Billionaires Just Bet Against America—and Won
Turning democracy into autocracy, Texas Hold ‘em style
Most people are unaware of the extent to which the gambling mindset—the attraction to poker in particular—is embedded into Wall Street trading culture. During the ten-week training period at Susquehanna International Group, for example, neophytes spend an inordinate amount of time, not honing their trading skills, but playing poker, according to The Wall Street Journal:
Young traders who join the trading giant Susquehanna International spend at least 100 hours playing cards during a 10-week training program. When the stock market closes at 4 p.m., they often head straight from the trading floor to a dedicated poker room at the firm’s headquarters in the Philadelphia suburbs.
Jeff Yass, Susquehanna’s co-founder, sometimes joins in, scrutinizing hands new hires play and gauging how effectively they bluff. Thousands of employees, from traders to technologists, participate in the firm’s annual poker tournament. At least three have notched wins at the World Series of Poker in Las Vegas.
No money changes hands in Susquehanna’s games, where employees often serve as volunteer dealers. Skill at the poker table translates to respect from colleagues and bosses. It also, according to the company’s top brass, improves performance on the trading floor.
I encountered Wall Street’s poker obsession a few months after 9/11. In an interview for a trading position, I received an interesting proposal. A few minutes into my interview, the interviewer excused himself from the room. He returned with a man dressed in jeans, an untucked shirt, and tennis shoes. This was the person who owned the company. That's when my interview took an unexpected turn.
The firm's owner was interested in funding a minority-owned investment business. Unbeknownst to me when I walked into the interview, the securities business I’d started before moving to New York—and the fact that I am Black—was why the firm was interested in me.
The man in the untucked button-down explained that his company had made several attempts to get approval for a separate trading startup that would be minority-owned. They’d failed each time. So instead of offering me the trading position I’d applied for, he made a different offer.
If I could get their dormant business past regulatory hurdles, he would provide the financial backing for the company. In addition to a salary, he offered to house me on their trading floor while I navigated the complex regulatory process. If I succeeded in jumping through all the regulatory hurdles, he would back me. I would have a majority ownership stake in the company, and he’d own the remaining shares.
I accepted his offer.
My partner in this business venture was Joe De Sena. Today, Joe is known as a bestselling author and influencer. For a while, he even had a show on CNBC. But when I knew him, he was the head of Burlington Capital, the equity trading business that housed Saratoga Capital, the startup I got off the ground.
It took a few months, but I managed to get the company across the finish line. Finally, I had the startup ready for regulatory approval. The last phase was to meet with a group of regulators for an approval interview.
“All of sports betting, all of playing poker, and all of options trading is making sure you’re betting against someone you’re smarter than. If you’re not asking yourself, am I the sucker, or am I the [bait], you get arrogant and you get crushed.” ~Susquehanna CEO Jeff Yass
When Joe and I met at the NASD’s (the predecessor of today's FINRA) offices for in downtown Manhattan, he showed up dressed in his trademark untucked button-down and jeans. Knowing regulators would take a negative view of this faux pas, I persuaded him to buy a more appropriate outfit from the Brooks Brothers shop in the building lobby. It's the only time I ever saw him in a tie.
A short time later, Saratoga Capital was in the trading business. Burlington catered exclusively to hedge funds, and Saratoga mirrored the same focus. At the time, most investment firms were behind the curve on electronic trading. At my previous job, folks wrote their traders down in spiral notebooks.
(Side note: the names of the two companies figure prominently in the 1923 Roman à clef Reminiscences of a Stock Operator, by Edwin Lefèvre.)
Joe recognized that a paradigm shift to digital trading was coming. He’d partnered with Sonic Financial Technologies, an electronic trading startup, and forced his traders to learn how to use their platform. My association with Joe and Burlington was my introduction to electronic trading.
My access to Sonic meant I could present Saratoga as the only minority-owed investment company capable of trading electronically. (Sonic was purchased by Bank of New York in 2004.) Hedge funds were starting to embrace electronic trading as well, so they loved Burlington. But there was another reason they gravitated to the firm.
