The (Mostly) Definitive Word on the WSOP Chip-Surplus Scandal

(Blogger's VERY IMPORTANT note: When reading this, you will encounter a couple of statements that when taken out of context or if used in an exploitative manner, would indicate that I believe that something untoward and dishonest occurred concerning the late stages of the WSOP. Let me assure anyone who reads this that is not so --- everyone who I observed at the WSOP appeared to me to be very efficient in what they were trained to do... and very honest. I did see one case of gross systemic incompetence, and I won't back away from that, even as several other episodes showing similar procedural horrors have also now come to light.

I do, sincerely, believe that the chip error that occurred at the WSOP was an honest mistake, although it's taken some further discussions with a couple of experts to convince me that one of the logic points I addressed --- the fact that several people would all have had to miss the same mistake at the same time, repeated across three different tables --- was a bit disbelievable on its face. This person reminded me that although the last few dealers were probably among the best at the WSOP, they could also be described, if rather harshly, as the best of a questionable batch. The really good, observant dealers, the ones likely to catch an error of this nature, simply wouldn't be working a temporary gig such as the WSOP. So these dealers were tired, at the end of an eight-week run, and so what? Who cares what the tournament director does with the chips?

But anyhow, back to my piece, and why this preface is now necessary. What follows --- and I'm not going to take it down, because its intent and its probing are worth the pixels --- was always intended to be a "devil's advocate" piece. Think an innocent mistake was what happened? Well, so do I. But the evidence so far uncovered does not disprove that something untoward might have happened, and that was THE point of the piece. It was intended to be a wake-up call, not an accusation.

I'm not a big conspiracy buff. I'm not much for Oliver Stone, and you know the World Trade Center attack? Osama and friends did it. "The DaVinci Code"? Balderdash... though I absolutely love looking at what's involved and seeing how such a crock can be built from a pile of mostly-true shards.

So keep that in mind when you read the following.

I tried to make the message of this clear, but now I'll just state it outright: It is incumbent upon Harrah's and the WSOP to own this mistake, to identify everything that they have learned about it, and to be forthright about what they do to prevent similar mistakes in the future. It is that important.

The mistake happened, it's part of history, and in all likelihood it is what is known as an "uncorrectable error" in major sports, like an extra foul shot being awarded. If Harrah's believes that this mistake was just going to curl up and die if they ignored it, then that represents the greater error, the gross misunderstanding of human nature and competitive glory and the fact, frankly, that there's a whole lot of money at stake. This is $88 million freaking dollars. It may be a mote on the Harrah's balance sheet, but hell, people also kill for the tiniest fraction of that amount, every day. The vast majority of each tournament's entrants are hopers and dreamers, many of them in what will turn out to be their own chance, albeit it very slim, at such riches and fame.

And to think that these people wouldn't clamor and scream and demand the proper and full explanation, after a two million chip mistake had been uncovered? If I were to have been in this, and somehow gone deep, I'd be outraged, indignant, merciless in pursuing something of this magnitude. It's just a tournament, yes, but that's human nature, too.

This is why I wrote what I did. It's not that I believe there was theft or malfeasance or dishonesty or any of that, because I don't. It was a message to Harrah's, in that by saying nothing and cowering in the corner for a month, Harrah's and the WSOP have done nothing but open the door to all sorts of outrageous rumors and accusations. I used the logic to add to what we already know to show that... wait, it's like a plane on the drawing board --- what we've been offered looks pretty but it still doesn't quite fly.

Conspiracies are ugly things. They build on themselves, wedging into the cracks and crevices of things that are known to be, where they grow, like fungus. It is important to recognize, though, that they serve a purpose: they can allow us to take a look at the process of moving from Point A to Point B (and points beyond), and coming up with some explanation, ludicrous or not, for whatever's occurred.

But, please, don't read all the following as an accusation. It's not. It's a wake-up call, to you-know-who.

Anyone who's kept track of the in-workings of the recently completed World Series of Poker is aware of the controversy involved with the chips during the last couple of days of play. And if you haven't, here's the short version: More than $2,000,000 in chips magically appeared somewhere during the late stages, swelling the total chips in play from just under $88 to more than $90 million. The surplus seems to be between 2.0 and 2.5 million chips, and we'll likely never know the exact overage that was introduced to the tables.

