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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. As a young man, Ed Thorp was a mathematician doing pretty much what you'd expect a mathematician to do: teaching, studying, trying to solve hard problems. There was one particular problem that.

The Professor of Blackjack Dr. Edward O. Thorp

Dr. Edward O. Thorp is an American hedge fund manager who began his career as a professor of mathematics at MIT. In between those two endeavors he visited Las Vegas, played some blackjack, became enamored of the game’s continually changing house edge and wrote the most famous book on gambling ever which he titled Beat the Dealer.

The Professor of Blackjack was born in Chicago, Illinois August 14, 1932. His childhood did not reflect a future of gambling (at casino games or the stock market), but he was continually intrigued by the precision and definitive nature of mathematics and physics. His interests led to a BA in Physics from UCLA in 1953, an MA in Physics from UCLA in 1955 and finally a PhD in Mathematics from UCLA in 1958.

He was hired as a professor at MIT, but missed the West Coast and was fascinated by casino games and game theory, and took several vacations with friend Claude Shannon and Claude’s wife Betty. Not surprisingly, the numbers attached to a spinning roulette wheel were quite a draw, and he and Claude invented a small computer for advantage play at the game. Betty would wear the device and use his mathematical formula to try and take advantage of anomalies in the spin pattern of different dealers and wheels.

Along the way, Thorp’s overall forays into the casinos of Las Vegas were successful. However, the mathematics of blackjack was also alluring to Thorp and he learned Fortran so he could program equations into a huge IBM 704 computer to define a specific strategy based on game theory related to the changing nature of the odds due to cards put into play. He was influenced by a paper presented by fellow mathematician Roger Baldwin on the same subject in 1956, but wanted to take his ideas to a new level. His new overall theory was related to the Kelly criterion, a wagering system he later applied to the stock market that matched bet-size to player advantage.

With his initial research finished, Thorp wrote a paper he titled A Favorable Strategy for Twenty-One in November of 1960. His fellow MIT professor, Dr. Shannon, suggested a name change to Fortune’s Formula: A Winning Strategy for Blackjack. The name stuck. The paper suggested that there was a specific way to play each hand of blackjack, based on the dealer’s up card – a basic strategy for winning. He also theorized a system to determine when the house odds changed and became player odds (or an actual player advantage).

Hitting the Casinos

His theories were so masterful that Thorp convinced Manny Kimmel, a local professional gambler, to provide him with a $10,000 bankroll to prove his system could be both practical and successful in real casino action. Instead of playing in Las Vegas, Thorp started in the casinos of Reno and Lake Tahoe where he initially won enough to convince Kimmel this might be a goldmine.

Repeated trips to both Reno and Las Vegas were filled with the good and bad of gambling. Unfortunately, even with a 1% edge there are huge swings at blackjack and Thorp had many ups and downs, but an $11,000 win over a single weekend was enough to keep him playing. And, it kept Pit Bosses watching him very carefully.

Before Thorp and the advent of basic strategy, most players were at a much larger disadvantage to the house, probably closer to 5%. To have a player who seemed to be so much better at the game was unnerving for the casinos, and they had no problem just telling him he couldn’t play anymore. He pondered his future while moving to New Mexico where he was a professor of mathematics from 1961 to 1965.

Thorp refined his strategy and detailed his Las Vegas casino exploits and explained the use of a mathematical card counting system in his book, Beat the Dealer. It was only marginally successful until a series of magazine and newspaper articles detailed the story of the college professor with a winning formula for playing blackjack and beating the casinos.

Las Vegas, in typical knee-jerk reaction to the thought of losing any money, changed the rules of the game to make it harder for the coming wave of skilled players they were sure was coming. Those rules included: no splitting of aces, shuffling the deck early, and restricting double down hands.

The public hated the rule changes, and even though Thorp’s book became a National Best Seller, it turned-out that very few players had the ability, patience, or bankroll to implement Thorp’s card counting system. In fact, after the casinos relented and eased-up on the rule changes, tens of thousands of new blackjack players did indeed come to Las Vegas, Reno and Lake Tahoe to try their luck. Most lost.

