Mit Professor Blackjack

Getty Steve played on one of the MIT blackjack teams that profited mightily off of Las Vegas 21 tables in the 90's. He’s one of the few people I know with both an MBA and an MD.

When we think of gambling, the first thing that comes to mind is that the house always wins. But a group of MIT students proved that the system has its flaws, and it can be beaten. Nowadays, casinos have evolved and adapted their technologies to prevent card counters from taking advantage of the vulnerabilities, but it is still worth trying your luck at some safe and licensed platforms available in the UK.

In 1993 when Lewis was 20 years old and feeling aimless, he was invited to join the MIT Blackjack Team, organized by a former math instructor, who said, 'Blackjack is beatable.' Expanding on the 'hi-lo' card-counting techniques popularized by Edward Thorp in his 1962 book, Beat the Dealer, the MIT group's more advanced team strategies were. Based on the books by Ben Mezrich that cover the legendary MIT Blackjack Teams.- Bringing Down the House'Describes a collection of math whizzes from M.I.T. The book follows the real characters and true story in only parts. Much of it is fiction. The movie, well, that’s all Hollywood schlock. The founder wasn’t an MIT professor, there wasn’t a love-story with the main characters, they didn’t play blackjack to get cash to go to medical school, and they weren’t all father-less, broke students.

Keep reading to discover the true story of the infamous MIT Blackjack team that defeated the house.

The Birth of a Legendary Card Counter
Bill Kaplan, a former member of the team, remembers his mom’s reaction when he confessed to her that instead of going to Harvard, he would become rich from gambling. “Oh, God! What Am I going to tell all my friends?” she told him.

Kaplan was a math genius. After reading a book on card counting, he thought he could use the mathematical model to make a fortune from blackjack. It was not exactly what his mother was hoping that her straight-A son would do with his future. However, his step-father was quite impressed with his choice and challenged Bill to play against him every night and prove that he could win.

“I crushed him for two weeks straight and then he told my mother that he couldn’t believe it, but said that I could win at the game so she should just let me go!” recalls Bill Kaplan. His mother couldn’t do anything but comply, and Bill went to Vegas, where he spent an entire year. So, in 1977, Kaplan took off with $1,000 in his pocket and, within nine months, turned it into nearly $35,000. After his sabbatical year in the city of sins, Kaplan graduated from Harvard while still playing blackjack on any given occasion.

But it wasn’t until a leader of a student group from the Massachusetts Institute of Technology (MIT) who played around with card counting overheard Kaplan discussing his blackjack exploits in Vegas when his life took a turn to greatness. The MIT student asked him to train and be in charge of what would later become known as the infamous Blackjack Team.

By the year 1992, Kaplan and his squad were ready to beat the house and become millionaires overnight by exploiting the card counting strategy in the new mega-casinos that were booming at that moment. The team’s friends and partners that had previously seen a 100% win rate on small investments contributed $1 million to fund Strategic Investments. This company would train sharp students in the art of card counting and gambling. Then the new card counters would be sent strategically to unsuspecting casinos.

Mike Aponte – The Blackjack Hacker
Mike Aponte, one of the students trained by Strategic Investments, was a 22-year-old who had no idea what he would like to do with his life. After training hard with other MIT prodigies, he was handed $40,000 cash to gamble in Atlantic City on behalf of the team. After merely 10 minutes at the blackjack table, he had already lost $10,000.

“An executive casino host came to me right away and invited me to a penthouse suite. It was amazing – it had a jacuzzi and pool table. Despite being in awe of the room, I couldn’t enjoy it as much as I would normally have because I was upset about losing all that money.”

Mike’s loss is the perfect example that blackjack is a volatile casino game, even if you use a foul-proof system. However, after continuing to play using the card counting strategy taught by his teammates, Mike Aponte successfully returned home with a net profit of nearly $25,000.

From Student Dorms to VIP Penthouses
Casino moderators are always on the lookout for high rollers – clients that gamble massive amounts – and entice them with perks like free drinks, food, tickets, or rooms, no matter if they win or lose. So the members of the MIT Blackjack Team, who usually spent their week in class, sleeping in dorms and eating at the cafeteria, soon got used to the VIP treatment offered by luxurious casinos.

According to Aponte, being comfortable and dealing with the attention you receive from the casino hosts is more important than the math itself. Since he was Asian, he played the stereotype card that they are reckless gamblers. “My standard story was that I come from a rich family, and I was the spoiled son,” said the student.

