Dr. Edward O. Thorp

Dr. Edward Oakley Thorp (born in August 14, 1932, Chicago) is an American mathematics professor, author, and blackjack player. He is widely known as the author of the 1962 book Beat the Dealer, which was the first book to prove mathematically that blackjack could be beaten by card counting.^[1] The technique eliminated the advantage of the house, which had an estimated maximum of approximately 5% (when following strategies with the smallest possibility of winning, either mimicking the dealer or never busting), and instead gave the player an advantage of approximately 1%.^[2] He is also regarded as the co-inventor of the first wearable computer along with Claude Shannon.^[3] Image File history File links Metadata No higher resolution available. ... Image File history File links Metadata No higher resolution available. ... is the 226th day of the year (227th in leap years) in the Gregorian calendar. ... Year 1932 (MCMXXXII) was a leap year starting on Friday (the link will display full 1932 calendar) of the Gregorian calendar. ... Nickname: Motto: Urbs In Horto (Latin: City in a Garden), I Will Location in the Chicago metro area and Illinois Coordinates: , Country United States State Illinois County Cook & DuPage Settled 1770s Incorporated March 4, 1837 Government  - Mayor Richard M. Daley (D) Area  - City  234. ... Blackjack, The face cards (Jack, Queen, and King) and the ten count as 10 points, and the Ace counts as 1 or 11. ... Year 1962 (MCMLXII) was a common year starting on Monday (the link is to a full 1962 calendar) of the Gregorian calendar. ... Card counting is a card game strategy used to determine when a player has a probability advantage. ... To meet Wikipedias quality standards, this article or section may require cleanup. ... Claude Elwood Shannon (April 30, 1916 _ February 24, 2001) has been called the father of information theory, and was the founder of practical digital circuit design theory. ...

Thorp received his Ph.D. from the University of California, Los Angeles in 1958, where he afterwards became professor of mathematics in 1965 to 1977 and a professor of mathematics and finance from 1977 to 1982, and worked at M.I.T. from 1959 to 1961. The University of California, Los Angeles, generally known as UCLA, is a public university whose main campus is located in the affluent Westwood neighborhood of Los Angeles, California, United States. ... The meaning of the word professor (Latin: one who claims publicly to be an expert) varies. ... 1965 (MCMLXV) was a common year starting on Friday (the link is to a full 1965 calendar). ... Also: 1977 (album) by Ash. ... Also: 1977 (album) by Ash. ... Year 1982 (MCMLXXXII) was a common year starting on Friday (link displays the 1982 Gregorian calendar). ... MIT redirects here. ...

Computer aided research in blackjack

Ed 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.^[4][5] 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 IBM 704 in order to improve his odds,^[6] especially near the end of a card deck that is not being reshuffled after every deal. Thorp subsequently decided to test his theory in practice in Las Vegas.^[4] The IBM 704, the first mass-produced computer with floating point arithmetic hardware, was introduced by IBM in April, 1956. ... Blackjack, The face cards (Jack, Queen, and King) and the ten count as 10 points, and the Ace counts as 1 or 11. ... It has been suggested that Kelly Criterion For Stock Market be merged into this article or section. ... Fortran (previously FORTRAN[1]) is a general-purpose[2], procedural,[3] imperative programming language that is especially suited to numeric computation and scientific computing. ... Some typical modern playing cards. ... For further information, see Las Vegas metropolitan area and Las Vegas Strip. ...

Applied research in Las Vegas

Beat the Dealer by Ed Thorp, 1966 edition

Thorp started his Las Vegas applied research using $10,000, with Manny Kimmel, a known mob associate, providing the venture capital. The experimental results proved successful and his theory was verified since he won $11,000 in a single weekend.^[4] 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. Image File history File links No higher resolution available. ... Image File history File links No higher resolution available. ... The Mafia (also known as Cosa Nostra), is an Italian criminal secret society which first developed in the mid-19th century in Sicily. ...

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,^[7] 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,^[8] much to the chagrin of Kimmel whose identity was thinly disguised in the book as Mr. X.^[4] A user guide, also commonly known as a manual, is a technical communication document intended to give assistance to people using a particular system. ... The New York Times bestseller list is a weekly chart in The New York Times newspaper that keeps track of the best-selling books of the week. ...

It is also worth noting that Thorp's blackjack research is one of the very few examples where results from such reached the public first, completely bypassing the usual academic journal publications and peer review process cycle. Moreover, Thorp became one of the very few, if any, applied mathematicians who risked physical harm in verifying a computer simulation. He has also stated that he considered the whole experiment an academic exercise.^[4] This also marked the first time in the history of computing that a computer was used as a gambling aid. Peer review (known as refereeing in some academic fields) is a scholarly process used in the publication of manuscripts and in the awarding of funding for research. ... Applied mathematics is a branch of mathematics that concerns itself with the mathematical techniques typically used in the application of mathematical knowledge to other domains. ...

In addition, Thorp, while a professor of mathematics at MIT, met Claude Shannon, who brought 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.^[9] His team's roulette play was the first instance of using a wearable computer in a casino -- something which is now illegal.^[9][3] 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 of 1961.^[3] His achievements have led him to become an inaugural member of the Blackjack Hall of Fame.^[10] Claude Elwood Shannon (April 30, 1916 _ February 24, 2001) has been called the father of information theory, and was the founder of practical digital circuit design theory. ... The south end of The Strip. ... A European Roulette wheel. ... Blackjack, The face cards (Jack, Queen, and King) and the ten count as 10 points, and the Ace counts as 1 or 11. ... The Blackjack Hall of Fame honors the greatest blackjack players in history. ...

Stock market

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 he has made a significant fortune.^[11]. Princeton/Newport Partners was Thorp's first hedge fund, achieving an annualized net return of 15.1 percent over 19 years. He is currently the President of Edward O. Thorp & Associates, based in Newport Beach, CA. In May 1998 Thorp reported that his personal investments yielded an annualized 20 percent rate of return averaged over 28.5 years. ^[12] See the separate articles on probability or the article on statistics. ... A stock market is a market for the trading of publicly held company stock and associated financial instruments (including stock options, convertibles and stock index futures). ... Princeton/Newport Partners was an early alternative investment management company founding by pioneering mathematical financier Edward O. Thorp in late 1974, assuming the instruments of an earlier venture, Convertible Hedge Associates. ... City Incorporation September 1, 1906 City Tree Coral Tree City flower Bougainvillea Mayor Steven Bromberg County Orange County Area   - Total   - Land   - Water 50. ...

Minor biographical details

Bibliography

• Edward Thorp, Beat the Dealer: A Winning Strategy for the Game of Twenty-One, ISBN 0-394-70310-3
• Edward O. Thorp, Beat the Market: A Scientific Stock Market System, ISBN 0-394-42439-5
• Edward O. Thorp, The Mathematics of Gambling, 1985, ISBN 0-897-46019-7 (online version)

Cited references

Breaking Vegas is a television show that covers the great lengths people have gone to make money, often illegally, from casinos. ...

See also

• Blackjack
• Card counting
• Gaming mathematics

Blackjack, The face cards (Jack, Queen, and King) and the ten count as 10 points, and the Ace counts as 1 or 11. ... Card counting is a card game strategy used to determine when a player has a probability advantage. ... Gaming mathematics, also referred to as the mathematics of gambling, is a collection of probability applications encountered in games of chance and can be included in applied mathematics. ...

External links

• The Mathematics of Gambling by Edward O. Thorp
• The Man Who Beat the Dealer
• Entry on Thorp at the Wilmott Wiki
• Generalized Kelly Criterion For Multiple Outcomes