Gambling has a bad moral reputation. Losing hundreds of thousands or perhaps millions of dollars in the vice dens of Las Vegas can blacken the reputation of even the most upstanding Republican like William J. Bennett (the professional moralist and author of "inspirational" tomes like The Book of Virtues).

Gambling not only fascinates Republican prigs but has also casts a spell over mathematicians for hundreds of years. The development of early statistics and probablity theory came from gambling. Great mathematicians like Claude E. Shannon, the father of information theory, were intrigued by roulette, poker and blackjack. Herbert Yardley, one of the fathers of American cryptography was an avid poker player and the author of the book The Eduction of a Poker Player (Simon and Schuster, 1957).

One of the most famous mathematicians who developed a lifelong fascination with blackjack and the mathematics of risk is Ed Thorp. In 1961 Thorp was a newly minted Phd hired as a lecturer at MIT. He wrote a paper titled Fortune's Formula which he presented at the American Mathematical Association yearly meeting. This paper described some of Thorp's early blackjack models, which he ran on an IBM 704. The following year Thorp wrote Beat the Dealer (Random House, 1962, revised edition 1966) which lays out the foundation for blackjack card counting stratagies. This book has been a best selling classic and is still in print.

Over thirty years later, blackjack and card counting live on at MIT. Bringing Down the House is a fascinating story of the rise and fall of a group of MIT students who are part of a blackjack group that won millions of dollars over a period of about four years. The main character in the book is "Kevin Lewis" (all names in the book have been changed). In 1994 Lewis' was an MIT pre-med when he moved in with two roommates who were MIT dropouts. His roommates did not seem to have jobs, but appeared to have lots of money. At one point Lewis worried that they were involved in the drug trade. Eventually Lewis' roommates take him to Las Vegas and give him a taste of the Las Vegas high roller lifestyle. They later recruit Lewis for their blackjack group and introduce him to the leader of teh group "Micky Rosa". Rosa, who is a decade or so older, was MIT instructor who gave up the academia for the life of a professional blackjack player. Rosa is a brilliant mathematician and card counter, whose professional card counting life lasted until he was banned from the casinos. Although Rosa can no longer enter the casinos himself, he and a set of unnamed investors provide the stake for the blackjack team, which Rosa organizes and coaches.

Once a casino has identified a person as a card counter, the person's name and likeness are immediately circulated on something called the Griffin list, which, I am told, has the power to keep people out of casinos for the rest of their lives.
[...]

For if a card counter should slip up and reveal that he is being paid to make bets with a bankroll of his own and other people's money, his card-counting career will come to an abrupt end.

This is what happened to Semyon Dukach: He became so good at counting cards and won so much money that the casinos eventually caught on to his technique. Once Dukach's likeness was circulated on the notorious Griffin list -- a report compiled by Las Vegas detective agency Griffin Investigations Inc. -- he had no choice but to hang up his aces and look for a new game.
The Venture Cafe by Teresa Esser

The MIT blackjack groups won millions of dollars over the time period covered in Bringing Down the House. It should be no surprise that the casinos wish to avoid these kind of losses. In Bringing Down the House the nemesis of the MIT blackjack groups is called Plymouth, which is almost certainly Griffin Investigations. Once Griffin started successfully identifying card counting teams, casinos were more or less universally forced to subsribe to Griffin's service. I suspect that virtually every casino in the world subscribes to the "Griffin List". Any casino that does not become a Griffin customer runs the risk of losing to card counters who get kicked out of casinos that do subscribe to Griffin. Like the government intelligence community, Griffin is a very secretive organization. As a private company they do not report their profits, but I would guess that they are very profitable. Apparently this has allowed Griffin to invest in advanced surveillance technology. Griffin has also invested the development of a face recognition system they call Indix.

Griffin works in the same environment as companies like Systems Research and Development, which developed the NORA database system which uses graph (or network) techniques to find "non-obvious" relations (for more on Systems Research and Development, see Entrepreneur Offers a Solution for Security-Privacy Clash by Don Clark, The Wall Street Journal, March 11, 2004).