As the students got used to living the luxurious casino life, they also became relaxed carrying vast amounts of cash. For instance, after some team members returned to class from a Vegas gambling trip, one of them left a paper lunch bag under his chair. The next morning, Kaplan received a call from that student, who told him that he forgot the paper bag containing over $125,000 in the classroom. The student ran back to the classroom to recover it, but it was gone.

After six months and investigations by the FBI and DEA, the team eventually got their money back from a cleaner that put it in his locker. The pressure soon started growing as more and more members of the MIT Team were banned from casinos. A private investigator was employed to find out who was responsible for the casino exploits. By analyzing the Boston addresses of many of those caught, he soon realized that the team of casino hackers were MIT students.

Most of the MIT Blackjack Team members were scared of getting caught, even though Aponte told them that the staff was harmless. “You would get a tap on the back, and the security would tell you that the management decided you can play any casino game except blackjack.” However, some security guards could become aggressive, mostly if the casino was outside the US.

Aponte remembers that once a new Ph.D. student who just passed the tests thought it would be a great idea to take his wife, who was also a member of the MIT team, to the Bahamas and try their luck at the casinos there. Once he got around $30,000 profit, the casino management found out that he was using a card counting technique, and called in the police.

“They put them in jail and confiscated not only all their winnings but also the team’s money that they had on them. That player and his wife never gambled for the team again.”

How card counting works
In blackjack, high cards represent an advantage for the gambler, while low cards favor the casino. As a card counter, you have to keep a running tally in your mind, adding 1 for lower cards and subtracting 1 for high ones. When the tally increases (more high cards are left in the deck), you should start placing higher bets.

Even though using this strategy won’t win you every bet, statistically speaking, the odds will be in your favor in the long-run. Card counting should always be applied in secret because the casinos don’t like it, and they are free to refuse to let you play, even if it’s not illegal.

In the 1950s, MIT professor of mathematics Edward Thorp researched this technique using computers. By 1962, he had a theory that he published in a book called “Beat the Dealer.” This publication forever changed the perception of the public regarding the game of blackjack.

The End of Strategic Investments
While most members of the MIT Team gave up after being caught, some of them took extreme measures to keep playing. Kaplan remembers a 21-year-old member that kept playing as a spotter – the person that counts cards and then signals their partner to place big bets when the opportunity arises.

“He shaved his head, put a wig on, dressed like a woman, and kept playing. He was a good looking guy!”

After the pressure kept increasing, Kaplan decided to put an end to Strategic Investments, and the company was dissolved in December 1993. At that time, the team already had 80 members, so it was about time to call it quits.

“As a blackjack player, it’s an amazing experience, but as the manager, we had 10,20 or even 30 people playing in different casinos, some in Vegas, some in Canada, and some in Canada. We had to keep track of their revenue, ensuring that none of them was stealing money,” said Kaplan in an interview.

So, he decided that the best way to evolve and keep making money was investing in real estate or other businesses. His wife was the happiest since she was in charge of telling members what to do if they get kicked out of a casino.

After Strategic Investments was dissolved, Mike Aponte formed a new team of card counters, which focused more on the personalities of the students they recruited. According to Mike, their revenues were over the roof. Eventually, he became too well-known as a cheater so that he couldn’t play anymore, but he still makes a lot of money from blackjack. In 2004, he became the World Series of Blackjack, and many people and casinos seek his advice.

The biggest irony of Mike Aponte’s life is that he became best friends with the very people that were hunting him down. “We pulled off something that very few have achieved. Everybody knows that the golden rule is you can’t beat the house in the long run, but that’s exactly what we managed to pull off!”

Edward Oakley Thorp (born August 14, 1932) is an American mathematics professor, author, hedge fund manager, and blackjack researcher. He pioneered the modern applications of probability theory, including the harnessing of very small correlations for reliable financial gain.

Thorp is the author of Beat the Dealer, which mathematically proved that the house advantage in blackjack could be overcome by card counting.^[1] He also developed and applied effective hedge fund techniques in the financial markets, and collaborated with Claude Shannon in creating the first wearable computer.^[2]

Thorp received his Ph.D. in mathematics from the University of California, Los Angeles in 1958, and worked at the Massachusetts Institute of Technology (MIT) from 1959 to 1961. He was a professor of mathematics from 1961 to 1965 at New Mexico State University, and then joined the University of California, Irvine where he was a professor of mathematics from 1965 to 1977 and a professor of mathematics and finance from 1977 to 1982.^[3]

Computer-aided research in blackjack[edit]

Thorp used the IBM 704 as a research tool in order to investigate the probabilities of winning while developing his blackjack game theory, which was based on the Kelly criterion, which he learned about from the 1956 paper by Kelly.^[4][5][6][7] He learned Fortran in order to program the equations needed for his theoretical research model on the probabilities of winning at blackjack. Thorp analyzed the game of blackjack to a great extent this way, while devising card-counting schemes with the aid of the IBM 704 in order to improve his odds,^[8] especially near the end of a card deck that is not being reshuffled after every deal.