There have been lots of explanations, theories, accusations... and of course, the usual unfocused grumbling. We had some of it here, in a episode I recounted from my own reporting time on the scene, when I saw lax chip security in a manner that would have allowed chips to be stolen and reintroduced into play, under certain circumstances. Flawed though it was, I surmised it to be the outgrowth of a long-standing tournament practice, one that had grown outmoded and untrustworthy under the strains of the present-day crowds, and I heven't seen anything that would make me change that assumption. Still, it's all probably beside the point.

Veteran poker writers Amy Calistri and Tim Lavalli have put together a wonderful expose on the matter, one of the best examples of poker reporting to hit our business in recent memory. You are highly encouraged to read it in its entirety over at pokernews.com; you'll be glad you did.

Now we get to put on the detective hat and do some additional thinking. First, I never believed the proferred explanations of (1) theft of chips from other tournaments which were then reintroduced in the Main Event, or (2) that the repeated process of coloring up and removing the smallest-denomination chips could explain the discrepancy; these were the two likeliest explanations offered. In the prior scenario, there was simply no way that someone could steal $2 million dollars in chips during play from other tournaments and have them reintroduced into the main event; this would involve repeated small-scale pilfering on a massive scale, somehow combining and coordinating all those thefts without word ever getting out, and is so unlikely as to be beyond all consideration. In the second scenario, as proved by Calistri's and Lavalli's work, the mathematics preclude beyond any doubt that the coloring-up process could account for more than a couple of percent of the overage.

It's also known that a few tens of thousands of chips were introduced to the Main Event through clerical and organizational error early on, but again, this accounted for perhaps $50,000 in chips, which was only one or two percent of the problem.

So, player theft was never a possibility, nor was the coloring up, in terms of the natural math of the process itself. It simply had to be a problem with Harrah's itself, whether through a flawed color-up process (the explanation offered by Calistri/Lavalli), or something else under the control of Harrah's. At over two million chips, the problem was too massive to have been caused by an individual player, at least in terms of the theft/re-introduction mentioned above. Which is where, of course, the Calistri/Lavalli piece comes in.

And that said, and having read and re-read their posited scenarios and explanations, I'm still not quite satisfied. The explanation Calistri and Lavalli offer fits the available data better than any other we've yet seen, but it still has some problems, which I'll do my best to address here.

There seems little doubt that Calistri and Lavalli have isolated the key moments when the improper chip introduction occurred, that being just prior or during the first break during Day 7 play, when the last of the $5,000 chips were being removed and replaced with higher denominations, mostly $25,000 (along with some $10,000) chips. It's one of the few omissions from the piece, but the chips in play during the WSOP Main Event largely followed a 1-5-1-5-1-5 pattern, when one considers only the first digits of each chip's denomination. Yes, I believe there were $25 chips in play on Day One, but after that it was $100, $500, $1,000, $5,000, $10,000 --- you'll note that every chip's first digit (other than those smallest) started with a "1" or a "5".

And then, for whatever reason, there were these chocolate $25,000 chips. (Actually, given the way the blinds rise at this stage of the tournament, the 25k chips do make sense. But it makes for better dramatic writing this way.)

The explanation, per Calistri and Lavalli, is that when the last of the $5,000 chips were removed, they were replaced with $25,000 chips on a 5:2 basis, rather than the proper 5:1, necessitated by replacing each five 5K chips with one 25K chip. This meant that twice as many $25,000 chips entered play as should have during this color-up, and therefore accounts for the two-million-plus chip surplus.

It's very likely.

It has been pitched to us (presumably by the Harrah's spokesperson who had to field Calistri's and Lavalli's continuing questions) as a mistake, an error of innocence by whatever tournament director or dealer was in charge of the color-ups at the tables. I'd like to believe that --- I'd really like to --- but I put the chances on this as being 80-90%, not the 99%+, "this has gotta be it" attitude that some of the other celebratory comments and posts have offered. Much as I like Amy and Tim, and deeply respect the work they've done here (because it's truly excellent), there are still too many unanswered questions at this time.

Let's examine some of them here.

First, the Calistri/Lavalli reports do a wonderful job of isolating exactly when the total of chips in play ballooned by the extra two-plus million. It first shows up on the chip-count report dated at 1:36 p.m. on Pokerwire. 1:36 was also the time that the first break of Day Seven began. Now, here's my first unanswered question, and run with me on this one, because I do have a reason for asking it:

1) Was the time on the Pokerwire "live count," the first one to show a total of over 90 million chips in play, backdated to coincide with the time that the players went on break?

