Of Card-Counting, Startups, and the Real Story of the MIT Blackjack Team

3/27/08Follow @bbuderi

(Updated, March 27, 6:45 pm—see editor’s note, p. 2)

The house was on Inman Street, near Cambridge’s Central Square. Peter Woit recalls the morning he came downstairs and found his roommate obviously upset.

“John, what’s wrong?” he asked.

“Have you seen a dirty pink laundry bag?” came the response.

“No, why?”

“There was $80,000 in it.”

This was back in 1987 or ’88—still pretty early days for the MIT blackjack team. In fact, in those days John didn’t even think of it as the MIT team because it included players from around Boston and even other schools, like Princeton. John was John Chang. He had graduated from MIT a couple years earlier with a major in electrical engineering and gone on to become one of the lead organizers of a group of young card-counters who were largely having their way in Atlantic City casinos and making occasional forays to Las Vegas. For his day job, Chang worked in Kendall Square, right above Legal Sea Foods, as senior software engineer at a computer aided design company called Premise.

In case you missed all the trailers and ads, the opening of 21—the movie adaptation of Bringing Down the House, the smash 2002 book about the MIT blackjack team—is set for tomorrow. But we wanted to tell you some parts of story that you haven’t heard if you read the book, that you won’t see if you go to the movie—and that reveal how intertwined Boston’s innovation history and MIT’s blackjack legacy are. For instance, one of the founders of Premise was Chang’s fellow card-counter Jon Hirschtick, who after selling the firm to Computervision in 1991 would go on to found the software design firm SolidWorks, one of New England’s big success stories of the 1990s (it was sold to Dassault Systemes for some $316 million in stock in 1997).

But this is Chang’s story. He’s the guy on whom the book’s Micky Rosa character, played by Kevin Spacey in the movie, was at least partially based (you can find his blog here, and the April issue of Men’s Vogue also has a piece that quotes him at length). In 1988, he had already been playing blackjack for some six years, and he would stay with the team as manager or coach for another 15 years or so. More than any other person, Chang embodies the MIT team. It turns out he’s living in Vegas these days, still playing cards occasionally. How do I know this? Well, the Peter Woit mentioned above is the famous Columbia University mathematician who wrote the book, Not Even Wrong. He is also the brother of Xconomy publisher Steve Woit. (See what I mean about intertwined?) Earlier this week, I spoke with Peter, who put me in touch with his former roomie.

Chang, 50, is a Chinese-American who grew up in various suburbs in New Jersey, Pennsylvania, and upstate New York. He arrived at MIT in 1975 (yes, it would take him 10 years to graduate, but that fits with his persona, as you’ll see). He found school somewhat unappealing, it seems safe to say. Then he found blackjack.

“I was an MIT student not knowing what I wanted to do with my life,” Chang relates. He had been at the school so long, he says, “My parents thought I was in grad school, but I wasn’t.” Then one day in 1982 he was walking down MIT’s famous Infinite Corridor when he saw a hand-written poster offering students the chance to make $300 during the upcoming spring break through card-counting. The poster, he says, was taken down by MIT authorities within hours. “Somehow the MIT administration looks askance at such activity,” Chang says. But it turned out about 30 people had seen it and showed up at the meeting in the ping pong room of the Student Center to learn more from a former MIT student who co-managed the group. Chang wasn’t a super mathematics whiz, and he wasn’t by initial appearances particularly adept at card-counting either. He wasn’t even that keen on the whole endeavor—”lackadaisical” is his description of his attitude. But in the end, only about five people stuck with the training and qualified for the job. “I was just good enough,” Chang says, adding, “There’s no way when I got into it that I thought I was going to [keep] doing it.”

But all that changed when he tasted the thrill of beating the house in Atlantic City. “Once I got in the casino, I thought, ‘Oh this is actually a lot of fun.’ Unlike most of my classes at MIT, which started out with such promise but they hit you with a ton of work.”

