Michael Geismar’s $710,000 blackjack breakfast

By Lawrence Delevingne

Thu May 24, 2012

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The story of how one hedge fund manager scored a blockbuster payday afterhours at the SALT Conference in Las Vegas. “We’re going to need more chips over here!”


   
   Michael Geismar (Photo by David Deal for AR in 2009)

Michael Geismar's blackjack run ended just after six o'clock on Friday morning with $410,000 in manila envelopes in cash sitting on a table at Café Bellagio in the namesake Las Vegas luxury hotel, right next to the plates of steak and eggs and glasses of ice water.

The co-founder and president of $4.6 billion managed futures firm Quantitative Investment Management couldn't put the bundled $100 bills in his room upstairs because the safe was already full with about $300,000 in winnings from two nights before. Geismar had a few hours to sleep before taking a private jet home to Charlottesville, Virginia on the final day of the SkyBridge Alternatives Conference. But he made time in the early hours of May 11 to celebrate with the four SALT attendees-marketers from SAC Capital Advisors and G2 Investment Group and two hedge fund consultants-who happened to join Geismar that night for a long, lucky and very lucrative run at the blackjack table.

AR reported earlier this month on a mysterious SALT attendee who was said to have won more than $400,000 in a single night playing blackjack. Rumors were rampant on Thursday in between panel discussions on the mutualization of hedge funds, charitable planning strategies and other conference events. AR released the incomplete story early that Friday, wondering if it was even possible to turn $300 or even $10,000 into so much money in one sitting.

But conversations with witnesses and others with knowledge of the events revealed that not only was the story true, but that it understated the windfall by hundreds of thousands of dollars.

Geismar, who declined to comment, returned to SALT after enjoying the conference in 2011, this time bringing along QIM's business development chief, Ned Parrish. The speakers and networking were good, but Geismar also liked the event for the opportunity it gave him to gamble.

According to a person who knows him well, 41-year-old Geismar has played blackjack since college, but never more than a few times a year. While not a card counter, he has read and recommended books by Dr. Edward Thorp, a former hedge fund manager and blackjack master and Bringing Down the House: The Inside Story of Six MIT Students Who Took Vegas for Millions. The author, Ben Mezrich, was fittingly SALT's luncheon speaker on Thursday May 10 where he delighted the crowd by describing his hands-on research for the book.

The conference didn't begin until Wednesday morning May 9, so Geismar decided to hit the tables Tuesday shortly after flying in from Virginia and eating dinner in the hotel. He sat down at a $100 minimum, $10,000 maximum bet table on the main Bellagio casino floor at about 10 p.m. He arranged for a $10,000 marker, casino-speak for a credit line, which promptly put $10,000 worth of chips on the table for him. Geismar put down $300 and the dealer turned over the first card.

After a stretch of good cards, Geismar had doubled his money to about $20,000. He then started to bet larger amounts with every winning hand, first $1,000, then $2,000 or $3,000. He also scaled down his bets after one losing hand, using laws of averages but not card counting. That basic scaling strategy worked well, and Geismar got to about $200,000 early Wednesday morning. By that point he was up so much he bet $10,000 for every hand, win or lose. And he kept winning.

Geismar was also giving big tips. He usually doled out $1,000 to the dealer for every $10,000 won by betting $500 on their behalf, according to witnesses. The dealers switched throughout the night, but he gave tens of thousands of dollars in gratuities by the time he left the table at around 4 a.m. He stopped at $470,000, paying back his $10,000 marker for a profit of $460,000. The cash out came in bricks of $100 bills, which he put in his safe and went to bed.

Geismar went back for more Wednesday. He left the SALT-sponsored Maroon 5 concert shortly after 11 p.m. and went to the same table, hoping for similar luck. Instead, Geismar lost $20,000 in about 45 minutes. Apparently still tired from the incredible six hour run Tuesday night, he went to bed early.

The conference ended midday Friday, so Thursday was the last opportunity for Geismar to get his blackjack fix. He went to the tables in between afternoon panel discussions and lost again, blowing $40,000 in one sitting. Just after SALT's poolside dinner party at the Bellagio-dubbed the Feast of San Gennaro by organizer Anthony Scaramucci- Geismar returned to the table, losing another $50,000. His luck was apparently up.

