THE MATHEMATICS OF GAMBLING By Dr. Edward O. ThorpTable of Contents SECTION ONE—CARD GAMES 1 Chapter 1: Introductory Statement. . Chapter 2: Blackjack. Chapter 3: Baccarat SECTION TWO—THE WHEELS 4 Chapter 4: Roulete....... Chapter 5: The Wheel of Fortune SECTION THREE—OTHER GAMES. Chapter 6: Horse Racing . Chapter 7; Backgammon « SECTION FOUR—MONEY MANAGEMENT ........ ‘Chapter 8: Mathematical Systems ..........-.1I3 Chapter 9: Optimal Betting .... Appendices «... Keeping Your Gaming Knowledge Current ......14LAbout the Author ‘Edward Thorp i adjunct professor of finance and mathematios atthe University of California at Irvine, where he has taught courses in finance, probability and functional analysis. He previously taught atthe University of California at Ls Angeles, the Masachusens Instnte of Technology and New Mexico Ste University ‘Thorp’ interest in gambling dates back almost 30 years, while Ihe was tll in graduate school at ICT-A. Tt was bere that he fist formulated his dream of making money from the development ‘ofa scientifically based winning gambling systema, His first sub- Jest of study was the roulewe wheel, which offered him the op- Foray fuse modern pss o pect te resin place With the roulete work unfinished, Thorpsatenton was diverted by the blackjack work of Raldwin, Cantey, Mrizel and MeDer- ‘ott. He st to work on this new problem. With the ad of com- puter, Thorp developed the basic strategy and the five-couat, en- ‘count and ultimate counting strategies. He used these methodswith sucess inthe Nevada casinos. The work was first publiciz- ed in a scientific journal and saw broad public exposure inthe 1962 book Beat the Dealer. The book underwent a revision in 1966 aid it ill epated as the lassi aly wrk a Ue “ack Jack revolution” which continues to this dey nthe late 1960s, Thorp developed with Sheen Kassout a sue- cessful method for stock market investing involving warrants that proved 50 profitable that Thorp turned $40.00 into $100.00 in two years. The strategy was publised in Beat the Market in 1967 ‘Additionally, using this strategy and further eefinements, Thorp ‘naiages ul-nilionllasiavesineat portfolio. He is Pres ent of Oakley Sutton Management Corp, and Chairman of the the Board of Oakley Sutton Securities Corp. “Thorp has continued to advance new theories for eambling and other games, as wel asthe stock market. Section One Card Games Casino card games such as baccarat and blackjack ) ¢-z 914%, £2 10%,The Mathenaics of Gambig is win rates en units pe hour and his verge bet SURG a’ Civen thse assumptions, being chested ten Heer hour ov onetenh ofthe time would ene hi advan- {ape Beng cheated more than ten pact ofthe time would prob- Sj fimino ate regi the real words probably moreefTectvethanintne typothetial example just ted, because te calculations fr that ‘Rane assure cheating equal kl fr small bes and big Seas my experience, the Bettor Se riuch more Healy to be hesied on lage bes than on smal ones. Therefor, the dar tho cheats wih mimi effeney wil wait uni a player Thakes his top be, Suppose that bet total five nis. Ifthe cheat Shifts the odds to 80 perent in favor Of the house, ie expected Tosis 2-1/2, ands four cheaing efforts per 100hands wil ‘acl a profesional players advantage. A cheating rate of ive ‘rte hand per 100 pt this player aa eevee dcadeansage ‘We can sce fom his that comparavely small amount of cheating applied to the larger hands can have a significant impact onthe game’s outcome. This gives you an idea of what tolook for Shen you ar in he casinos and nk tat someting may be Missing Cards: The Short Shoe have heard complaints that cards have been missing from the ‘pack in some casino blackjack games. We'll discuss how you ‘ight spot this cheating method. In 1942, | wrote on page SI of Beat the Dealer, “Counting the. card, is an invaluable asst in the detection of cheating ‘because a comnnion devices to remove one or more cards from the deck." Lance Humble discusses cheating methods for fourdeck games dealt from a shoe in his Intemational Blackack Cub newsletter. He say, “The house can take certain cards such a8 tens and aces out of the shoe. This is usually done after several rounds have been dealt and after the decks have been shuffled several imes. Its done by paiming the cards while they are being 2 Blokick shuffled and by hiding them on the dealer's person, The dealer lien disposes Of the cards when he goes oh fis break.” But cheating this way is not limited tothe casino, Payers have been known to remove “small” cards from the pack to tit the edge their way, The casino can spot tis simply by taking the pack and ‘counting it; the player usually has to use statistical methods. In the cheating trade, the method i known asthe short shoe. Lets say the dealer is dealin froma shoe containing four decks ‘of 92 varus each In 32 cards, there should be 16 ten-value cards: ‘the ens, jacks, queens and kings. Logically, in four decks of 208 cards, there should be 64 ten-value cards” I'l call all ofthese ens" from now on. Casinos rarély remove the aces—even ‘novice players sometimes count these. ‘Suppose the sift boss or pit boss takes outa total of ten tens, some ofeach kn, of course, not all kings o queens The shoes shottened fu 6 ves wo 34 tens, and the four decks from 208 cards to 198 card ‘Thelossof these ten tens shits the advantage from theplayer to the dealer or house. The ratio of exhers/tene changes from the sonal 14/64 =2.3510 144/54 =2.67, and this gainsalitle over ‘one percent forthe house. How can you discover the ack of tens | without te dealer knowing it? __ Hewes one method tha is sed. If you're playing a the black- jack table, stn the last chairon the dealer's right. Bet asmal fixed ‘amount throughout a whole pack of four decks. After the deer ts the ct card back ony, ler's say, ten percent ofthe way into the four shuffled decks and returns the decks into the shoe then | ready yourself to count the cards. Play your hand mechanically, only pretending interest in your good or bad fortunes. What you'einerested in finding outs the numberof tensin the whole Four-deck shoe, ‘Les say the shift boss has removed ten tens. Reports are that they soem to love removing exactly ten from a four-deck shoe) ‘When the white eut card shows atthe face of te shoe, let's say that the running count of tens has reached $2. That means ‘mathematically that if all 64 ten-value cards were in the shoe, aThe Mathematics of Gambling then, ofthe remaining 15 cards behind the cut card, as many as 12 of them would be teas, which mathematically is very unlikely. This is how one detects the missing ten tens because the dealer never shows their faces but just places them face dawn on top of thestack of ducarded cardstohisright, which then proceedsto shuffle face down in the usual manner preparatory to another ourdeck shoe session. Although at first the running counts not easy to keepin areal casino situation, a secondary ciTiculy is estimating the appror- mate number of cards let behind the cut card aftr al the shoe bas been dealt. To practice this, take any deck of S2cards and cut off what you think are ten, 18 or 20 cards, commit yourself to some definite number, and then count the cards to confirm the closeness of your estimate. After awhile, you can look atabunch ‘of cards cutoff and come quite lose to their actual number. Insuramary, count theniumber of tens seen trom the Desig of a freshly shuffled and allegedly complete shoe, When the last card is seen and itis time to reshuffle the shoe, subtract the ‘umber often sen from the number that are supposed to be in the shoe—68 fora four-deck shoe—to get the numberof unseen tenwalue cards which should remain. If $8 ten-value cards were seen, there should be ten tens among the unused cards. Then estimate the umber of unseen cards. You have to besuretoadd to the estimated residual stack any cards which you didnot see uring the course of play, such as burned cards. Step fouristoask ‘whether the numberof unseen ten-value cards is remarkably large for the numberof residual cards. If 50, consider seriously the possibility thatthe shoe may be short. For instance, suppose there are 1S unseen cards, ten of which are supposed tobe ten-values. A ‘computation shows thatthe probably that the last 1S cards of a ‘wellshuffed four-deck shoe will havea least ten en-au cards {5 0.003247 or about one chance in 308. Tihs the evidence against the casino on the basis of this one shoe alone isnot overwhelming, Buif we wereto count down the same shoe several times and each ime were to find the remaining cards suspiciously ten-tch, then the evidence would become very Pa lacjack ssrong. Suppose that we counted down the shoe four times and ‘har each time there were exactly 15 unseen card. Suppose that the numberof unseen tens, assuming a ful our decks, was nine, 1, ten, and [3 respectively. Then referring to Table 2-4, the pro- bbls to six decimal places are H() = 14651 wo have nine ‘or more unseen tens, and fr at last I, ten, and 13 respectively, the chances are Hl) = .000539, HO) = .003247, and H(3) "= 000005, These correspond io odds of about 168, 1855, V308 and 17200000 respectively. The odds against al ese events hap- ‘ning ogether is much greater sil. In ths eaample, the evidence ‘Sonal suggests that upto nine ea-alue cards are missing, There can't be more than nine missing, of course, because we sw all ‘but nine on one countdown. ‘If the casino shuffles after only 104 cards are seen, itis not so easy totellif ten ten-value cards were removed. A mathematical ‘roof of this fs contained in the appendix.» “This discussion should makeit