Fortune's Formula: The Untold Stow of the Scientific Betting System That Beat the Casinos and Wall Street.

FORTUNE'S FORMULA: The Untold Stow of the Scientific Betting System That Beat the Casinos and Wall Street WILLIAM POUNDSTONE

Claude Shannon, the author of theories that undergird modern computers and the Internet, and Edward Throp, a mathematics professor, are accomplished academics who nevertheless made their reputations by beating the odds. By applying their minds to both Wall Street and casino gaming tables, they became wealthy men. In Las Vegas, they used a betting system invented by Bell Labs' John Kelly to beat the roulette and blackjack tables. In the stock market, they got a quick-buy-and-sell technique known as arbitrage to yield an extraordinary amount of money with low risk. In this thrilling and entertaining book, Poundstone explains the mechanism behind the controversial Kelly formula, describes the various efforts to discredit it, and shows how it paid off for Shannon and Throp. The author also examines the seedy underbelly of gambling and organized crime that brainy gamblers sometimes encounter. With a host of colorful characters, from corrupt telegraph operators to billionaire investors, this is the first full-length examination of Shannon and Thorp's ingenious techniques and mathematical legacy. Farrar, Straus and Giroux, 2005, 386 p., hardcover, $27.00.