Applied research in Reno, Lake Tahoe and Las Vegas[edit]

Thorp decided to test his theory in practice in Reno, Lake Tahoe, and Las Vegas.^[6][8][9]Thorp started his applied research using $10,000, with Manny Kimmel, a wealthy professional gambler and former bookmaker,^[10] providing the venture capital. First they visited Reno and Lake Tahoe establishments where they tested Thorp's theory at the local blackjack tables.^[9] The experimental results proved successful and his theory was verified since he won $11,000 in a single weekend.^[6] Casinos now shuffle well before the end of the deck as a countermeasure to his methods. During his Las Vegas casino visits Thorp frequently used disguises such as wraparound glasses and false beards.^[9] In addition to the blackjack activities, Thorp had assembled a baccarat team which was also winning.^[9]

News quickly spread throughout the gambling community, which was eager for new methods of winning, while Thorp became an instant celebrity among blackjack aficionados. Due to the great demand generated about disseminating his research results to a wider gambling audience, he wrote the book Beat the Dealer in 1966, widely considered the original card counting manual,^[11]which sold over 700,000 copies, a huge number for a specialty title which earned it a place in the New York Times bestseller list, much to the chagrin of Kimmel whose identity was thinly disguised in the book as Mr. X.^[6]

Thorp's blackjack research^[12] is one of the very few examples where results from such research reached the public directly, completely bypassing the usual academic peer review process cycle. He has also stated that he considered the whole experiment an academic exercise.^[6]

In addition, Thorp, while a professor of mathematics at MIT, met Claude Shannon, and took him and his wife Betty Shannon as partners on weekend forays to Las Vegas to play roulette and blackjack, at which Thorp was very successful.^[13]His team's roulette play was the first instance of using a wearable computer in a casino — something which is now illegal, as of May 30, 1985, when the Nevada devices law came into effect as an emergency measure targeting blackjack and roulette devices.^[2][13] The wearable computer was co-developed with Claude Shannon between 1960–61. Thefinal operating version of the device was tested in Shannon's home lab at his basement in June 1961.^[2] His achievements have led him to become an inaugural member of the Blackjack Hall of Fame.^[14]

Mit Professor Blackjack Games

He also devised the 'Thorp count', a method for calculating the likelihood of winning in certain endgame positions in backgammon.^[15]

Stock market[edit]

Mit Professor Blackjack Online

Since the late 1960s, Thorp has used his knowledge of probability and statistics in the stock market by discovering and exploiting a number of pricing anomalies in the securities markets, and he has made a significant fortune.^[5] Thorp's first hedge fund was Princeton/Newport Partners. He is currently the President of Edward O. Thorp & Associates, based in Newport Beach, California. In May 1998, Thorp reported that his personal investments yielded an annualized 20 percent rate of return averaged over 28.5 years.^[16]

Bibliography[edit]

• (Autobiography) Edward O. Thorp, A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market, 2017. [1]
• Edward O. Thorp, Elementary Probability, 1977, ISBN0-88275-389-4
• Edward Thorp, Beat the Dealer: A Winning Strategy for the Game of Twenty-One, ISBN0-394-70310-3
• Edward O. Thorp, Sheen T. Kassouf, Beat the Market: A Scientific Stock Market System, 1967, ISBN0-394-42439-5 (online pdf, retrieved 22 Nov 2017)
• Edward O. Thorp, The Mathematics of Gambling, 1984, ISBN0-89746-019-7 (online version part 1, part 2, part 3, part 4)
• Fortune's Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street by William Poundstone
• The Kelly Capital Growth Investment Criterion: Theory and Practice (World Scientific Handbook in Financial Economic Series), ISBN978-9814293495, February 10, 2011 by Leonard C. MacLean (Editor), Edward O. Thorp (Editor), William T. Ziemba (Editor)

See also[edit]

References[edit]