Joe was the most exceptional marketer I met while working on Wall Street. He produced ideas for attracting business that blew me away. One summer he leased a half-dozen homes in the Hamptons for his traders to entertain their best clients. He organized a boot camp-style competition at a remote location. Those grueling events evolved into Joe's international brand, which features the Spartan Race.
If you're playing a poker game and you look around the table and can't tell who the sucker is, it's you. ~Paul Newman
The Flop
One of Joe’s best marketing ideas was Texas Hold ’em Night. I’d played poker before I met Joe, but I’d never heard of the game, which is a variant of regular poker. Because of the huge audiences it amassed due to televised poker tournaments, the game usurped seven-card stud as the most popular form of poker.
One of the differences from regular poker is that, after each player makes their initial bet, subsequent rounds have unique names: the flop, the turn, the river, and then finally, the showdown. If your knowledge of Texas Hold ’em is limited to a Beyoncé tune, this video explains the basics.
Every week one summer, traders from across Manhattan would meet on the penthouse floor of a nondescript building on Read Street—that Joe happened to own. When players exited the fourth-floor elevator, they were presented with $10,000 in poker chips.
Adding to the authenticity of the evening's experience, Joe rented more than a dozen poker tables, the kind you see in casinos. He hired professional bartenders. A phalanx of attractive waitresses made sure participants’ glasses stayed full. One week, Joe even brought in a pasta chef.
No real money was involved, although a few more serious gamblers shot craps on the far side of the floor. Players who washed out of their pretend money could relax with a drink in the outside space with a view of downtown New York City.
The traders loved it.
Hours later, the last player standing at the end of the weekly soirée claimed the evening’s prize: a helicopter ride to Atlantic City, complements of Burlington Capital. The following day, reams of appreciative trades rained down on the firm's trading desk. At the end of summer, the weekly winners faced each other for the championship.
One summer, one of Saratoga’s clients won the tournament. The prize? A week in the French Riviera. So, the client, the trader who covered him, and their girlfriends lived it up in San Tropez for a week. All they had to pay for was plane tickets.
The Turn
With his $30 billion fortune, Jeff Yass is the wealthiest person in Pennsylvania, but he is far from a household name. According to a recent piece in Vanity Fair, the Queens native practically grew up on racetracks. By his twenties, he and his friends were raking cash at racetracks and poker tables around the country.
Yass later bought a seat on the Philadelphia Stock Exchange, recruiting the same friends to form Philadelphia Trading. The group parlayed the profits from that business to launch Susquehanna International Group. Located in Bala Cynwyd, Pennsylvania, the global trading firm is a quantitative trading behemoth. If you’ve ever traded options on a mobile phone app, chances are you’ve done business with Susquehanna:
[Susquehanna] is the largest trader of listed stock options in America by some measures and like Citadel, Susquehanna’s skilled traders devour the order flow coming from free trading apps like Robinhood. In 2020, Susquehanna’s quants traded some 1.8 billion stock options contracts, 80% more than the prior year, and accounting for nearly a quarter of all options trades in the U.S., according to Alphacution Research.
Yass bootstrapped Susquehanna in part with startup capital plucked from racetrack pots and poker tables in the 1970s and early 1980s. He then applied his gambling instincts to options markets during the 1980s bull market, and his skill for handicapping odds and finding an edge set him apart.
When people use the word 'science,' it's often a tell, like in poker, that you're bluffing.
~ Peter Thiel, Managing Partner, Founders Fund
While Elon Musk garnered the bulk of media attention due to his close association with Trump, Jeff Yass used his considerable largess to operate behind the scenes. According to Open Secrets, a firm that tracks donor contributions to outside spending groups, Yass and his wife poured just under $100 million in donations into this year's election. With Trump heading back to the White House, Yass looks poised to cash in his chips.
