Edward O. Thorp: The Original Card Counter

If they don’t count cards themselves, most blackjack players have at least heard about card counting. It’s a method of keeping track of cards that have been dealt, so players can have a reasonable guess as to what cards are still to be dealt.

It is more strategy than cheating, although it’s frowned upon by most casinos, precisely because counting cards really can improve players’ games.

Despite the fact that blackjack is a centuries-old game, card counting is a relatively recent invention – and it is all thanks to Edward O. Thorp.

Who Is Edward O. Thorp?

Born on 4 August 1932, Thorp grew up to become a professor of mathematics and a hedge fund manager with a passion for playing blackjack. He also had a keen interest in computer technology; so much so, that in 1961, he and Claude Shannon invented the first wearable computer in the world.

It was in 1958 that Thorp obtained his Ph.D. in mathematics from Los Angeles’ University of California. Losing no time, he found a post at the Massachusetts Institute of Technology (MIT) the following year.

He remained at MIT until 1961, and then moved on to work at New Mexico State University. In 1965, he moved to a mathematics professor post at Irvine’s University of California, where he later also became a professor of finance.

Thorp and Blackjack

After reading about the Kelly criterion in a 1956 academic paper, Thorp developed a blackjack card counting theory. He realised that the easiest way to implement his equations was to use a computer, so he learned Fortran – a high-level computer programming language – and then programmed an IBM 704 computer to calculate various probabilities.

He also applied some of his ideas to the card game of baccarat.

Once he was satisfied with his research, he decided to put it to the test in Las Vegas, Reno and Lake Tahoe. Thorp teamed up with profession gambler, Manny Kimmel, who provided the initial US $10 000 needed for the venture.

Thorp and Kimmel first visited casinos in Reno and at Lake Tahoe. It took only a weekend for them to realise that the mathematician was on to something. They walked away with US $11 000 in winnings.

Unfortunately, the Las Vegas trip did not go as smoothly as hoped. Thorp certainly won his blackjack games, but casino security were not convinced that it was entirely above board, so they summarily kicked him out of the casinos he visited.

Undeterred, Thorp used various disguises, such as fake beards and glasses, to gain entry to Vegas casinos so he could continue testing his card counting methods.

In the meantime, the baccarat team Thorp had put together and taught were making a success of their games, proving to him that card counting need not be limited to blackjack.

Other players soon found out that Thorp had found an almost fail-proof way of beating the house at blackjack. As could be expected, he became something of a celebrity.

Of course, almost every player wanted to know how he did it. Not one to be stingy with his wisdom, Thorp then wrote Beat the Dealer, which was published in 1966. The book was a success, and, after sales of more than 700 000 copies, it appeared on the New York Times bestseller list.

Thorp Takes on the Stock Market

In the 1960s, Thorp began applying what he knew about statistics and probability to the stock market. He went on to form the Princeton/Newport Partners hedge fund, before founding Edward O. Thorp and Associates.

In 2012, his net worth was estimated at US $800 million and he currently lives in Newport Beach, California.