The Math Professor Who Beat Las Vegas, Then Wall Street

In 1961 a young MIT math instructor named Edward O. Thorp sat down at a private blackjack table at Lake Tahoe and, without luck and without cheating, took the house's money. He had used an IBM 704 to prove that a deck of cards has a memory, published the proof in the Proceedings of the National Academy of Sciences, built a secret roulette computer with Claude Shannon, and then wrote it all down for anyone to read. Las Vegas changed its rules. Thorp took his math to a bigger casino, Wall Street, where his fund ran for nineteen years, until federal agents walked into his partners' office in Princeton in December 1987. Thorp was never charged with anything. The fund's returns and the Madoff story are told as Thorp tells them. CHAPTERS 0:00 Cold open: "Help me" 1:44 Chapter 1: Seven Cards 4:49 Chapter 2: The Billiard Room 7:52 Chapter 3: The Butcher and the Lamb 11:20 Chapter 4: An Army 14:03 Chapter 5: The Bigger Casino 16:59 Chapter 6: December Seventeenth 19:49 Epilogue: how much to bet SOURCES Edward Thorp, "A Favorable Strategy for Twenty-One", Proceedings of the National Academy of Sciences 47(1), January 1961, pp. 110-112. Notices of the American Mathematical Society 7, December 1960: program of the 67th Annual Meeting (Hotel Willard, Washington, D.C.) and abstract 576-118, "Fortune's formula: The game of blackjack". J. L. Kelly Jr., "A New Interpretation of Information Rate", Bell System Technical Journal 35(4), July 1956. Edward O. Thorp, Beat the Dealer (Blaisdell, 1962; revised edition Random House, 1966). Edward O. Thorp, "The Invention of the First Wearable Computer", Second International Symposium on Wearable Computers, IEEE, 1998. Edward O. Thorp and Sheen T. Kassouf, Beat the Market (Random House, 1967). Edward O. Thorp, A Man for All Markets (Random House, 2017). Edward O. Thorp, "A Perspective on Quantitative Finance: Models for Beating the Market", Wilmott, 2003; "The Kelly Criterion in Blackjack, Sports Betting and the Stock Market" (2006). William Poundstone, Fortune's Formula (Hill and Wang, 2005). NPR Planet Money, "Episode 749: Professor Blackjack", 20 January 2017. UC Irvine Libraries, "Finding the Edge: The Work and Insights of Edward O. Thorp" (exhibition, 2019). United States v. Regan: 858 F.2d 115 (2d Cir. 1988); 706 F.Supp. 1102 (S.D.N.Y. 1989); 726 F.Supp. 447 (S.D.N.Y. 1989); 937 F.2d 823 (2d Cir. 1991); 946 F.2d 188 (2d Cir. 1991). UPI, 4 August 1988, 31 July 1989 and 8 January 1992; Scot J. Paltrow, Los Angeles Times, 7 November 1989 and 29 June 1991. SEC Office of Inspector General, Investigation of Failure of the SEC to Uncover Bernard Madoff's Ponzi Scheme, Report OIG-509, 31 August 2009. Science News Letter, 5 February 1949 (Science Talent Search winners).