Steven Levy, the technology writer for Newsweek, wrote a similar article on SRD (see Geek War on Terror, Newsweek, March 22, 2004). In an example of sloppy journalism, Steven Levy parrots into the Casino view that anyone who might diminish casino profits, even through legal means like card counting, must be a bad guy:

Since Jonas's livelihood is fingering bad guys -- the Las Vegas firm he founded, Systems Research and Development (SRD), helps casinos shut their doors to mobsters and card counters

Ben Mezrich is a novelist, not a journalist and it shows in Bringing Down the House. Griffin (a.k.a. Plymouth) plays the dark heavy in the book. It is not clear that Ben Mezrich ever found out much about Griffin Investigations beyond the fact that they are the bete noir of card counters. A Google search would have shown that Griffin Investigations is an interesting company. The "chief investigator" of Griffin Investigations is Beverly Griffin, who apparently founded the company with her husband Bob.

The story behind Griffin would probably be an interesting one. A journalist would have wondered how the company started and grew to become a provider of high tech. surveillance technology to most of the gambling business. To a novelist a side story about Griffin, a small company built through the hard work of a husband and wife, could have ruined the character of "Plymouth", the dark nemesis that eventually forced Kevin Lewis and the MIT blackjack teams out of the casinos. Largely because of the fascinating story, Bringing Down the House is a good book. But this lack of depth is what keeps it from being great.

Once on a film set, Paul Newman asked him [Ed Thorp] how much he could make at blackjack. Ed told him $300,000 a year. "Why aren't you out there doing it?" Ed's response was that he could make a lot more doing something else, with the same effort, and with much nicer working conditions and a much higher class of people. Truer words were never spoken. Ed Thorp took his knowledge of proabillity, his scientific rigor and his money management skills to the biggest casino of them all, the stock market.
In for the Count by Dan Tudball, Wilmott Magazine

The personality traits that make a person feel comfortable taking a risk on a high-tech start-up are similar to those that make one comfortable with other forms of gambling, including blackjack.
The Venture Cafe by Teresa Esser

For those with a taste for risk, there is no casino like the modern finanical markets where the opportunity for profit and loss is far greater than the gaming tables of Las Vegas. The rewards that are available at investment banks and hedge funds attract some of the smartest people in the world. This was eventually the path followed by Ed Thorp.

While a professor at U.C. Irvine Ed Thorp became interested in the stock market. In 1967 he published Beat the Market: A Scientific Stock Market System which describes stratagies for trading stock warrants. Warrants act like stock options, but with a longer term. Thorp developed an early version of what has become known as the Black-Scholes option pricing formula. In 1969 Thorp left academia, never to return. He founded an investment fund, based in Long Beach, California, initially called Convertible Hedge Associates, and later renamed Princeton Newport Partners. Princeton Newport Partners was one of the most consistently successful hedge funds in history, making Thorp a very wealthy man.

The members of the MIT blackjack teams were young and much of their story remains ahead of them. I can only wonder how many of them will find their way to Wall Street or start-up companies.

The story in Bringing Down the House is so compelling that the book is a page turner, despite Ben Mezrich's writing. Before writing Bringing Down the House he wrote fiction and this is his first non-fiction book. Perhaps the awkward and stilted writing style in Bringing Down the House is due to Mezrich's lack of experience as a journalist.

Afterward

Before reading Bringing Down the House I read the articles A Casino Odyssey and A Reader of the Pack, linked to below. Both of these articles describe card counting as profitable. However, the card counters in these accounts hardly lived the "high roller" lifestyle described in Bringing Down the House. Their profit margins were thin and they stayed in cheap hotel rooms. The end result in both cases was burnout.

I don't know much about the world of gambling. I don't gamble and I've only been to Las Vegas to attend the Comdex trade show. So I thought that perhaps the MIT blackjack teams were simply better trained, smarter and better funded, which accounted for the large profits described in Bringing Down the House.