clear thatthe method suggested is generally not able to easy spot the removal often-value cards| ules he shoes counted sea times os del down clos to ‘One of the interesting ironies of the short shoe method of cheating playersis that neither the shift boss nor the ptboss—the laver bringing the decks of cars the dears ble—ueed el the dealer that his shoe s shor. Thus, the dealer doesn’t necessarily hhavetoknow that he'scheatng. Afterall he's jut dealing. I'san {pe question how many deals know ta the ding from ‘Reports are that the short shoe is a frequent method that, casinos use in cheating at blackjack using more than one deck. “The tables with higher minimums (say $23) are more tempting ‘candidates for short shoes than those with the lower minimums. “An experienced card counter can improve the method by count- ing hoth tens and non-iens. Then hell now exactly how many unseen cards there are, aswell as unseen tens. Table 2-4.can then ‘be use with greater confidence. Inpractce, you don’t need to count through a shoe while bet- 2 see Arent peThe Mathematics of Ganbing Table 24 ting (and thus losing money in the proces) to find out that the ‘casino cheating. Ifyou suspect foul play, count whe sanding ‘Behind the player tothe dealer's right "You might easy catch a short shoe by simply counting all the cards that are used, whether or not yousee what they are, Then if the remaining cards, atthe reshuffle, are few enough so you can 6 Buactjack ‘accurately estimate their number, you can check the total count. For istance, you count 165 eards used and you estimate dat 31 ‘& 3cardsremain. Thenthere were 196 = 3 cards athe than the 208 expected, 50 the shoes short. ‘Acting conntermeasireisto put hack a, $or6 fo each ace or ten-value card removed. Then the total number of cards remains 208, and thecasno gets an even greater advantage thanit ‘would froma short shoe. ‘Cards do get added to the deck, and there's u spooky ci «idence oillustrate this. On page SI of Bea the Dealer, rotein 1942, “One might wonder a this point whether casinoshave also rind adding cards tothe deck Uhave only sen it done once. Iis very risky. Imagine the shock and fury ofa player who picks up his hand and ses that not only are both his cards S, but they are also both spades." And then 15 years late in 1977, a player ina ‘one-deck game did peta hand with two ofthe sare Garde Sot spades. Walter Tyminsk's casino gaming newsleter, Rogue et ‘Noir News, reported on page3of the June 15,1977 issue, “What ‘would you dof the player a you right ina single blackjack game had two 5 of spades? Nicholas Zaika, a bail bondsman from ‘Deri ad that experience at the Saharain Las Vegason May 24 ata $5 minimum table. “zatea wasnt inthe best of humor because he had reportedly lost $394,000 at other Sahara tables, by far the largest loss he has ever experienced. Zaika had the blackjack supervisor check the cards and there were 53 cards in the deck, the duplicate be- inthe 5 of spades. The gumer has engaged the services of Las Vegas attorey George Grazadei to pursue claims he feels that be has against the casino. The Sahara denies ayy wrongdoing and says that it i ‘cooperating fully with th investigation... Players arentlikelyt0| {introduce a exzaS because the presence ofthe extra’ favors the Inoue and not the player” ‘Suppose instead of ust counting tens used and totalcards sed, you kept track of how many aces, 25,36, queens, kings, andso on ‘Were used. Ths extra information should give the player a better zThe Mathematics of Gambling ‘chance of detecting the short shoe. The ultimate proof would be to count the number of each of the 52 types of cards which have ben used. Mathematical readers might wish to investigate effec- ‘tive statistical or other ways of using information for detecting thoes in which the numbers of some of the cards have been 4 2s Baccarat “The games of baccarat and chemin de fe are wel known gam- ‘bing games playee for high stakes in several pars ofthe world. is sid tobe a card game of Falan org that was troduced into France about 1190 A.D. Two forms ofthe game Aevelped One form wae caled Rocce andthe oer ws alls chemin ofr. The mos basi diference between these tw is simply that chee hands ate dealt n bacarat (called bocarat en bang in England) and two had ae dealt in chemin de fet (Galles baccaratcheman de Yr in England and Nevada) The cards ae trough ine are each wort terface valve and the cards ten jack, queen and king are each worth 20 pins. ‘Aandi evan asthe umn modo tn of i card, 4.8, om. iy the las digit ofthe (oui counted. The objet ofthe game is tobe a lose to eght or ine as posible wth two cards, of 4 clos to nine as possible with at most thee cards if one does othave eight or nine on is st wo cards Then Ge high hand “The games ofbacarat and chemin defer Became popula in »