my ROR shouldn't change.

I'm not yet decided but at the moment, I'm thinking that I'm not going to take any investments.

[Bodarc]

Wonging giving me an hourly win rate of about $40/hour and ROR 1.9%.

Cardguy, something seems very wrong to me with the $20,000 bankroll and playing green chip 6D with a 12 spread 1.9% RoR.

I think your RoR should be much higher than that even with some wonging involved. I could be wrong of course.

20,000 N0 seems very low also.

[bigplayer]

It needs to be someone you know very well and trust completely. I would never pay players more than around 40% of the win. A 50-50 split is asking for investors to get murdered over the long run because the last bank on most teams is always a loser and in that case investors take it 100% on the chin.

[Cardguy]

Cardguy, something seems very wrong to me with the $20,000 bankroll and playing green chip 6D with a 12 spread 1.9% RoR.

I think your RoR should be much higher than that even with some wonging involved. I could be wrong of course.

20,000 N0 seems very low also.

I ran my own CVCX sim which included Wonging in at +1 and Wonging out at -1. 6D, 4 players, H17, DAS, LS, 4.5/6 pen, 1:12 spread, 100 rounds per hour, rational bets and manually set minimum bet to $25. This produced win/hr $39.63, ROR 1.9%, SCORE 39.04 and N0 25,617. So you're right that the N0 is higher than I stated. I decreased this to 20,000 because I try to play two hands when practical.

I find it interesting that few teams pay their counters an hourly rate. After reading the chapter on Team play in BJA3, it seems like this is really the fairest way to do things.