1. ^Peter A. Griffin (1979) The Theory of Blackjack, Huntington Press, ISBN978-0929712130
2. ^ ^abcEdward O. Thorp. 'The Invention of the First Wearable Computer'(PDF). Edward O. Thorp & Associates. Retrieved April 26, 2010.
3. ^'Founding professor of math donates personal, professional papers to UCI Libraries'. UCI News. UC Irvine. June 12, 2018.
4. ^Understanding Fortune’s Formula by Edward O. Thorp Copyright 2007 Quote: 'My 1962 book Beat the Dealer explained the detailed theory and practice. The “optimal” way to bet in favorable situations was an important feature.In Beat the Dealer I called this, naturally enough, “The Kelly gambling system,” since I learned about it from the 1956 paper by John L. Kelly.'
5. ^ ^abTHE KELLY CRITERION IN BLACKJACK, SPORTS BETTING, AND THE STOCK MARKET by Edward O. Thorp Paper presented at: The 10th International Conference on Gambling and Risk Taking Montreal, June 1997
6. ^ ^abcdeDiscovery channel documentary series: Breaking Vegas, Episode: 'Professor Blackjack' with interviews by Ed and Vivian Thorp
7. ^The Tech (MIT) 'Thorpe, 704 Beat Blackjack' Vol. 81 No. I Cambridge, Mass., Friday, February 10, 1961
8. ^ ^ab'American Scientist online: Bettor Math, article and book review by Elwyn Berlekamp'. Archived from the original on April 23, 2007. Retrieved March 18, 2006.CS1 maint: BOT: original-url status unknown (link)
9. ^ ^abcdIt's Bye! Bye! Blackjack Edward Thorp, the pensive professor above, is shaking the gambling world with a system for beating a great card game. He published it a year ago, and now the proof is in: it works David E. Scherman January 13, 1964 pp. 1–3 from SI Vault (beta)(CNN) Quotes: 'The unlikely trio was soon on its way to Reno and Lake Tahoe, where Thorp's horn-rimmed glasses, dark hair and fresh, scrubbed face hardly struck terror into the pit bosses. (p. 1)', 'But Edward Thorp and his computer are not done with Nevada yet. The classiest gambling game of all—just ask James Bond—is that enticing thing called baccarat, or chemin de fer. Its rules prevent a fast shuffle, and there is very little opportunity for hanky-panky. Thorp has now come up with a system to beat it, and the system seems to work. He has a baccarat team, and it is over $5,000 ahead. It has also been spotted and barred from play in two casinos. Could it be bye-bye to baccarat, too? (p. 1)' and 'But disguises frequently work. Thorp himself now uses a combination of wraparound glasses and a beard to change his appearance on successive Las Vegas visits. (p. 3)'
10. ^Breaking Vegas “Professor Blackjack.”Archived December 21, 2008, at the Wayback Machine Biography channel Rated: TVPG Running Time: 60 Minutes Quote: 'In 1961, lifelong gambler Manny Kimmel, a 'connected' New York businessman, read an article by MIT math professor Ed Thorp claiming that anyone could make a fortune at blackjack by using math theory to count cards. The mob-connected sharpie offered the young professor a deal: he would put up the money, if Thorp would put his theory to action and card-count their way to millions. From Thorp's initial research to the partnership's explosive effect on the blackjack landscape, this episode boasts fascinating facts about the game's history, colorful interviews (including with Thorp), and archival footage that evokes the timeless allure and excitement of the thriving casinos in the early `60s. '
11. ^'Blackjack Hero profile'. Blackjackhero.com. Retrieved April 26, 2010.
12. ^A favorable strategy for twenty-one. Proceedings of the National Academy of Sciences 47 (1961), 110-112
13. ^ ^ab'Poundstone, William: Fortune's Formula : The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street'. Retrieved April 26, 2010.
14. ^Anthony Curtis. 'Las Vegas Advisor on Ed Thorp'. Lasvegasadvisor.com. Retrieved April 26, 2010.
15. ^Chuck Bower (January 23, 1997). 'Cube Handling in Races: Thorpe count'. bkgm.com. Backgammon Galore. Retrieved May 8, 2013.
16. ^'Thorp's market activities'. Webhome.idirect.com. Archived from the original on October 31, 2005. Retrieved April 26, 2010.

Sources[edit]

Mit Professor Blackjack Meaning

• Patterson, Scott D., The Quants: How a New Breed of Math Whizzes Conquered Wall Street and Nearly Destroyed It, Crown Business, 352 pages, 2010. ISBN0-307-45337-5 via Patterson and Thorp interview on Fresh Air, February 1, 2010, including excerpt 'Chapter 2: The Godfather: Ed Thorp'

External links[edit]

• Edward O. Thorp at the Mathematics Genealogy Project