It seems likely to me, but this hasn't yet been addressed. It seems a bit convenient that the time on that report would coincide to the minute with when the players went on break, particularly in light of the mini-stampede of spectators, media, and players to the exits that was probably occurring when the break was announced. So I really don't buy that one, more evidence not forthcoming.

But now starts the fun stuff. Calistri and Lavalli recount in their report how some of the coloring up of the $5K chips had already been done, and that many of the remaining $5K chips had been swapped into the possession of one of each table's largest stacks. They wouldn't be in the possession of one of the small stacks, because that's why they are short-stacked players... no chips. So fine. In this scenario, there were between 400-500 of the $5K chips in play, and if these chips were swapped out a 100-chip rack at a time, then each of the largest chip stacks would have returned to find an extra $500,000 in chips at his seat, over and above what should have been there, for each 100 of the $5K chips that were removed.

As Calistri/Lavalli explain, it could have been a 2-1-1 scenario, where one player received an extra $1,000,000 in chips (two racks of $5K chips' worth), two others receiving $500,000 each, plus all the small handfuls of chips needing the coloring up as well. More likely, none of the big stacks with the swapped-for stacks of $5K chips --- which would have been one each at each of the three remaining tables --- had two full racks of the $5K chips, so it was some mix-and-match process instead.

Now here's the problem: For all this to occur, it would have required a minimum of seven different people to not notice that there were a problem with the way this last color-up was being handled. The seven are the tournament director / assistant director in charge of distributing the chocolate $25K chips to the tables; the three dealers, one each at each of the three remaining tables (the dealers don't go on break, but stay behind to "guard" the tables), and the three players (again, a minimum of three players), who would have received bonus chips during this final color-up. It also assumes that only one WSOP Tournament direvtor was involved, when it could have been three, six, or whatever. And through all of this, we're led to believe, no one noticed that a 5:2 swap, instead of the proper 5:1, was being used. So, another question:

2) Does Harrah's really believe that at least one tournament director (maybe more) and three different dealers --- all presumed to be experts, well-trained in the process, would go through this color-up, the chip denominations clearly marked on every chip, and none of them would notice that this was being done wrong?

Nope, I don't buy that one either.

Now let's return to that earlier little expose that I wrote, where I described how lax the chip security was once those chips left the back cabinets, where they were locked and well guarded, and under. The chips made made their way out on a plain old pushcart, not very secure at all. The greater point of the piece I wrote --- and maybe I should have shoved it down some people's throats, dammit --- was that it was clear that the process itself had serious holes. It looked antiquated, patched up, a small-tournament process made to fit into a big-tournament world just because other things had higher visibility.

To an extent what I wrote seems to have been pooh-poohed, because even if someone could have swiped a rack of chips from an unguarded cart, what's a rack of unguarded chips worth, especially in the $1,000 denomination I described? The answer there is a simple and too-small $100,000. Too small, that is, for the scene I described to be the answer, in and of itself. Like the player-theft and color-up "math" scenarios, it couldn't work on a matter of scale.

Now, I left the day prior to the Day Seven episode described by Amy and Tim, so I did not see the color-up in question, but I would guess that the fans had been removed from the tables by a great enough distance to pretty much preclude the type of theft that I described from occurring.

Here's where we enter dangerous territory.

Calistri and Lavalli mention how in order for this to work, it would have taken several players --- three or more, the way I've described it in the above --- to either not notice that they had received a sizeable number of extra chips, or to choose to not report it, tempted as they were by the nearness of that $12,000,000 first-place bonanza. Each of the 20-plus players remaining were all guaranteed a huge payday already, I believe in excess of a half million, and yes, there would have been an incentive for them to keep quiet. That said, and as pointed out by Calistri and Lavalli, it would have been a gross breach of poker's ethics to not report the overage if it was discovered by any of these players, and to the best of my knowledge, it was never reported.

Now, given that the largest stacks in play probably had $5,000,000 or more in chips each, this could have represented between 5% and 10% extra in newfound chips for whoever received the overage. At least three players should have noticed this, but no one did... or at least spoke up about it. It's far less likely that one of these players' neighbors would have noticed the discrepancy; when one returns from a break, one counts one's own chips for accuracy and presence, and the neighboring players are presumed to be doing the same.

Certainly, Jamie Gold would have been one of the three big stacks likely to have been involved in the last bit of the color-up, and well, let's just say that leaves two other big stacks, more or less at random, who didn't notice or say anything. Add that to the dealers and the tournament director(s) as mentioned above, and you know what?

