How Ed Thorp became the man who beat the casinos: A studying of numbers and the probabilities led to one gambler beating the odds.
Many of us dream of that elusive casino win, the in which we beat all the odds and, hopefully, break the bank in the process. But for nearly everyone it stays as a dream – mainly because we don’t have the opportunity or the application to make it happen.
But there are exceptions to the rule, and one of them is Ed Thorp, the legendary gambler and blackjack player who, having made a small fortune in the casinos of Las Vegas, went on to make an even bigger one by playing the financial markets.
Thorp, now 84, was born in the midst of the Great Depression and, from an early age, was naturally curious about the world and what made it work. After school he chose to study maths and physics at college and it was at this stage in his life he was drawn to Las Vegas with the idea of designing a computer that could predict which numbers would come up in a game of roulette.
But it was while he was in the casino that his attention was attracted by blackjack. He observed that the people playing this deceptively simple game didn’t really understand it. This led him to look into the maths underlying the game and the probabilities of certain cards coming up at specific points. He quickly saw that it was relatively easy to get an edge over the casino and gained access to an IBM mainframe computer to help crunch the numbers.
The result was a card counting system that he explained in his best-selling book “Beat The Dealer” – still a classic today which would be worth a read before stepping into competitive online blackjack games of today.
He was also continuing to work on his roulette-playing computer and used this, as well as his blackjack strategy, to take on the casinos, and win.
Back in the early 60s Las Vegas was a quite different place to the corporate-led city it is today and Thorp tells some very interesting stories about how he had to keep one step ahead of the casinos in order to keep on playing. These included wearing disguises and getting companions to play on his behalf.
He also claims that the casinos tried various underhand tricks to stop his winning streak including drugging his coffee. He also believes that the accelerator linkage on his car may have been interfered with when it stuck open on a drive home one night from a casino.
Eventually he became so well known that going to casinos became all but impossible. But, by then, he had amassed enough seed money to start dabbling in the stock market. Using the same mathematical skills that had helped him to devise card counting he published his second book, “Beat The Market”, in 1967.
He subsequently went on to make many millions playing the markets as well as working alongside one of America’s richest men, Warren Buffett.
Increased security and greater awareness on the part of casinos means that Thorp’s feats simply wouldn’t be possible today. But if you do feel like you could emulate his achievements there’s no time like the present. All you have to do is invest in a false moustache, devise your own fool proof system and wait for the cash to start rolling in. Simple really!