System Revised and the Real Boom in Blackjack Play

Thorp, however, continued to win, but found he was often shuffled-up or asked to leave, so he took to playing in disguise. With the help of Julian Braun, an easier count system was developed and included in the 1966 updated and revised edition of Beat the Dealer. Every subsequent blackjack book and system is based on the initial work of Thorp and Braun

Thorp continued to play casino blackjack after moving to the University of California at Irvine where he also taught mathematics from 1965 to 1982. He also contributed articles and ideas to a growing group of professional blackjack players and blackjack teams. However, his main focus outside the university was a growing interest in the stock market.

His first hedge fund, the market neutral Princeton/Newport Partners was started in 1969 with partner Jay Regan. Thirty years later Thorp reported that his own personal investments using his system of exploiting pricing anomalies in the securities markets as well as quantitate finance with stocks had yielded a 20% annual rate of return.

Dr. Thorp has written several books on his theories for beating the stock market using what were then new ideas, with names like Option Arbitrage, Convertible Arbitrage, Index Arbitrage and Statistical Arbitrage.

Without the book Beat the Dealer and Thorp’s Simple Point-Count System and Complete Point-Count System, upcoming blackjack players like Lawrence Revere and Kenny Uston would never have achieved the success and notoriety they did – by beating the casinos, and publishing their own books.

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The hit Hollywood movie “21” was based on Ben Mezrich’s book, Bringing Down the House, which chronicled the resurgence of the MIT blackjack team in the 1990’s. 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. Well, students usually are broke, so that part’s mostly true.

The 1980’s

About the time Ken Uston was winding down his blackjack play and concentrating on land deals, books, and lawsuits against Atlantic City, Reno and Las Vegas casinos, Bill Kaplan formed a team of blackjack players to do some card counting on the east coast. He says his first recruits were JP Massar, who co-managed the team, and John Chang. Kaplan was a Harvard Business School graduate. Chang graduated from MIT in 1985. Other early recruits were MIT students also.

Kaplan was hardly a novice. He made treks to Atlantic City casinos and had been the manager of a team of card counters based in Las Vegas in the late 1970’s. The movie certainly forgot that part. As for the true story, the team name is accurate because a group of six MIT students who lived in the Burton-Conner House at MIT read Lawrence Revere, Ken Uston and Ed Thorp’s books on blackjack and practiced playing the game.

While several of them graduated in May, they offered a course in blackjack for MIT’s January Independent Activities Period, a short monthly course. A few of the students were approached by a professional gambler and an investor with $5,000 to put-up as a bankroll. Eventually four of the students played as a team in Atlantic City, each making about $3,500. Later, one of the players, JP Massar, overheard Kaplan talking about blackjack in a Chinese restaurant one evening, introduced himself, and invited Kaplan to watch his buddies winning in Atlantic City.

Kaplan was intrigued, as they did play well, but they were disjointed, used different count systems, and made errors that drove what should have been a hefty 2% edge down to under 1%. There were too many math computations, too many basic strategy exceptions, and too much drama.

Kaplan offered to work with the friends if they were willing to follow more stringent rules including a single Advanced Count and a more rigid wagering system. They weren’t too happy about the idea, but eventually met on several occasions and worked on the new count.

The First Real MIT Team

Kaplan was serious about using a business approach to the new team. He wrote a prospectus, projected a $170 per hour win rate, and took investments from team members (who eventually totaled 10) and from outside the group. With an $89,000 bank they started playing in Atlantic City. Both Kaplan and Massar served as Big Players, placing large wagers while their teammates counted down shoe after shoe at various tables.

The counters played $5 or $10 per hand. The Big Players joined games when the count was positive for the players and wagered $500 to $1000. The Pit Bosses weren’t completely fooled, but with dozens of tables and big money being played everywhere, the MIT Team was able to blend-in fairly well and get in plenty of play. They were rarely shuffled-up on.

Still, it was grueling for the teammates. They worked hard, made mistakes, practiced till all hours of the morning, and went back for more when they could find the time. It took nearly 10-weeks to double the first playing bank, but once the double was done, everyone was happy. The team of mostly undergraduate students were paid $80 per hour for their play. The overall hourly rate for play was over $160, with the other $80 going to investors.

New Recruits

The real advantage that the MIT Team had in both the 1980’s and the 1990’s was that they had an unlimited supply of potential card counters. Harvard and MIT were obviously filled with motived, bright students, and the team actually recruited new members with flyers placed in quads and dorms. The training wasn’t easy on new recruits. Those who professed knowledge of counting were put through an intense series of sessions consisting of counting down six-deck shoes over and over. They were expected to make less than a single mistake per shoe while keeping the count correct.