A few months before leaving office, then-president Donald Trump used his emergency economic powers to go after TikTok, issuing an executive order aimed at the app’s Chinese owner, ByteDance. The order gave the company forty-five days to sell its assets in the U.S. to an American-owned company or be subject to a ban. At the time, Trump said the move was a matter of national security. But during his election campaign, his tune suddenly changed.
In an interview with CNBC during his campaign, Trump said that although TikTok is a national security threat, he no longer supports a congressional ban. So why the flip-flop? It doesn't take a genius to see that something happened between Trump, Jeff Yass—and Susquehanna. Just follow the money.
Susquehanna was one of the largest investors in the special purpose acquisition company, or SPAC, that merged with Trump Media & Technology Group (DJT), Trump’s social media company. Then there is the TikTok connection.
A little over a decade ago, Susquehanna invested in ByteDance, then a fledgling tech startup. The company has been called the world's most valuable startup. When the company bought back shares from investors last year, it valued itself at $300 billion, according to the Wall Street Journal. Yass’s stake is an estimated $30 billion.
On March 1 of this year, Yass and the CEO of The Club for Growth invited Trump to speak at the group’s donor retreat. This was notable because until then, Yass had been a never-Trumper, actively promoting campaigns opposing Trump. At the time, the Trump’s campaign was strapped for money, plus he had a ton of legal liabilities. And everyone knew it.
On March 7, Trump posted on Truth Social that Facebook, not TikTok, was the real threat. You do the math.
The River
I was reminded of the poker mindset when I saw an op-ed by Nate Silver, formerly of FiveThirtyEight, in The New York Times a few days before the election. According to Silver, his “gut” told him Donald Trump would win the presidential election. At the end of the piece came the customary statement of bona fides, the part that tells us something about the person whose opinion we’ve just read:
I was pleased to know that Silver’s book is a success and that he has a Substack newsletter, but what I found interesting was what the newspaper of record omitted about Silver’s current resume. Before FiveThirtyEight, Silver worked for KPMG. In 2004, he quit his $55,000-a-year job at the company to make a living playing online poker. According to Sports Illustrated, he was good enough at the game to earn $400,000 over the next three years. In 2021, Silver was the runner-up in a World Series of Poker tournament, which earned him more than $150,000.
In his op-ed, Silver alluded to speaking with poker players, but he never bothered to mention his connection to the sport. I found these omissions odd, especially given the news last July regarding Silver’s latest gig, advising a company named Polymarket.
The Showdown
Polymarket is a venture capital-backed prediction platform founded in 2020 that has become one of the world's most popular prediction markets—especially for wagering on U.S. elections. The company says doesn't yet allow U.S. users to make trades based on its predictions. That said, a single “whale” raked in $85 million betting that Donald Trump would win the November election. Just like Nate Silver’s gut said he would.
Given his undisclosed link to Polymarket, Silver’s op-ed made me wonder if he was “talking his book” to benefit Polymarket, in much the same way CNBC’s Jim Cramer used to talk up his hedge fund's book—which resulted in a suspension. But something else is interesting about Silver’s op-ed, and the omission of his connection to Polymarket.
Polymarket’s lead investor is Founders Fund, a private equity shop, which along with a few others, invested $45 million in the company earlier this year. And who heads up Founders Fund? That would be billionaire Peter Thiel, who has also been the sole patron of JD Vance, the Ohio senator who just became the vice president of the United States.
Hopefully, someone smarter than me will unravel what this all means, but I don’t believe in coincidences. And since Polymarket’s CEO just had his home raided and cell phone seized by the FBI, maybe the Department of Justice doesn’t either.
Whatever the case, they better move fast. January 20th is right around the corner.
Wow, that's an interesting read. I know next to nothing about the things you are writing about here, but it is quite compelling and yes, they better move fast. OY!
Fascinating read, Mr. Weems. The more I learn, the more I believe the current financial system needs to rebuilt, brick by brick. Your success is admirable.