Dr. Edward Oakley Thorp (born August 14, 1932, Chicago) is an American mathematics professor, author, hedge fund manager, 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. 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%. He is also regarded as the co-inventor of the first wearable computer along with Claude Shannon.
Thorp received his Ph.D. from the University of California, Los Angeles in 1958, and worked at M.I.T. from 1959 to 1961. He was a professor of mathematics from 1965 to 1977 and a professor of mathematics and finance from 1977 to 1982 at University of California, Irvine.
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 which he learned about from the 1956 paper by Kelly. 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, 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 Reno, Lake Tahoe and Las Vegas.
Applied research in Reno, Lake Tahoe and Las Vegas