Monday, April 12, 2004

Tuning the bullshit meter

There's a story out today about a British dude who "sold all of his possessions", raised $135,000, bet it all on one spin of roulette in Vegas this weekend - and won.

It sent the Cap'n Ken Bullshit Meter to about 7 (in comparison, the "girl wins slam-dunk contest" story was a full 10 on the CKBM).

First off, why are there TV cameras capturing the big moment when Ashley Revell bet everything he has in this world on red? Turns out SkyTV is doing a mini reality show on Ashley's big gamble (they say he's not getting paid by them). Fair enough.

Then I learn that Ashley is actually a professional gambler. He plans to play in the World Poker Tour next. Ah, a little advance publicity to create buzz for himself in the growing "sport" of poker. And therein, it seems, lies his motivation.

We were pitched a story about a humble 32-year-old Londoner who figured he's still young enough and free enough to pool together all of his resources and "let it ride" on the hopes of a big payoff.

But consider this:

He says he sold all of his possessions (including the extra-special hook that he sold all of his clothes and only had his rented tux to wear) and the $135,000 represented everything he had in life. The story isn't clear on what exactly he sold - real estate, stocks, cars or what - so it's hard to know what profit or loss he may have realized on the "liquidation".

For argument's sake, let's say $120,000 was in things such as real estate or stocks that he realized a gain on. British tax laws are pretty complicated, so let's assume he had to paid capital gains taxes on $35,000 of the appreciating asset sale value at 15%. That would mean he sold $125,250 worth of assets to raise that $120,000.

If he raised the other $15,000 by selling things - cars, furniture, clothes - that do not appreciate in value, then conservatively I'd think it cost him at least $25,000 to buy the items he ended up selling for $15,000.

So it seems reasonable that in order to raise $135,000 in cash, he had to get rid of assets which were either worth or cost him at least $150,000 to aquire.

In Vegas, he won $135,000 on his big roulette bet. The IRS taxes the gambling winners of foreigners at 30% (most foreigners don't end up paying this tax because the casinos don't have to report table game winnings to the feds - but the tax is harder to avoid when your win is all over TV). Assuming he won't have any additional British income tax liability (although I imagine he will), he's out $40,500 in taxes.

Stay with me here ...

At this point, he's liquidated about $150,000 in assets in order to gain $94,500. If we are to believe he sold "everything he owned" to raise this money, then he's going to have to replace it when he gets back to London. He now has $229,500 in cash to his name. If he spends $100,000 on a new house, he'll pay a 1% "stamp duty", or $1,000 on the purchase.

Now he has a house, $128,500 in cash and - we are to believe - nothing else in the world at all. If he buys $25,000 (the estimated original purchase price) worth of cars, furniture, clothes, etc., it will cost him $29,375 to do so, thanks to Britian's 17.5% VAT.

After he puts the remaining $20,000 worth of his original assets back in to whatever he sold off to raise the money (no doubt incurring more fees, commissions, etc.) he's left with as best $79,000.

We're supposed to believe that a professional gambler would put up $150,000 in assets in order to gain at best $79,000 on a bet (red or black) that carries odds of [corrected: slightly worse than] 1:1?


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