It violates something called Occam's Razor --- the explanation as fed to us by Harrah's turns out to not be a simple explanation at all. Rather, it requires the suspension of disbelief, in that all these trained experts didn't notice that something was significantly wrong, and all not noticing the problem during the same crucial period.

Let's go back for a moment to the wonderful timeline constructed by Amy and Tim, where they show when the two-million-plus in mystery chips magically appeared. Now read carefully, folks, and pay attention.

There weren't that many players left, with Rizen (Eric Lynch) exiting in 24th place, clearly before the problem arose. Despite that fact that the various chip-count boards were in constant flux, the number of players had dwindled to the point that there was still some consistency and recognition of who the big stacks were and just how big were the stacks that they held.

Also, in the span of the the 20 or so minutes in the key period as outlined by Calistri and Lavalli, there simply couldn't have been that many monster pots played across the three tables, despite the fact that two more players were knocked out during this time.

It would be a daunting task, but certainly one no more daunting than, say, Michael Craig undertook when he reconstructed the workings of the first Big Game between Andy Beal and the Corporation, as detailed in The Professor, The Banker, and the Suicide King. In this case, one should be able to look at the various live chip-count reports, interview the 20 or so players left in the tourney on a hand-for-hand basis --- especially the players who were or knocked out or close to departing --- and determine who won the few big pots played at the three tables during that period. Then one could reconcile that against the chip-count reports, and pretty much determine who had received the extra 2.0-to-2.5 million in chips.

Interview the other writers, too --- at that point, each of them pretty much had their own horse, and was sweating him.

It would be a daunting task, but not an impossible one. And even if the players who had received the extra chips truly never realized it (doubtful as that is), the process of deduction could allow us to focus on who the likely beneficiaries were.

But all this pressuposes that the explanation as offered by Harrah's is valid and correct, and that the extra chips were spread across several players in the manner detailed by Calistri and Lavalli.

One other note needs to be brought up at this time, and that's the question of when the WSOP tournament staff discovered that there were extra chips in play. In answer to this I return to one of the very first pieces I contributed to pokernews.com, when I recounted the tale of a mismarked chip. I spoke at length with one of the WSOP tourney directors, Nick Gullo, who filled me in on that story as it happened ---- the chip was relayed to one of the roving floor directors, who then brought it to Nick, who was in charge of the locked cabinets where all the chips were held.

What Nick later told me was that at the end of each day, they do a reconcililation process, which takes aboout 45 minutes, so whether or not Nick was in charge of the chip cabinets during this Day Seven incident (he might not have been), the end of play that evening represents the latest time that the chip discrepancy should have been discovered and verified by Harrah's, whether or not they chose to believe the totals in excess of 90 million chips that had been reported by Card Player, Pokerwire and other sources throughout much of the day.

But what I don't know is whether a separate reconciliation occurred after each of the color-up processes, to ensure that the value of the chips that went out was roughly the same as the value that came back; remember, each color-up is essentially a swapping process. Given the denominations of the chips and the small number of players remaining, particularly if many of the $5K chips had already been removed from play, then the WSOP directors should have been able to do a quick reconciliation almost immediately, and certainly within a few minutes after the players had returned from the break.

That few minutes, though, is key. Let's suppose that the WSOP directors had discovered the chip discrepancy existed, a few hands after the players had resumed play. This would have been sometime after 2:00 p.m. on Day Seven. What then, given that play had already taken place based on the new chip stacks in front of each player? It then becomes a situation akin to that in other sports: an uncorrectable error.

Heck, that's important enough to make it a question:

3) Why, with so few players remaining, was an on-the-spot reconciliation of colored-up chips not built into the WSOP's late-tournament procedure? My God, the directors on the floor outnumbered the players, at that point.

It's clear after the fact that a reconciliation of colored-up and swapped chips before play resumed would have prevented the problem. It's also clear that this does not seem to be part of the tournament procedure, as it existed that day.

But though I named Nick Gullo here, I do not believe he's the person who made the mistake. It's clear that even if he had discovered the discrepancy, it would have been too late for him to do anything but report it. And the actual mistake or whatever occurred out on the floor, not back by the cabinets.

Mistake... or whatever. Remember me mentioning Occam's Razor? The truth behind it is that the simpliest explanation is also the likeliest, and the explanation we've been given may be very likely, but it doesn't turn out to be so simple after all, because it requires a whole bunch of people to make the same mistake at the same time, and several players to not say anything, all at once.