But hedge fund managers are gamblers, and Geismar still had plenty to play with. His self-imposed limit was to take home $300,000 of the winnings no matter what, according to people who spoke with him. So he took the excess cash out of his safe and went back to the Bellagio gaming floor around 10 p.m.

He started to win again, but this time with help. Other SALT attendees began to join him at the table. These men, whom he had not met before, included Chris Rae, the director of marketing at Steve Cohen's SAC; Ryan Gold, a managing director at Manhattan-based industry consultant Kiski Group; Sanjay Patel, the managing principal at Rye, New York-based third party marketer Institutional Capital Partners; and Kevin Murray, the head of business development at G2 Investment Group in New York City, part of Forbes Private Capital Group (Gold, Murray and Rae declined to comment; Patel did not respond to requests).

As the other players started beating the dealer, Geismar began backing them up. Backing up is the blackjack term for betting on another person's hand. Bellagio casino rules on blackjack impose a $10,000 limit on an individual player's own hand, but players are allowed to bet on each other's hands, meaning one player could place $9,000 of his money on top of another player's $1,000 bet. In this way, Geismar was able to bet on the hands of several players, though his total bets could not exceed $30,000 per round. Geismar's bets were usually much larger than those he was backing. He often used $5,000 chips on each of the other four players' hands, and he often went right to the limit during a run of good cards, using his up-and-down scaling bet strategy. He was also betting $10,000 on each of his hands during the good streaks. Soon the group was drinking beer together and high fiving after big wins.

Bryan O'Leary, another SALT attendee, randomly joined the table looking to get rid of $200 in chips after his wife went to bed. "I get there and I realized there was a full-on party going on," said O'Leary, a marketer at Dallas, Texas-based index product company Alpha Financial Technologies.

Geismar asked O'Leary what his name was and where he was from. "You like the Dallas Mavericks? Yeah? Let's be a maverick!" he said to the new player and threw him a $5,000 chip to bet on O'Leary's hand.

O'Leary started beating the dealer, too, winning Geismar thousands of dollars a hand. After some big wins, Geismar hugged him in excitement. "He was jumping into the pit screaming 'we're going to need more chips over here!'" O'Leary recalls, laughing. "It was insane."

The young dealer was visibly sweating with tens of thousands of dollars now being bet on every round of cards. A small crowd had formed around the table. At one point a casino pit boss came over, worrying that the players Geismar was backing up weren't actually betting their own money. The table quickly convinced the man they were, and play resumed. The pit boss conferred with a superior, who O'Leary recalls saying "We're never going to win our money back, but screw it, let's let it roll."

O'Leary says one hand made the group "jump around like it was the Super Bowl." Everyone at the table got dealt face cards-Jacks, Queens or Kings worth 10 points. The dealer got a nine. On the next card, everyone at the table got either 20 or blackjack-21. The dealer flipped over an eight for a total of 17. "The table went crazy" said O'Leary, who noted that people suggested taking pictures because the hands were so good. "Geismar won maybe $50,000 on that hand alone."

When O'Leary left for bed around 5 a.m., he had turned $200 into $4,000. Geismar also tossed him a $1,000 chip in gratitude for the tens of thousands he made off of O'Leary's cards. "It was the most fun I've had in my life, no doubt," said O'Leary.

Geismar finished the night at about 6 a.m. with $410,000, $250,000 profit for the day. He gave the same $1,000 tip to the other four men at the table, having already tipped the dealers tens of thousands of dollars throughout the run. Cocktail waitresses got hundreds too. "He was such a gentleman about it all," said one witness.

After the team steak and eggs breakfast, Geismar is said to have put the new cash under his pillow. By midday he was headed home with QIM's Parrish and a friend from Richmond, Virginia hedge fund Chesapeake Capital on a $20,000 private jet flight he'd booked on Wednesday in celebration of his early gains.

After starting Tuesday with $10,000, Geismar made a $710,000 profit playing blackjack over three days at SALT, a return of 7,100%.

See also: QIM's Jaffray Woodriff: The monk in managed futures

Additional coverage of SALT: Macro bears square off with micro bulls at SALT Maroon 5 rocks SALT SALT attendee allegedly hits massive blackjack payday Gotham, JANA, Omega, T2 push U.S. stocks Paul Singer strikes back, says size is no enemy of performance Calpers: We'd invest more if hedge funds had a better reputation

ISSN: 2151-1845 / CDC10004H