Another possibility is that the account in Bringing Down the House is exaggerated. As I've noted, Ben Mezrich is more a B-grade thriller writer than a journalist. While card counting is not illegal, it is a covert activity. As William Bennett found out, spending your time in gambling dens is not considered a respectable pastime, like golf. People are reluctant to talk about their experiences making the account difficult to verify. So it is possible that Ben Mezrich or the people who told him the story related in Bringing Down the House exaggerated. There are many "true stories" which don't seem entirely true on closer examination.

This review of Bringing Down the House attracted some fascinating e-mail which suggests that reality may be closer to the articles I've linked to below than the account in Bringing Down the House. The author is anonymous at their request. I certainly understand and respect the authors wish to be anonymous. I will note that as a card counter the author is part of a group that includes Claude Shannon and Ed Thorp, which is pretty good company. My correspondent writes:

[I have made a few minor edits. BP stands for "Big Player" -- Ian]

Back in the 1970's I wrote the first computer program that could simultaneously evaluate various blackjack card counting systems, casino rule variations, and casino "environment" variations (e.g., how deeply a dealer dealt into a deck/shoe) on-the-fly. In 1979 and 1980 I played on two successful card counting teams -- one in Las Vegas and one in Atlantic City.

Almost all of the techniques used by the MIT students have been around for 20+ years. It looks like they may have done a little refinement on clumping but the ability to find a dealer whose clumping is trackable is quite difficult. Exploiting that clumping is even more difficult. I will pretend that they found a way to make it highly profitable. Still, the story does not come close to adding up.

Since the early 1980's, the spotter-BP strategy and the gorilla BP strategy have been unusable for any significant-sized bets ($25 or greater) for any significant lengths or time in a casino (say, more than an hour playing at $25+ bets) without detection.

Even the most loosely run casino pays reasonable attention to bets of $25 or more (if they didn't they would be out of business). The idea that a high roller can come in and out of games, make big bets (when the real count happens to be highly positive), and avoid detection for more than a couple of days is laughable.
[...]

As for me, after my card counting days were over, I went on to have a successful career in the computer industry. The quote you included from Thorp sums it up well -- easier and more pleasant to make money in other lines of work -- though I would have said that $100,000/year is about the most a good spotter-BP team could make at blackjack in any year after the early 1980's.

In a follow-on e-mail my correspondent writes:

The MIT blackjack team(s) certainly existed and, from what I know, exist today. There are probably somewhere on the order of 15-20 card counting teams that still ply their trade in any meaningful way however they have had to evolve their tactics significantly since the early 1980's.

Many of today's teams are built for on-and-off action. They go to Vegas for a week then go away for a couple of months. They might try to play a bit in Tahoe or Atlantic City but they generally work Vegas because of the sheer number of casinos available within a short radius.

One of the tactics we used over twenty years ago was shift tracking. In short, this is the manner by which you make sure that the same combination of spotter and BP never play at the same table in the same casino on the same dealer shift in any eight week period. If you have 50 casinos and 3 shifts in a 24 hour day, you have 150 playing opportunities per spotter. A tight team of 2 spotters and 1 BP can take advantage of 300 opportunities per trip to Vegas (again, assuming a trip about once every eight weeks or so).

A departure from the book is the idea of the BP being in disguise before the casino is on to you. As told in Bringing Down the House, they didn't think of this angle until they were Griffin poster children. In any case, the BP should change his/her style of dress, maybe wear a beard, have a mullett, etc. on some trips just in case any dealer or pit boss recalls seeing a BP/spotter combination in the past.

Contrary to Bringing Down the House, it almost never makes sense for the BP to be flashy. You simply don't want to be remembered, period. For example, I had a rule where I was never the largest wagerer at any table I played at. No exceptions, regardless of how positive the count was. This led to some lost opportunities but also resulted in none of us ever getting barred (though I came very close on at least one occasion).