And now I return to the earlier post I made on the chip security, and its obviously too-hidden point. The chips as they were stored in the back cabinets were very secure, but in transition to and at the tables themselves, they were not secure at all. Worse, in the midst of a frenzy that marks the start of the break, it was a prime opportunity for a singular untoward act to have occurred.

The chips in question, the ones that were added "in error," were almost certainly of the $25,000 variety. And you know how much space $2.5 million in these delectable chocolate chips occupies? Exactly one chip rack, small enough to be held in one hand and misplaced into a player's stack, intentionally or not.

And that's where all of Amy's and Tim's hard work runs up against the naked truth of Occam's Razor. A much simpler explanation, painful as it is to consider, is that there was a crooked tournament director or dealer somewhere in the mix, probably in cahoots with one of the few remaining players. (And, gee, but Jamie Gold's boast about giving $1 million to the floor staff takes on a bit of a new meaning in this light, too... and that's an ugly thought.)

Simpler, but not likelier, and I'm adding a paragraph here to clarify the point. The chance of that would be very small, based on the integrity of the people that I witnessed. Also simpler, but not dealt with at all, is the accidental misplacement of something less than a rack of those chocolate $25K chips during the process of coloring up, having them on the wrong spot of the table, where they were inadvertently and subsequently pushed into a nearby player's pile. Let's give the Calistri/Lavalli story the 90% likelihood of truth it deserves, because it's logically consistent, based on what it includes. Let's give a 9% chance to a different innocent error occurring, as in the example created above, and let's keep the 1% on the boiard for something we don't really want to have to think about, for two reasons: the known evidence doesn't disprove it, and Harrah's has done everything in their power to not address the situation, allowing all sorts of crazy rumors to jump up and take hold.

In that start-of-break frenzy, all it would have taken is for one director or dealer to make a swipe or a push of a few small stacks of those chocolate-colored chips. It could have even been done accidentally, but either way, it seems much more believable than all those expert dealers and floor directors and deep-running players all missing the fact that their chip stacks were off, and all at the same time.

All this, it comes with a disclaimer: I still think Amy's and Tim's explanation is probably right, and that all this devil's advocate stuff is so much cotton candy. But I am very worried by one other thing.

As mentioned late in their article series, the Rio security tapes recording the floor are held for seven days, and yet as my own interviewing with Nick Gullo showed, the very latest that the discrepancy should have been discovered was at the end of Day Seven play, roughly ten or twelve hours after the error occurred. At that point, they still would have had six days to examine the tapes, but all I read was a collection of "should"s and "probably"s and "we believe"s. I'm sorry, but that's not good enough.

Amy and Tim also rightly eliminate the possibility of cheating during that span just prior to 1:36 p.m., given that all the cameras were on, hundreds of fans were watching, and there's just no way anyone could have slipped in four or five stacks of chips without anyone noticing.

And that's another reason why I believe the Pokerwire timestamp of 1:36 p.m. was backdated and adjusted, to show when the players went on break. At 1:36 the cameras went off, everyone rushed off in all directions (but mostly toward the doors), and if it was like every other break I witnessed, it was momentary chaos. I believe that the introduction of the extra chips occurred shortly after 1:36, and that the Pokerwire counts are correct, but the timestamp in that instance is not. Sorry, guys, it's great reporting anyhow. And know that I'm sincere in stating that.

But what I'm not convinced of, because I remain open to all logical possibilities, is that the mistake was made in all due innocence, and wasn't a fix between a player and a dealer and/or director who saw an opportunity in the chaos. I don't believe it, but it is there, a thinly viable but very ugly possibility. It needs to be addressed, and addressed NOW. The problem, as I've tried to show, is that a quick cheat in a chaotic situation is a much simpler satisfaction of old Mister Occam than believing all those people all made similar mistakes at the same time, whether or not the procedural structure in place was so bad as to have allowed an error of such magnitude to have occurred.

Also, there's a dearth of direct quotes from Harrah's officials in the Calistri/Lavalli series, and there's no explanation from Harrah's as to what might have been found on those surveillance tapes, innocent or not. We all know that a problem occurred, and we now know that Harrah's had ample time to review what happened. It behooves Harrah's to assure the poker world that it was absolutely, positively an innocent mistake.

And when someone from Harrah's makes that affirmation, and signs their name to it, then I'll believe it for sure. Unless and until, I will always have my doubts...