Indeed, conventional work was never a big thing for Chang. (As an aside, I asked him if he had a day job now. There was a slight pause, and then he said, “Naahhh.”) But gambling was another story. “I advanced very quickly after that, just because I had the enthusiasm,” he says. He spent a lot of time practicing, and even found his Asian background was an advantage in that it allowed him to go unrecognized by casinos looking for card counters. “I’m Chinese, and when you go into a casino, it’s like you’re in an Ivy League college in terms of representation of Chinese or Asians—it’s too many.” And, he says, casinos definitely hold some stereotypes that further help his cause. “Being Chinese helps a lot in terms of being able to bet large and not get suspicion.”

Chang was not part of the first wave of MIT blackjack players. Students had been playing informally for years, and the first more serious groups seem to have formed soon after the first casino opened in Atlantic City in 1978. But it was still early days when Chang joined. The leaders at the time were J.P. Massar, the MIT alum who had put up the recruiting poster, and Bill Kaplan, a Harvard Business School graduate. Chang and Massar later bought the house in Inman Street together, using part of their winnings.

Massar is a blackjack legend in his own right. Chang says Massar was far more intense than he was about the game. “J.P.,” he says, got so stressed out training team members that he once left a bag with $125,000 in cash in an MIT classroom. Massar also took up professional poker and coached 2002 World Series of Poker winner Robert Varkonyi, another MIT alum. For his part, Kaplan had initially seen his acceptance to Harvard Business School revoked when officials learned of his role as a card counter. He had fought the decision and eventually was reinstated. Kaplan had also done his undergraduate studies at Harvard, where one of his classmates turned out to be future Microsoft CEO Steve Ballmer. At a class reunion in the 1990s, the two met up again. By that time, there was such an incredible buzz about the MIT card counting team that Kaplan was the class hero for some, not Ballmer—at least according to what Chang heard. “Steve Ballmer’s the billionaire in this class, but everyone is asking Bill about blackjack.”

(Editor’s note, March 27—John Chang passed on the following clarification and correction, courtesy of Kaplan: The year was 1992, Kaplan’s 15th Harvard reunion, and it turns out Ballmer had heard tales of the blackjack team through some Microsoft employees who had played on it. Said Kaplan, “The real story is that Steve (Ballmer) came up to me and said he was ‘so fascinated by the story of my blackjack team and wished he could have switched places with me and started and run the team.’ I told him I was ready to swap bank accounts whenever he was ready.”)

Before too long Chang, who finally graduated from MIT in 1985 (he did his undergraduate thesis, which you can find here, on blackjack), became the senior person on the MIT team. He says he got the leadership role, which included recruiting, training, and compensating players, almost by default. Few others stuck with blackjack through the many ups and downs associated with card counting—including not just dry spells, but some scary back-room encounters with casino security staff. Says Chang, “People would go, ‘It’s not worth it, ah forget it.’”

Throughout the 80s, there were no more than a dozen people on the MIT team at a given time. But by the early 1990s, the school probably had 80 people either playing or in various stages of practice or “checkout,” in which players must demonstrate their capabilities before being sent unsupervised to a real casino. A West Coast MIT team even started up. The efforts were funded largely by player investments (most of it from the older players) and a few outside investors. One very small stakes investor in the early days, says Chang, was open source software pioneer Richard Stallman, who had worked at MIT’s Artificial Intelligence Lab before resigning in 1984 to develop a free Unix-like operating system known as GNU.

A big crisis came just before a July 4 weekend, probably in 1994. At the time, teams tried several different blackjack strategies—not just card counting but things like card steering and ace tracking—and profits were far below what was expected. Chang says he came to the realization that they really needed to focus on card counting. “I just canned all these games. I said screw that,” he says.

