MIT Blackjack Team
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The MIT Blackjack Team was a group of students and ex-students from the Massachusetts Institute of Technology who attempted to beat casinos at blackjack worldwide. The team and its successors operated from 1979 through the beginning of the 21st century.
[edit] Blackjack and card counting
Blackjack gives the house a low statistical advantage compared to other casino games. Beyond the basic strategy of when to hit and when to stand, individual players can use a combination of betting strategy, card tracking, and card counting to improve their odds. Since the early 1960s a large number of card counting schemes have been published, and casinos have adjusted the rules of play to counter the most popular methods.
[edit] Origins of the team
The origin of the MIT Blackjack Team was a mini-course called 'How to Gamble if you Must', taught in January 1979 at MIT over what is known as Independent Activities Period (IAP). A number of MIT students from a living group known as Conner III, who often played penny-ante poker with each other, attended this course and learned about blackjack and card counting methods.
Determined to put their newly-discovered knowledge to work, the group resolved to travel to Atlantic City in the spring of 1979 to win their fortunes. Failing miserably in this endeavor, the group went their separate ways when most of them graduated in May, but two members maintained an avid interest in card counting. These people decided to give their own IAP course on card counting in January 1980, and created a course-listing in the MIT Independent Activities Period Guide, published in early November of 1979.
In late November of 1979 a person known only as 'Dave', who claimed to have been a member of Ken Uston's Blackjack team, contacted the organizers, and proposed forming a team to travel down to Atlantic City and taken advantage of the New Jersey Casino Commission's recent ruling that made it illegal for the Atlantic City casinos to bar (that is, prevent from playing blackjack) card counters.
The team, consisting of four players and an investor who put up most of its $5000 in capital, went to Atlantic City in late December after months of intense training, and over the next few weeks doubled and then redoubled its capital.
This was the beginning of the actual MIT blackjack team. The team members held their January IAP course and recruited a number of additional MIT students as players. The players continued to play in Atlantic City through May of 1980 but sustained consistent losses during this period. Frustrated and bewildered by their inability to win at the game, the original players suspended play and new trainees dropped out. In May of 1980, Dave was ousted from the group because of disagreements over whether certain shuffle-tracking techniques were mathematically correct or based on false hypotheses, as well as personality conflicts.[citation needed]
[edit] Mr. M Meets Bill Kaplan, Harvard MBA with a Las Vegas Blackjack Team of his own
Fortunately, as luck would have it, one of the original MIT players, Mr. M as he is known in the History Channel documentary on the MIT Blackjack Team, overheard a conversation in May 1980 about professional blackjack at a Cambridge chinese restaurant luncheon buffet. Mr. M introduced himself to the speaker, Bill Kaplan, a 1980 Harvard MBA graduate who had been running a successful blackjack team based in Las Vegas for the prior three years. Mr. Kaplan had earned his AB at Harvard in 1977 and deferred his admission to Harvard Business School for a year, during which time he moved to Las Vegas and formed a team of blackjack players based on his research and own statistical analysis of the game. Staked by the funds he received as Harvard's outstanding scholar-athlete upon graduation, Mr. Kaplan generated a 35+ fold ROI in less than 9 months of play during this "year off."
Mr. Kaplan continued to run his Las Vegas blackjack team as a sideline while attending Harvard Business School but, by the time of his graduation in May 1980, the players were so "burnt out" in Nevada, they were forced to hit the international circuit. Not feeling he could continue to manage the team successfully while they traveled throughout Europe and elsewhere, encountering different rules, playing conditions, and casino practices, Mr. Kaplan parted ways with his teammates, who then splintered into multiple playing teams, none of which proved particularly successful.
[edit] Mr. Kaplan Observes Mr. M and his friends in action
Getting back to Mr. M's encounter with Mr. Kaplan, after hearing about Mr. Kaplan's blackjack successes, Mr. M asked Mr. Kaplan if he was interested in going with a few of Mr. M's blackjack playing friends to Atlantic City to observe their play in the hopes of figuring out what they were doing wrong. Given the foruitous timing of Mr. Kaplan's parting with his Las Vegas team, Mr. Kaplan agreed to go, in the hopes of putting together a new local team that he could train and manage.
Mr. Kaplan observed Mr. M and 3-4 of his friends spend a weekend in Atlantic City and the trip was a disaster. Each of the players utilized a different card counting strategy, one more complicated than the next, and their consistent counting, playing, and betting errors resulted in their playing the game with a negative expectation. Moreover, the players spent the majority of the weekend arguing over unimportant mathematical formulas such that they put in very few playing hours at the tables. Upon returning to Cambridge, Mr. Kaplan detailed all of the problems he observed to Mr. M, which accounted for the losses the MIT players had been sustaining.
[edit] Mr. Kaplan sets the ground rules for starting a new team
Mr. Kaplan said he would back a team and run it with Mr. M but it had to be run as a business rather than as an ad-hoc group of bright kids interested in the game but without any formal process or management. The original players initally were averse to the idea. The had no interest in having someone tell them what counting strategy to use, being put through "trial by fire" checkout procedures before they were allowed to play, subjecting themselves to being supervised in the casinos, or having to fill out detailed player sheets (i.e. casino, cash in and cash out totals, time period, betting strategy and limits, etc.) for every playing session. However, they had already given up playing and Mr. Kaplan's persuasiveness and success record coupled with their keen interest in the game enabled logic to rule.
