Edward Oakley Thorp~Beat the Dealer

 

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

He was the author of Beat the Dealer, the first book to mathematically prove, in 1962, that the house advantage in blackjack could be overcome by card counting. He also developed and applied effective hedge fund techniques in the financial markets, and collaborated with Claude Shannon in creating the first wearable computer.

Applied research in Reno, Lake Tahoe and Las Vegas

Thorp received his Ph.D. from the University of California, Los Angeles in 1958, and worked at M.I.T. from 1959 to 1961. He was a professor of mathematics from 1961-1965 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.

Thorp started his applied research using $10,000, with Manny Kimmel, a wealthy professional gambler and one-time illegal bookie with mob connections providing the venture capital. First they visited Reno and Lake Tahoe establishments where they tested Thorp's theory at the local blackjack tables The experimental results proved successful and his theory was verified since he won $11,000 in a single weekend. He could have won more during his initial foray in Las Vegas had his uncanny ability at winning not drawn the unwelcome attention of the casino security, which led to repeated expulsions from the various premises that he visited that night. 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. In addition to the blackjack activities, Thorp had assembled a baccarat team which was also winning.

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 1962, widely considered the original card counting manual 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.

Thorp's blackjack research 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. Moreover, Thorp became one of the very few applied mathematicians who risked physical harm in verifying a computer simulation. He has also stated that he considered the whole experiment an academic exercise.This also marked the first time in the history of computing that a computer was used as a gambling aid.

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. His team's roulette play was the first instance of using a wearable computer in a casino — something which is now illegal. The wearable computer was co-developed with Claude Shannon between 1960-61. The final operating version of the device was tested in Shannon’s home lab at his basement in June 1961. His achievements have led him to become an inaugural member of the Blackjack Hall of Fame.

He also devised the "Thorp count", a method for calculating the likelihood of winning in certain endgame positions in backgammon.

 Source : http://en.wikipedia.org/wiki/Edward_O._Thorp