Then, each member was taught the same advanced count system, grilled on the basic strategy exceptions that should be made at times based on the count, and taken to Atlantic City for live casino play, completely supervised by trainers. If they passed, they were allowed to work with the team and either count at team tables or move up to money handlers and Big Players. As the team grew to more than 30 players by 1984 it became more important for the occasional trip to Las Vegas.

Clubs in Reno and Lake Tahoe had lower table limits and there was more heat due to the smaller percentage of big money players at the casinos. Only the MGM offered enough tables for a team of 10 or 12 players to blend in, but it wasn’t worth the trip for one casino with Vegas-style limits and games (all six-deck shoes).

By this time Kaplan was well known in both the New Jersey and Las Vegas casinos. He settled into a reduced role and played sporadically for the team, now being managed by Massar, Chang and Bill Rubin. The managers had an easy time of it, as investors couldn’t wait to get their money into action, but it wasn’t necessary. The team doubled several banks each year, held back some of the money to increase their worth, and played to $200,000 banks on a regular basis.

While breaking the banks (doubling) was fun, the work of constantly counting cards perfectly, giving signals, keeping an eye on the bosses, and traveling between the east and west coasts wasn’t quite as fun as it might sound. The play was stressful. One year the team only doubled a single bank, barely making a profit, but like the Uston teams, most banks were successful.

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New Casinos – New Money

As casino gambling grew in the US, new outlets were available for plunder. The main drawbacks were slow dealers (who were all newly trained) and low limits, but when the mammoth Foxwoods Casino opened in Connecticut with hundreds of blackjack tables it was easy pickings. And, the money was good enough to convince an author to write about the team, and Hollywood to someday make a movie. As for the team, it was nearly invincible.

Kaplan joined Massar and Chang again in 1992 and they formed a company called Strategic Investments to bankroll a super team. The partnership easily raised their million dollar goal and went to work using a slightly different system, employing a counter and a controller on each game. The controller played small stakes, just like the counter, but was there as a final check to make sure the count was accurate and to watch the bosses. When the count soared into positive territory the Big Player was signaled and given the count, often with codes (such as “my ice tea is too sweet,” which translated to sweet sixteen, or a count of +16). Sometimes the team had three Big Players in action watching many tables. The team eventually had more than 80 players, hitting new casinos all over the country from Mississippi, to Iowa, Chicago and of course, Las Vegas. The Bahamas was also a favorite location.

They pushed hard, got barred, and trained new Big Players. They cleared more than $3 million dollars before the barring’s became commonplace. As more and more players were carded, photographed, and banned from play, a common denominator was noted: many of the players were from Massachusetts, some from or near Cambridge.

Individual casinos who employed the Griffin Detective Agency came to the same conclusion that some of the players might be college students from MIT. That conclusion may have been helped through the sale of team member names, copies of MIT yearbooks, or both. Either way, Strategic Investments had a banner year in 1993 and dissolved the partnership on December 31, 1993, but that wasn’t the end of the teams.

The Movie Teams

When Strategic Investments went by the wayside, several players who had enjoyed making up to $50,000 a year at blackjack came up with their own teams. Two large groups were first called the Amphibians and the Reptiles. Each was loaded with talent, each was well bankrolled ($500,000 to $1,000,000 banks), and each had several dozen intertwined players in various locations across the country.

The Amphibians included players like Katie Lilienkamp, Semyon Dukach and Andy Bloch. Bloch was an MIT student, earned a law degree, and then turned to poker to earn a living. He says his largest individual win at blackjack was $100,000.

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The Reptiles were led by Mike Aponte, Manlio Lopez and Wes Atamian. Aponte convinced Jeff Ma (who inspired the lead character Ben Campbell in “21”) to play on his team of card counters. Ben Mezrich, author of Bringing Down the House (which became the movie “21”) based his story on a team that was created after the Amphibian team won more than $4 million.

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Was the smaller team really successful enough to tell a story about? According to Mike Aponte, he once won $200,000 on a single trip and the team won $500,000 over the Super Bowl 1995 weekend. That’s pretty strong. Did they have more money than they knew what to do with?

Mit Professor Blackjack Game

According to Blackjack Forum Online, John Chang and his wife cleaned his apartment before he moved and they found more than $165,000 in chips, cash and travelers checks he had forgotten he had, stashed all over the apartment. That’s pretty strong too.