Can you still beat blackjack with the strategies from Beat the Dealer?
Professional card counters are still making a living from the game. It is more difficult now because casinos have fewer games with good rules and they also have learned to detect and discourage card counters. On the other hand, blackjack is still fairly easy for the amateur to learn enough to overcome the casino advantage and gain a modest edge.
Who was influenced by the ideas and methods in Beat the Market?
In his book, The Quants, about the rise of modern quantitative finance, Scott Patterson provides an impressive list of some of the people influenced by Beat the Market, including:
- Fischer Black, co-creator of the Nobel Prize winning Black-Scholes Formula
- Ken Griffin, founder of Citadel Investments
- Bill Gross, who revolutionized bond trading and founded PIMCO
- Blair Hull, blackjack player and founder of Hull Trading and Hull Tactical Asset Allocation
- Frank Meyer, founder of Glenwood Investments
- Paul Singer, founder of Elliot Investments
What is “Fortune’s Formula?”
I first used the title “Fortune’s Formula” in 1961 when I gave a talk to the American Mathematical Society about the card-counting methods I discovered for beating casino blackjack. At the same time I was developing my card-counting methods, I learned what amount to bet, when I had the edge, so that my wealth was likely to grow fastest. I called this strategy for betting “The Kelly Criterion,” after the Bell Laboratories physicist who discovered it, J.L. Kelly Jr.
In 2005, it was this betting strategy that William Poundstone referred to in his book titled “Fortune’s Formula.” In his book, Poundstone gives the simplest version of the formula for a fair bet with two outcomes, where you have an edge:
Bet a percent of your formula equal to your edge/odds
The extensive academic development of The Kelly Criterion is covered in the 2010 book, The Kelly Capital Growth Investment Criterion.