Please take a moment between hands to thank Edward O. Thorp the next time you are at a live blackjack table counting cards, adding and subtracting ones, and possibly making a little money. He is a former math professor at a university who is now a stock market whiz. He is credited with creating card counting, penning the best-selling book “Beat The Dealer,” and founding advantage play in the modern era.
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Thorp began thinking about how to beat roulette four years before his book, which came out in 1962. He had also invented the first basic strategy card, which are the laminated, pocket-sized cards that advise players whose play in blackjack is correct. In 1958, Thorp and his spouse chose to spend their Christmas vacation in Las Vegas, where they indulged in a little blackjack gaming, as detailed in his most recent book, “A Man For All Markets.”
Blackjack was a game where players had little chance of making money in the long term at the time. In reality, their wild, haphazard play was probably going to cost them a lot of money. Immersed in the realm of mathematics and games, however, Thorp had been made aware of a blackjack method developed by four individuals in the US military that would eventually be referred to as “basic strategy.” The house edge dropped to.62 percent as a result.
With a $10 bankroll, Thorp took a seat and used his own card, which instructed him on how to play every hand against every dealer up-card. With just $8.50 remaining, he gave up, feeling confident that he could win the game by figuring out how to play it on his own. He was made fun of by dealers and other players for reading his card and making plays (such as hitting with a soft 18 against the dealer’s 9) that, while absurd at the time, are now commonplace. According to his book, “the superstitious and ignorant environment around the blackjack table that night had convinced me that even excellent players did not comprehend the mathematics underpinning the game.” “My goal upon returning home was to figure out a method to win.”
Thorp labored with numbers in the math department library at UCLA, where he worked as a math major. It was there that he came to the revolutionary conclusion that the rules of blackjack vary depending on how many cards are still to be dealt. Thorp was successful in getting a chair at Massachusetts Institute of Technology in 1959. He developed a system for tracking the cards that had already been dealt, betting more when the remaining cards offered advantages for players, betting less otherwise, and deviating from standard strategy when the math indicated that doing so would be wise after learning to program on the school’s mainframe computer.
To put it briefly, he devised the method that card counters still employ today. Thorp partnered with two New York businessmen in 1961, following his public disclosure of his discoveries, who were keen to support a test-run in Reno, Nevada. They contributed a total of $10,000, or $80,000 in 2016 currency. Thorp was dealt to the bottom of a single-deck game and soon he was spreading from $50 to $500. The mathematician’s winning techniques unnerved the casino owners, who ordered their dealers to shuffle as often as needed to keep him from winning constantly. Thorp’s method obviously worked.
But a few days later, he encountered the scourge of all card counters who would come after him. He writes, “We were not allowed to play at the casino.” “I inquired about the purpose of this from the floor manager. In a cordial and kind way, he said that they had watched me play the day before and were perplexed by my consistent winning at a rate that was high relative to my stake levels. He claimed they came to the conclusion that a system was at play.
They were accurate. After all, after just thirty hours of play, it produced a profit of $11,000 (that is the equivalent of a $88,000 profit today, or almost $3,000 an hour). By the summer of 1961, Thorp was working on “Beat The Dealer,” a book that would reveal to readers his revolutionary method for winning at blackjack by using a mathematical advantage over the house. The book achieved bestseller status. Numerous blackjack enthusiasts made riches by adhering to its principles.
However, the casinos did not take losing well, and Thorp, who started teaching at the University of New Mexico, resorted to dressing up to avoid being recognized by security guards and sharp-eyed pit supervisors. Life and Sports Illustrated both featured him and his book. Owners of bookshops were unable to hold it on their shelves. Anxious casino tycoons convened in private at the Desert Inn to attempt to determine the best course of action for dealing with Thorp and his followers. The Las Vegas Sun, the local newspaper in Sin City, responded by publishing an article that sought to refute card counting.
It seems clear that the reporter was in error. Blackjack teams, such as the well-known MIT Team, which was made famous in the film “21,” began to emerge and thrive after the publication of Thorp’s book. More sophisticated gambits, including the Big Player approach (where a player creeps onto the table and only bets when the count is positive), increased earnings and made it harder to spot tricks. According to Thorp, “I found myself persona not grata at the tables and barred, defrauded, and betrayed by a representative of the gaming control board.” When the enormous beast panicked, I felt vindicated and satisfied. Knowing that I could alter the environment around me simply by sitting in a room and doing basic math felt amazing.
When advantage play increased in 1964, Thorp abandoned blackjack in favor of a more difficult task at the Wall Street casino. He went on to win that bigger, more difficult game after realizing that “gambling is investing simplified,” making enormous sums of money that took advantage of inefficiencies and made advantage-playing earnings appear insignificant. Clearly, “Great investors are often good at both,” as he has demonstrated with his victories in both the stock market and blackjack.