Bringing Down The House romances the life of a card counter but there is nothing further from the truth. It is a dreary existence in which you voluntarily turn yourself into a calculating robot. There were many days and nights where I could not wait for my shift to end. Dreaming all night that you are counting cards and waking up with the count (from you dream) in your head equals the most unrestful sleep you can imagine. For this (and quite a few other reason) I've always felt that the only card counting stories that would ever have mass appeal would need to be highly fictionalized and exaggerated.

Finally, there is the issue of the supposed winnings of the MIT team. I will leave you with this thought: kids from MIT are obviously very smart but 2-3% of the population can learn to be excellent spotters. Being a great BP is probably something 1 in 500 people could do. So, the barrier to forming a card counting team and having some money behind it is not ridiculously high. Without casino countermeasures, thousands of teams would exist. There was nothing particularly special about the MIT guys though they had better funding than most teams.

Beyond the fact that hundreds of teams could be formed with the skill level necessary to win, the reason they do not win millions (nor do the other hundreds of teams who attempt each year) is that casinos can isolate high stakes games very, very easily. In all of Las Vegas, there might be 100 tables at any given time where someone is betting more than $100/hand (let alone $1000/hand, playing multiple hands at high stakes and other attention getting moves). The casinos watch these tables like a hawk. You can team play, and you can count, and you can take a little bit per casino here and there but, no matter how smart you are, your ability to play for those stakes, many times, jumping in during a shoe, when the count is highly positive... it's just plain silly to think you won't quickly be detected. You will.

A Few Articles on Blackjack and Gambling

• Team Attack: The Playing Strategies by Arnold Snyder, The Blackjack Forum, Fall 1996

  This article provides an interesting overview of some of the team blackjack approaches that are described in Bringing Down the House.

• How to "Hack" BlackJack By Lex Luthor and The Legion of Gamblerz!! (LOG)

  This article is by a cracker (someone who gains unauthorized access to computer or telecommunications systems, not someone from the South). It covers the history of blackjack, the history of card counting and basic blackjack strategy in a two part article.

• Seen City: From surveillance cams to facial scans, in Las Vegas the whole world is watching, by J.C. Hertz, Wired Magazine, December 2001

• Hacking Las Vegas: the inside story of the mit blackjack team's conquest of the casinos by Ben Mezrich, Wired Magazine, Sept. 2002

  This article is based on Bringing Down the House.

• A Casino Odyssey, by Roger Williams

  As anyone with any amount of experience with the Internet knows, the Internet is the great engine of serendipity. I was searching for reviews of a book titled The Newtonian Casino to see if it was simply another printing of a book I already have, The Eudaemonic Pie, by Thomas Bass. It was largely as a result of reading The Eudaemonic Pie and Thomas Bass' later book, The Predictors that I ended up working at The Prediction Company, in Santa Fe, New Mexico. On these books, lets just say that truth may be an undecidable proposition.

  I found out that The Newtonian Casino is, in fact, a reprint of The Eudaemonic Pie with an added afterward. I also found a amazing four part set of articles written by Roger Williams titled A Casino Odyssey, published on a site named Kuro5hin.

  One of the most interesting parts of A Casino Odyssey is the discussion of the emotional way that even someone trained in graduate level physics and statistics approaches risk and gambling.

  Casinos "work" (in the sense that they are effective tools for separating customers from their money) by exploiting two universal human misperceptions. The first of these is a tendency to perceive patterns in randomness. The cruel losing streak with which I began my gambling career was no deliberate taunt by god or evidence of crooked games; it was a perfectly ordinary run of random numbers. As Knuth wrote with regard to random number generators, if your RNG can't pump out a string of 20 zeroes then it really isn't random. That is a perfectly valid result which must happen just as often as any other arbitrary string of 20 results. But when it happens, we don't think "hmmm, that is a perfectly valid if unusual result." We think the game is fixed or biased, and if we're gambling we might smirk and place a bet.

  Another interesting point the Williams makes is that casinos don't like winners. They cut into profits. A casino is a private establishment and they can kick you out when ever they want. And they want to kick you out when you win too much:

  As 1997 rolled over into 1998 he parlayed his modest stake into $80,000. But in that course he was kicked out of every casino on the Gulf Coast. His big bets were now in the $100 black chip range, and everybody knew he was a counter from his losing days. Once he began to win, he was shown the door, although usually with more politeness than [censored] had shown.

  "Ah, Mr. X. We must contratulate you on your really excellent play. Yes, we have noticed that you are very, very good. In fact, you're really too good for us. You're welcome to play any of our other games, but we really can't offer you a Blackjack game any more."

  The problem that the casinos struggle with is that there can be large swings in probability (luck). Although they have the edge, they can lose a lot of money on the way to realizing the edge. So they prefer players that play emotionally and give the house a much larger edge. Many of the people who run casinos also have an emotional approach to the gambling odds (a Wall Street Journal article on how casinos attempt to attract big gamblers, the so called whales, mentioned that you would not see people at Allstate discussing probability the way casino bosses do).

• A Reader of the pack, by Sandra Newman, April 7, 2002, The Guardian Unlimited Observer.

  Although A Casino Odyssey is a wonderful story, I wondered at the time how true the account was. From what I've learned, it seems to be true. A similar story is told by Sandra Newman in A Reader of the pack

• Swimming with the online card sharks, by Stephen Elliott, Salon, May 2, 2002

  I am fascinated by travel books and articles about places I'll never go. I get to live vicariously through the account. Accounts about gambling are the same kind of thing. I don't gamble, at least on games (we all gamble, but that's a different topic). I don't think that I have a killer instinct when it comes to games like poker. Without such a killer instinct, it sounds like I'd be a pretty bad player.

  Stephen Elliott has a gritty history, growing up in state homes and playing poker. A part of him has that hard edge, that desire to defeat others at the poker table, to "take them". His account of on-line gambling is fascinating. His advice at the end of the article also sounds good: don't go there. I belive that for everyone there is a "drug" that will destroy them. Sometimes it is cocaine, booze or heroin. Sometimes it is sex, power, unbounded ego, the desire to escape death. For some it is gambling. The wise person does not open the door to the thing that will destroy them.

• Who's Holding the Aces Now? by Daniel Terdiman, Wired News, August 18, 2003

  In the continuing technology war that the casinos wage to make sure that their marks (ah customers) walk away with as little casino money as possible, some casinos are using software and hardware from a company called MindPlay. According to this article the MindPlay system can track blackjack play and betting. This allows an automated technique to recognize blackjack card counters.

  The MindPlay system also raises two interesting questions:

  1. In Nevada it is illegal to use computers to track the games in a way that will lead to better playing performance. This law applies both to casinos and to their customers.

  2. It is illegal to do anything that alters the odds of a game.

  Using a computer to track play and then kicking players out who are winning seems to violate both of these laws. To avoid this brush with gaming regulations, the casinos claim that they use the MindPlay system to track how much money is being gambled so that they can do a better job of concentrating their "comp" money (free rooms, meals, shows, women, etc...) Of course if they also find someone who is, on the balance, walking away with lots of their money, they may ban them from the casino.

Books

• Calculated Bets by Steven Skiena

  Steven Skiena is a professor of computer science at the State University of New York at Stony Brook. This book is about building a predictive computer model for Jai Alai.

• Fooled by Randomness by Nassim Taleb

  Nassim Taleb is an options trader who currently manages his own hedge fund. As the title suggests, this book is, in part, about how humans try to find patterns in randomess. Not everone likes this book. I found it artfully written, profound in places and touching in others.

• Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein

  As with all of Peter L. Bernstein's work, this book is excellent. It discusses the development of probability theory, insurance and the application of mathematics to risk calculation.

• Capital Ideas: The Improbable Origins of Modern Wall Street by Peter L. Bernstein

  This book is a popular introduction to the history of modern finance and, to some degree, economics. As in Against the Gods, probability and statistics play a staring role.

Ian Kaplan
June 2003
Last updated on: March 2004

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