“After I made all these changes, we just won like gangbusters immediately. It was kind of astonishing really,” says Chang. In fact, it was largely about the next few years—1994 to 1998—that Bringing Down the House was written. Things reached a climax the night of June 28, 1997, with the famous “Bite Fight,” the boxing match where Mike Tyson bit off a piece of opponent Evander Holyfield’s ear. There was a riot in the MGM casino, with tables tipped over and chips flying. “The MGM was the center of the universe for the card counting community for a couple years. Players from all over the world would descend on the casino at that time,” says Chang. He estimates that at least a half-dozen teams from around the world, including several from MIT, were in the casino that night. “It’s like everybody was there.”

So much money was being bet in those days, he says, that teams didn’t draw that much attention even when players bet big. “At the moment of the riot, I was at a table betting $9000 at each of two hands and my action was not drawing any special attention,” he says. “Every single player at that table was playing yellow chips, which are $1000 each.”

But over time, the once close-knit teams fell apart. They were partly victims of their own success, says Chang. Everybody seemed to want bigger stakes or for their investments to grow faster, he says. A number of players decided to form new, smaller teams.

Chang draws a lot of parallels to the challenges businesses face. People become dissatisfied with their compensation as the company grows. Or they miss the entrepreneurial environment and go off to find it again somewhere else. “I guess this is the essence of startups,” he says. And it wasn’t like he had much leverage to convince people to stay. “I had not hidden anything from anybody. It was all transparent, so it was easy to break away. We had no contracts. We didn’t have golden-handcuff-type benefits. You didn’t vest, anything like that.” Chang estimates the MIT teams took about $10 million out of casinos over the years. “Although it seems like a lot of money, it’s not really a lot of money, not in a business sense,” he says.

Chang made investments in several teams that broke away from the big group but still wanted him involved as an advisor or in some other limited capacity. But before too long, he says, even that attitude changed and “a lot of my investment in these groups had been returned to me.” He didn’t really care that much about the money—it was beating the casinos that turned him on. “I just found it very fun, and once I got the money I was like, ‘Well it’s a trophy,’” Chang says. “I wasn’t going to use it for anything. And so when people gave it back to me, I really had no idea what to do with it…It was just like lying around in my apartment…I didn’t even know how much it was.” When Laurie, his fiancée at the time, came out to help him move west, she began cleaning his filthy Cambridge digs and discovered more than $150,000, mainly in chips, tucked into various nooks and crannies, bags and jars. Chang was mortified. Each time she found something, he says, “I’m like, ‘Oops…Please, please don’t tell anybody. I swear, there’s nothing more.’ But of course there was.”

By around 2003, the MIT teams had “fizzled out” in the face of lower profits and increasing scrutiny, says Chang. In 2004, though, he and Laurie moved to Las Vegas. “I had avoided living in Las Vegas for years,” Chang says. He thought of it as a cheap town, with no culture, and a joke of a university. But then he realized he actually knew more people there than in Boston.

He and Laurie play occasionally, but he makes it sound relatively tame—until, of course, Laurie’s recent arrest (after speaking with her, I’m not sure I’d want to be with the casinos on this one). It has definitely gotten harder to beat the casinos, which are much more on the lookout for card counters than we he got started and have taken steps to keep the odds more in their favor. But on the other hand, says Chang, the betting limits are also higher. “The actual profitability, that’s unclear. You may be able to make more than ever.”

So what about Bringing Down the House and 21? “It’s kind of a weird thing, you know, to have a movie and book that you’re a pretty main character in and yet not to be acknowledged in any specific way by the author or the producers,” Chang says. “We were never invited by the producers or anything to participate in anything.”

Still, he did go to a premiere of the film in Las Vegas a few weeks ago. Jeff Ma, the MIT grad who served as the model for Kevin Lewis, the main character in the book, even introduced him to the real Kevin—Kevin Spacey.