[edit] The first MIT blackJack "bank" is born
Thus, the first "bank" of the MIT Blackjack Team was started on 8/1/1980 with an investment stake of $89,000. Ten players, including Mr. Kaplan and Mr. M, played on this bank. Ten weeks later they had more than doubled the original stake, thereby triggering the time to "break the bank." Profits per hour played at the tables were $162.50, statistically equivalent to the projected rate of $170/hour detailed in the investor offering prospectus. Per the terms of the investment offering, players and investors split the profits 50/50 with players paid pro rata in proportion to their playing hours and computer simulated win rates. Over the ten week period of this first bank, players, mostly undergraduates, earned an average of over $80/hour while investors achieved an annualized return in excess of 250%. Everyone was happy and Mr. Kaplan and Mr. M went on to grow their MIT Blackjack Team into the most successful and notorious team in the history of the game.
[edit] Strategy and techniques
The team often recruited students through flyers posted around campus. The team tested potential members to find out if they were suitable candidates, and if they were, the team thoroughly trained the new members. A fully-trained player had to pass an intense 'trial by fire', consisting of playing through 8-10 six-deck shoes with almost perfect play, then undergo further training and supervision in actual casino play.
The group combined the individual player advantages with a team approach of counters and players to maximise any opportunities and disguise the betting patterns card counting produces. In a 2002 interview in Blackjack Forum magazine,[1] John Chang, an MIT undergrad trained by Mr. M and Mr. Kaplan in the early 1980's and MIT team co-manager in the 1990's, reported that, in addition to classic card counting and blackjack team techniques, the group at various times made use of advanced shuffle tracking and ace tracking techniques. While the card counting techniques used by the MIT team can give players an overall edge of up to about 2%, some of the MIT team's methods have been established as gaining players an overall edge of up to about 4%. In his interview Chang reported that the MIT team had difficulty attaining such edges in actual play, and their overall results had been best with straight card counting.
The team approach used by the MIT groups was originally developed by Al Francesco, elected by professional gamblers as one of the original seven inductees into the Blackjack Hall of Fame. Blackjack team play was first written about by Ken Uston, an early member of Al Francesco's teams. Uston's book on blackjack team play, Million Dollar Blackjack, was published shortly before the founding of the first MIT team. The team methods devised by Al Francesco were enhanced by Mr. Kaplan and used by the MIT team. The team concept enabled players and investors to leverage both their time and money, thereby reducing their "risk of ruin" while also making it more difficult for casinos to detect card counting at their tables.
[edit] Team history 1980-1990
The MIT Blackjack team continued as an informal organization throughout the 1980s, growing at times to have as many as 25 players, with a capitalization of as much as $300,000. Recruiting new players from the MIT student body and elsewhere as necessary, it continued to exist until 1990, when casino conditions, player exhaustion and other factors caused the group to stop playing.[citation needed]
Andy Bloch, now a professional poker player, was part of the MIT Blackjack Team. He is most famous for getting second in the 50,000 buy-in H.O.R.S.E Tournament at the world series of poker.
[edit] Strategic investments - 1992-1993
In 1992, Mr. M, Bill Kaplan, and John Chang decided to capitalize on the opening of Foxwoods Casino in nearby Connecticut, which they planned to use as a training ground for new players. They signed on as the General Partner and formed a Massachusetts Limited Partnership called Strategic Investments to bankroll the new team. Structured similar to the numerous real estate development limited partnerships Mr. Kaplan had formed, the limited partnership raised $1MM, significantly more money than any previous MIT team. Coincident with this new funding, the three General Partners ramped up their recruitment and training efforts to capitalize on the opportunity.
Unfortunately, Uston's books alerted casinos to the methods of blackjack team play, and many MIT team members were identified and barred. These members were replaced by fresh MIT students, and play continued. Investigators hired by casinos eventually realized that many of those they had banned had addresses in or near Boston, and the connection with MIT became clear. The detectives obtained copies of recent MIT yearbooks and added photographs from it to their image database.
On December 31, 1993, with substantial winnings in hand but team morale suffering from constant casino bannings and a series of losses, the three General Partners decided to terminate the limited partnership and pay out the winnings to investors and players alike. No longer twenty-somethings with time to kill at nights and on weekends, the General Partners decided not to start up a new venture. The original team disbanded and a few small, less formal splinter groups founded by alumni of Strategic Investments sprung up.[citation needed] At its height in the early 1990's, Strategic Investments had a total of 80 players and staged an onslaught, never before seen, on scores of casinos throughout the world.
The exploits of three of the players on the Strategic Investments team, who continued to play on in the mid 1990's, are descriptively depicted in the New York Times best seller, "Bringing Down the House," written by Ben Mezrich, an early 1990's Harvard graduate. A movie, based on the book and produced by and starring Kevin Spacey, is currently being filmed in early 2007.
[edit] Later history
With most of the original team barred, most members retired, having made an amount variously reported as $1 million to $10 million. Some members have used reports of their successes to start public-speaking careers or businesses selling blackjack card counting systems or running blackjack seminars.
[edit] In the media
The story of the MIT Blackjack Team in its incarnation as Strategic Investments was told in the documentary Breaking Vegas, and on an episode of the Game Show Network documentary series, Anything to Win. Its further exploits after the demise of Strategic Investments are told in the book Bringing Down the House. "Bringing Down the House" was published by Ben Mezrich, and is now a New York Times Bestseller. The Columbia Pictures film "21", a film based on the story of the MIT blackjack film is currently in filming [2]
The private investigation firm referred to as Plymouth in Bringing Down the House was Griffin Investigations.
[edit] Trivia
Robert Varkonyi, 2002 World Series of Poker Champion, lived on Conner III while attending MIT and played in penny-ante poker games with the founders of the team, though he was not otherwise involved with blackjack or the team.
[edit] Notes
- ^ Blackjack Forum interview with Johnny Chang
- ^ http://www.bearcave.com/bookrev/bringing_down_the_house.html Bearcave.com review of Bringing Down the House
