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.^{[citation needed]}

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]

Many articles have been written about playing Blackjack in order to beat the dealer. Most notably is the book from Edward O. Thorp: Beat the Dealer, innumerable others followed. The serious ones present one or more counting methods to find out the best strategy when betting high, stay or buy, double or split. Beat The Dealer: A Winning Strategy For The Game Of Twenty-One by Edward O. Thorp Edward O. Thorp has been a hero of mine for many years. His work on probability in the field of Black Jack should be regarded as a classic! His theories on when to double down, both soft and hard.

• 1Computer-aided research in blackjack

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]

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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]

Fun fashion games to play online for teens. He also devised the 'Thorp count', a method for calculating the likelihood of winning in certain endgame positions in backgammon.^[15]

Stock market[edit]

Thorpe Blackjack Strategy

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]

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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''. Amazon.com. 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]

Blackjack Basic Strategy

• 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

Beat The Dealer: A Winning Strategy For The Game of Twenty One

I have an older copy of Beat The Dealer: A Winning Strategy For The Game of Twenty One. I know it's an older copy, because it touts itself on the cover as having sold over 500,000 copies. And when I took a look at the book for sale on Amazon, I could see that the cover now reads 'Over 1,000,000 copies sold'. And I don't doubt that number one bit, as Beat The Dealer is THE groundbreaking work when it comes to counting cards and understanding the game of blackjack.My copy of the book also reads 'The book that made Las Vegas change the rules' across the top of it. Unlike most of the crap ebooks' claims that are being sold on the Internet, this book's claim is also true.

Beat The Dealer was first published in 1962. And before the publication of Beat The Dealer, card counting was practically unheard of. So when people refer to Edward O. Thorp's book as the book 'that started it all', they're not exaggerating. In fact, this book is so important, such a giant in the blackjack literature, that I'm a little intimidated about writing a review of it at all. But review it I will.

Beat The Dealer is written in a pretty old-fashioned style. If you've read some of the older self-help books like Dale Carnegie's books, then you'll be familiar with the writing style. This isn't a criticism, just an observation. The writing style is dated, and will sound a little bit funny to modern readers. That's no big deal, and it's certainly not a reason to avoid reading the book.

A nice aspect of that particular writing style is the detailed table of contents. Not only are the chapters listed, but what's covered in each chapter is also presented in the table of contents. When I took education classes in college, we learned about meta-reading, and one of the elements of meta-reading that helped people learn was a detailed overview or table of contents.

An example from the table of contents for Beat The Dealer follows:

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2. The Rules of Blackjack

Numbers of players. The pack. The deal. Betting. Numerical value of the cards, hard and soft hands. Object of the player. Naturals. The draw. The settlement. Splitting pairs. Doubling down. Insurance. Customs and practices: Shuffling, Shills, New decks.

As you can see, you know what you're going to learn from each chapter.

Beat The Dealer goes on to explain basic strategy in some detail in the next chapter, then discusses how to come up with a winning strategy in the following chapter. These explanations of why basic strategy is essential to use in a blackjack game and why blackjack can be beaten by a card counting system are as good as anything written in any newer blackjack book. The first three chapters of Beat The Dealer will give any aspiring blackjack expert an excellent conceptual foundation from which to start.

The counting system presented in Beat The Dealer is more difficult than most modern count systems, but it provides interesting reading nonetheless. And Edward O. Thorp's anecdotes and tales of his blackjack success are inspirational and gripping. The book also features a section on dealing with casino's countermeasures, which also seems a bit dated, and some information about dealing with cheating. I've noticed that a lot of the earlier blackjack literature, including this book and Lance Humble's The World's Greatest Blackjack Book worry a lot about the possibility of a casino cheating the player. My thinking is that cheating by the casino is no longer the concern for blackjack players that it once was. Casinos now just offer really bad games like 6/5 blackjack, or they use a large number of decks and shuffle them often, or they use automatic shufflers when they deal. Cheating isn't necessary when you have those countermeasures in place.

Beat The Dealer is an indispensible book in any serious blackjack student's library though. The historical significance of the book and the excellent conceptual framework that it provides makes it well worth the cover price and then some. Follow it up with Kevin Blackwood's book, or some of Stanford Wong's books, and you'll be in a good position to become an expert blackjack player and/or card counter, if that's your goal.

See also: