Ed Thorp

Ed Thorp was one of the original 7 members inducted into the Blackjack Hall of Fame in 2002. From Mathematician to Vegas’ Worst Nightmare Born August 14, 1932 in Chicago, Illinois, Edward Oakley Thorp’s heightened level of intelligence was evident at a young age. A Man for All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market.

Anyone with a basic knowledge of blackjack’s illustrious history has heard of Edward O. Thorp. He’s responsible for developing the first and most common strategic blackjack practice known as card counting, as well as the first wearable computer technology in history. Ed Thorp was one of the original 7 members inducted into the Blackjack Hall of Fame in 2002.

From Mathematician to Vegas’ Worst Nightmare

Born August 14, 1932 in Chicago, Illinois, Edward Oakley Thorp’s heightened level of intelligence was evident at a young age. After graduating in 1958 from the University of California, Los Angeles with a B.A. and M.A. in Physics and a PhD in Mathematics, he immediately crossed the country to take a job at MIT, where we worked for two years.

In 1961, he traveled back west to take a job as Professor of Mathematics at New Mexico State University until 1965, and then Professor of Mathematics and Finance at University of California, Irvine until 1977.

But in between all that, Thorp was revolutionizing the game of blackjack.

Based on research into the 1956 Kelly Criterion, Ed began investigating theories of probabilities and application on one of the first superior computers of his time, the IBM 704. He spent mass amounts of time and energy analyzing the game, and with the help of his trusty room-sized computer, developed a winning blackjack strategy that has survived the test of time – the art of counting cards.

Thorp theorized that, by counting the cards in a specific manner, he would be able to significantly increase his odds of winning, especially towards the end of a deck that was not yet subject to reshuffling.

Edward Thorp Blackjack

Application of Research in Nevada

To test his theories on probability and, what would later be coined “deck penetration” by fellow Blackjack Hall of Famer Arnold Snyder, Thorp employed the financial assistance of Manny Kimmel. Kimmel was a professional gambler with ties to the mob, but more importantly, a willing investor, supplying Thorp with a $10,000 bankroll.

Edward’s first night at the blackjack tables in Las Vegas didn’t go so well; not because he wasn’t winning, but because he was. It didn’t take long for casino managers to take notice, thereby expelling the mathematician from their premises one after another. Thorp decided to take his game off the Strip to Reno and Lake Tahoe, where he was able to win $11,000 in his first weekend of experimentation.

Ed Thorp Blackjack

Thorp Goes Public with his Research

After beating the casinos to such an extent that he was banned from pretty much all of them, even after using various disguises to continue his lucrative research, word of his discovery got out.

Edward was more than willing to share his knowledge with the blackjack world, and thus authored the most famous gambling strategy book in history, Beat the Dealer, published in 1962. The second edition of the book (1966) revealed that Thorp’s research was aided with his co-invention of the first wearable computer in 1961.

During his time at MIT, Edward teamed up with Claude Shannon to develop the device, which looked like nothing more than a box filled with wires strapped around the waist. Originally designed to beat roulette, the device could be triggered by the tap of his foot, and sent an audible sound to the user via an earpiece. The exact details of the technology were never revealed by Thorpe until 1998 when he published the following manuscript: The Invention of the First Wearable Computer

It’s worth noting that such devices have long since been illegal to use in casinos, but card counting, when performed solely by the mental power of the player, is not.

Thorp’s card counting techniques are still in use today by professional blackjack players, but casinos make sure to reshuffle the deck a lot sooner these days in an effort to thwart successful efforts on the part of card counters.

Thorp Transitions Theory of Probability to Stock Market

Edward Thorp isn’t just one of the best blackjack players the world has ever known. In the late 1960’s he transitioned his focus from casino gambling to Wall Street. In 1967, he published another famous, strategic guide for making money, Beat the Market: A Scientific Stock Market System.

Ed Thorp

Incorporating his vast knowledge of probabilities and statistics, Thorp was able to discern and exploit numerous anomalies in the pricing of securities markets.

Not-so-coincidentally, due to Thorp’s publication of Beat the Dealer, which directly resulted in a colossal boom of professional blackjack players who learned to count cards and developed teams to beat casino from coast to coast, the securities market was in high demand for technology.

From 1969 to 1998, Edward reported that his personal investments had harvested a 20% annual yield, making him one of the most successful stock market investors in the world.

Thorp is currently the President of a self-titled company, Edward O. Thorp & Associates, based in Newport Beach, California.

Other Gambling Strategies Theorized by Thorp

Although Edward is—and will always be—best known for fashioning the legendary act of counting cards in blackjack, his endeavors into gambling strategies reach much further across the boards. In fact, Thorp’s research began as a theory on how to beat roulette, and that’s what his wearable computer was originally intended to do.

Thorp also found success at the baccarat tables by incorporating his infamous theory of probabilities. Baccarat was a perfect target for the professor because the rules strictly prohibit early reshuffling of the deck, and since players don’t physically handle the cards, it left little room for being declared a cheater by the casino.

As the story goes, he was responsible for assembling a renowned trio of baccarat players, including himself, who ultimately succeeded at beating the house. However, contradictions now exist in his 1985 publication of Mathematics of Gambling that point to the likelihood of casinos dealing deeper than 26 cards before reshuffling.

Thorp’s counting capabilities extended beyond the casinos as well. He developed what’s known as the “Thorp Count”, an elaborate method of counting pips in backgammon that, when properly applied, is said to be 99% accurate. Thorp’s backgammon count is best described by 1983 and 1987 World Champion Bill Robertie in his 1984 book, Advanced Backgammon.