Dr Edward Thorp received his PhD from U of C in 1958 and was a professor of
mathematics from 1956 to 1977. In 1977 he began teaching mathematics and finance
and during the 60’s would use his background in mathematics with probability
and statics to exploit pricing anomalies in securities. Thorp is credited as
the first mathematician to develop a card counting system for blackjack and
was inducted into the Blackjack Hall of Fame.
Edward
Thorp published his first blackjack
book in 1962 called Beat The
Dealer. After years of research
based on the Kelly criterion
Thorp was able create a strategy
for the game of blackjack which
took the standard house edge
of 5% and in turn gave the player
a 1% edge over the house. His
theory meant players would need
to mimic the dealer in their
play and never go bust and
was the most influential change
in blackjack
history.
His research stemmed from the
IBM 704 created by Roger Baldwin
and would devise a theory for
the game based on the probabilities
of winning. During his research
he began to create card counting
systems that would allow a player
to significantly reduce the
house edge, and be able to make
informed choices at the table.
The IBM 704 was used as a teaching
aid to improve his odds.
Once Thorp felt his theory was
sound he took it to Vegas and
was backed by a gambler named
Manny Kimmel. His first visit
to Reno was a success. Thorp’s
blackjack theory would win him $11,000 in the first few days. Just like today’s
casinos, big winners at the
tables draw not only the attention
of the gamblers around them
but also the casino security
team, and Thorp was no exception.
Once he caught the attention
from security he was quickly
thrown out of the casino.
His
stay in Vegas would land him
a celebrity among other blackjack
enthusiasts and would push him
to write and publish the book
Beat The Dealer. The book was
an instant success as it was
one of the few blackjack theories
that could be used by any player
at any table. The original book
hit the New York times
best seller list and would eventually go on to sell more than 700,000 copies
across the globe.
He would later take a team with
him to Vegas and apply a system
to both the blackjack and roulette
tables. His wife Shannon was
one of the members of his team
and both teams would do exceptionally
well at exploiting the weaknesses
in the games. Thorp’s roulette team was the first to use a computer
aid in the casino that simulated different probabilities, outcomes along with
the odds.
Beat
The Dealer was responsible for
how the casinos changed the
game of blackjack. Prior to
Thorp’s book, dealers
would shuffle and deal the game
by hand using the standard 52
deck of cards. After the release
of his book, the casinos would
replace the single deck with
a four deck, and would add a
shoe to shuffle the cards. This
would change the probabilities
in Thorp’s original book
but the overall principle would
remain the same.
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