Bob is Xconomy's founder and editor in chief. You can e-mail him at bbuderi@xconomy.com, call him at 617.500.5926. Follow @bbuderi

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  • http://www.math.columbia.edu/~woit/blog Peter Woit

    Very good article, but one minor clarification. When John told me about the missing $80,000, from what I remember, he didn’t seem especially upset about it…

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  • George Middlemas

    What about the “pioneers’?? Len Kleinrock and Larry Roberts

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  • Mike

    Love this story. I would like to know who was on the team. Xconomy should publish the list.

    Now that it’s popular, every MIT grad I meet knows someone who knows someone on the team. It’s reaching urban legend status as if the team had over 1000 members.

  • http://mickeyrosa.com John Chang

    I don’t even remember misplacing 80K, though if Peter remembers it, I’m sure it happened.

    With 25 years of history and perhaps 200 players, it’s hard to enumerate all the people who played on the MIT team. The incarnation I know started at the opening of Resorts in 1978.

    Len Kleinrock and Larry Roberts… I don’t know them, but it would be nice to. I just read a transcript of an interview in which they talked about counting cards and timing roulette wheels in the late 60′s. It’s heartening to discover that there were others at MIT between Thorp in 1961 and us in 1978.

  • http://www.championshipblackjack.com RYan

    Glad to see the excitement and interest hitting the mainstream. John, I would love to talk with you. Get in touch.
    Ryan
    http://www.championshipblackjack.com

  • http://biz.freshaddress.com/ManagementTeam.aspx#Bill%20Kaplan Bill Kaplan

    Enjoyed your article. A few clarifications and sidenotes:
    1) Steve (Ballmer) was a Harvard College (not HBS) classmate of mine, which goes to show you don’t need an HBS degree to make billions of dollars. For that matter, you don’t even need a Harvard College degree as our other classmate, Bill Gates, has shown. FYI – Microsoft bought a software company founded by a couple of other MIT BJ players, Chuck Whitmer and David Wiese. David went on to become the principal architect for Windows and Steve swears that without David’s work Windows and Microsoft would be a mere shadow of what they are today.
    2) While I know John likes to say he’s Mickey Rosa [:)], the founder and leader of the Team, the fact is he’s a dead ringer for the character Choi played by Aaron Yoo.
    3) It’s 25 years later and John still “loses” real estate limited partnership distribution checks we send him.

  • Carlos

    Am I wrong in thinking that the amounts of money gained in the movie were a bit exaggerated?

    Nevertheless, a very cool story.

  • Ryan

    Hi everyone,

    Yes there were over 200 players at different times. Though I didn’t go to MIT, I played on one of the teams in the early 2000’s. I had been playing solo at a casino and noticed that another person at the table clearly was counting and playing correctly….he noticed me as well. The next day we met up at a pool and that was the start of a great run.

  • J Epstein

    My dad says his friend Kenny Uston was also an early, successful card counter. Did you gents know him?

  • http://biz.freshaddress.com/ManagementTeam.aspx#Bill%20Kaplan Bill Kaplan

    Ken played in the late 1970′s on a team in Vegas formed by Al Francesco. Their team was one of the first to successfully employ spotters and big players, and Ken subsequently wrote a book titled “Million Dollar Blackjack” about his experiences.

    When I first played in Las Vegas in 1977-1978, originally with a $1 (one dollar!) unit bet, I saw Ken betting blacks ($100 chips) and counting. I was in awe! I asked him for some advice and I remember he gave me some great tips about strategies, the best casinos to play in, and team play. Little did I know then the scale my own team, the MIT Blackjack Team, would soon become.

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  • Ghostrider

    Old news, so here goes. Infamous MR.”M” is none other than J.P. Massar, asked Bill Kaplan for help. Mr. Kaplan had already ran a team in Las Vegas and MR. “M” asked for Mr. Kaplan assistance with his team. MR, Kaplan agreed and they got to work. So without notice MIT was around long before John C. So yes, John has a masterful mind, and very, very, very brilliant, but needless to say not the the mastermind behind the MIT team. MIT was around long before John. So to say that Micky Rosa was based on John being the mastermind well, we all know the truth and Micky Rosa = John……….NOT!!!!!!

