Las Vegas casino bosses hated Edward O. Thorp — so much so that, in 1964, personnel at the Mafia-backed Dunes allegedly tried to off him.
Admittedly, Thorp was a worthy foe — a former MIT math professor, he invented the art of card counting. On that night in ’64, he was winning once again. He turned down several free cocktails before finally requesting a coffee. “I drank it, and I lost my ability to focus. I couldn’t count,” Thorp told The Post.
One of his pals, a nurse, noticed that the professor’s pupils were dilated in the manner of someone flipped out on pills. “Clearly, I had been drugged. [My friends] kept me on my feet, kept me walking, and I was eventually OK.”
Twenty-four hours later, he got kicked out of the Sands — with no reason given — while ahead by about $2,500. The next day, after retrieving their car from the casino’s valet, Thorp and his wife began driving home to Arizona. “We went down a steep hill and the accelerator locked. Thinking fast, I geared down as low as I could, put on the emergency brake and switched off the engine,” he recalled. “It turned out that the linkage between the gas pedal and whatever made the car go faster had been tampered with.”
As expressed in his new memoir, “A Man for All Markets,” this was not where Thorp expected his mathematical calculations to take him. He only got into gambling to prove a point. “All my life I have been an independent thinker,” he said. “When somebody says a casino game can’t be beaten, I ask why. In reality, some of the games, under some circumstances, can be beaten.”
He became convinced that there was a mathematical model for yielding profits from blackjack — once viewed as an unwinnable game — based on the cards that have been dealt and those remaining in the deck. He spent nearly a year running computer calculations to show that players who bet higher when the deck is still rich in 10-value cards and aces will be at an advantage, then presented his findings at a 1961 math conference. “I had no intention of proving it — until the casinos made clear that they thought I was an idiot and the Washington Post wrote that my findings were a scam,” said Thorp. “That pissed me off mightily.”
Armed with $10,000 provided by backers who also wanted him to be proved right, “over three years, I won $25,000 at blackjack” — and got himself banned all over Nevada.
“If someone is too lucky, [casino managers] don’t want you there. They thought I could count every single card, and I told them that nobody can do it.” But, Thorp added, “I was bluffing. I could have taught myself to do it in a couple of weeks.
“I had fun figuring out how things worked and how to beat the games,” he said. “But I did not enjoy grinding it out in the casinos.” So instead of keeping his card counting a secret, he wrote a 1962 how-to book called “Beat the Dealer,” which went on to sell more than 1 million copies.
Soon, he forsook gambling dens for the biggest casino on Earth: Wall Street. While teaching at the University of New Mexico in 1965, He used mathematics to devise a system “to evaluate probabilities of things happening in the marketplace and taking financial positions on them,” said Thorp. In 1969, he launched a hedge fund from his new home in Newport Beach, Calif. “We made 20 to 25 percent per year. It was a lot like card counting, [but] I could do it and not get my legs broken.”
He attracted an impressive list of boosters and investors, including Warren Buffett and Paul Newman. Rudy Giuliani, however, was not a fan. In December 1987, Giuliani, then the US Attorney for the Southern District of New York, ordered a raid on Thorp’s affiliate office in Princeton, NJ. Though Thorp was not indicted, a number of his partners were charged with racketeering. Most charges were later dropped, but the fund closed in 1988.
Once the smoke cleared, Thorp put together a second fund, Ridgeline Partners. He retired from managing other people’s money in 2002.
“I live my life with math,” said Thorp, who is now 84 and living in a multimillion-dollar home in Newport Beach. “I hear information, run the numbers and usually find my way to the truth.”