  • agmines

    This movie stinks just like “The Firm”, why??? If this guiy was so smart what so many dumb moves like keep going to Vegas, not changing the signs, going to over and over to Vegas with the same people, keeping money in his Dorm Room, just a dumb ass. Just like John Grisham “The Firm” How does Top Law Student from Harvard end up working for a Mob Firm? If he is so smart why no research on the firm that will employ him??? Does not make any sense!

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  • Hmm

    I am here because a freind said its a true story of an asian guy….I am glad thats wasn’t me, usually I count 4 decks of the cards, and alway sit on the last seat of the row so I can see the other player’s card, its only improved the odd, you still need lucks. I don’t count 10,j,q,K as individual. I counted them as 64 numbers in catagory D, 6 to 9 = 64 numbers in catagory C, 3 to 5 = 48 numbers in catagory B, and Ace & 2 = 32 numbers in catagory A. Total 208 numbers all together

    Its only work on the non resuffer dealer, normally the high bet table. Lets say I have been betting small by myself at minimum, the dealer was gonna deal for one more hand and was about to resuffer, so the very last hand before resuffer, I placed a very big bet, I already count 57D, 32C, 41B, 27A. Total of 158 card counts, included all the player sat before me and my cards. My turn to draw a card, I have J and 2. Dealer have the 6. If the closed card = D, the chance of dealer drawing the next card are mostly C catagory which is 6 to 9 chance are 32 out of 50 included the catagory D which make it chance of 38 out of 50 the dealer will die. Chance for the dealer to survive is less than 24 pct. and as for me I have a hugh chance of survival, to get another 10 its 6 out of 50 I would lose, and there are many cards in catagory C left, which is 6 to 9. so I figured I would get to 18 to 21 with the chance of 32 cards out of 50 in deck. I double up my money, people said I am crazy because I have 12, and dealer have 6 as their face card. Bascially I ignored all of them, I bet on the odd and double up , I got the 8, so I have total of 20, I went “phew lucky” . Now here is the problem where the dealer flip the card over, its was an a 2. Dealer got 8. from that moment I knew I already won, based on the odd Dealer 3rd cards = 8 again, total 16, dealer was force to draw one more, now drew a 9, total 25. I observe the game with small bet till every 30 minutes, I only bet big if I see the odd can be crack, like the catagory C. if all of them have same pct, I will bet small, lets the deal resuffer, and try again every 30 minutes. If someone can count exactly all 13 numbers..they can make a lot of money by themself, my brain = dumb, therefore I can only count 4 group of numbers. I asked the dealer if I can use paper and pencil while playing blackjack. They said no cell, no paper, no pencil, if paper and pencil, I could of write down all the #…..or a caculator haha. I am writing this because the movie 21 is so simliar, but done by group of 4 people, each person can count 1 to 3, 4 to 6, 7 to 9, 10+. The easiest one should be the 10 +, more card, but easier to keep trace, since all card goes by 10. I haven’t watch the movie, but read story about it, from what I see, each player would signal how many cards are out for each number, so the next person can bet on the odd before drawing. I wish I have a group like that, trust is the problem for me.

    everything is based on lucks still…the odd just boost little more percentage of winning thats it. I am not alway successful, I bet big last hand about almost 200 times, total I lose is exactly 32 times. I can’t remember how many times I won, but I remembered exactly how many time I loss, its a lesson for me. and each bet + double up is almost as much as a used car.

  • Hmm

    I remembered this one dude sat next to me, I was betting big….while he bet $200, I want to force more cards out of the deck, the guy sat next to me have a huge chance of losing if he draw a card, if stay he could of win, but I wanted him to force another card out of the deck so I can caculate the percentage. I told him, go ahead and draw, he went “are you crazy…I got 18, the dealer got 7″.. I gave my chip to him. I say. you are in win/win situtation. If you lose, you can have my $400 chip, if you win, you get from the dealer. beacuse I was more worried about my bet. So he got the Q….he lose, which I was very worried. beacuse I have 13. beacuse the percentage of D catagory is very high, I know the dealer will have 17 for sure. to draw a catagory C card is less than 30 pct, D alone is over 40 pct, and a/b 30 pct. I draw a catagory C card a #6….I got 19, deal flipped card over, its was a 10, 17. that dude save me, its was a pure luck, since that time, something pop in my head…”I need a team….team of 4…..no 5 people, cover the whole table………I sit here last and bet big, and the rest sit before me bet minimum to control the cards for me”….till this movie 21 came out, I gave up my ideas on the team.

  • Anna

    Where can I find the real rules of the counting method they used???

  • garry

    The character, Micky Rosa, Who is he in real life????

  • Anna

    Can anyone who knows the story really close or even participated in it (that’d be fantastic) contact me via email: annsobol@ua.fm
    will be looking forward!

  • kit halliday

    I have watched the film and have tried to research about counting i have the hi lo system cracked all but the betting amounts in relation to a true count worked off off the running count. i am from the uk and frequent a six deck 1 bj table casino. i would appreciate it if any of the old mit team (pefferably ones who are succesful and have been listed on the griffin face recognition site) could get in touch via e mail and we could talk about some training (i am willing to pay) kithalliday@london.com The casinos i use over here are very weak on security and do not expect it. i believe i could do it little but often and make a couple of million dollars before having to go out of the uk. Oppurtunity for known american to be paid for teaching and % of a much easier uk market. BUT THE TIME IS NOW as modernization will lead to an american style setup. dATED 14 day 5 month 2008…..pointer gbp=2$

  • Kate

    When I heard that 21 was based on a true story, I thought ‘I have to meet these guys!’ I do agree that you guys (John Chang & the team) should have gotten more credit, both the book and the film. Your story really is a very interesting one to tell. My teacher (during class) actually taught us how to count cards for weeks and it took us quite some time, but we did manage to get a hang of it in the end. Of course we couldn’t really do anything because we’re not old enough to go to gamble in casinos.

    How did all this gambling and card counting affect your life, though? I mean, you get a lot of money, yes, but is it still the same when you become older?

  • Hmm 2

    How come you write like you’re still in high school?! Also the word is “reshuffle” and not resuffer.(?) wow.
    However reading your posts do make me suffer!
    Cheers!

  • Harry

    I have a dvd of Andy Bloch teaching card counting, using the high and low system. I have the move 21. In the movie the guy is counting his own cards, and not the next person’s. I like playing alone with the dealer. Here a question. Do casinos allow players to have cel phone or IPODS at the tables?

    Harry

  • http://blackjack.nl blackjack

    hi there, nice content added you on my rss reader i also have a few card counting techniques on my site thank you

  • bill kaplan

    I just won Big last night 100,000

  • nicole

    Where can I find the real rules of the counting method they used in the movie???
    i remember something like “eggs+12, paycheck+15, sweet+15, magazine+17…” where do i find that???

  • corry

    hey…… chang…. i love card counting… and count by the multi level omega 2 system…. is that a good system or do you consider something different… what tips do ya have…?????

  • terrell

    i would like to chat with some of the mit people from back in the day.i have been learning the hi/lo system and wanted to learn some more in card counting. i am a quick learner could yall leave me a message at my email address rell_red@yahoo.com i am looking to get in some casinos

  • count

    email me, I want to get on a team and learn more,

    asmussenz@yahoo.com

  • ..?

    Can one of the MIT team message me, need to ask something.
    And if anybody could reply to this – is it harder to get caught card counting in the UK as they don’t expect people to be doing it.
    vstephenmcguirex@hotmail.co.uk
    -And please message me soon as I will be deleting this email address,

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