We all remember teenage years when our parents told us the importance of mathematics if we wanted to get on in life. Chances are, some of us have repeated those same old warnings to our own progeny. It is part of life’s rich tapestry, and empirical evidence shows that it also happens to be true.
We don’t just mean that in the sense of getting a good grade in mathematics and having a long and fruitful career as an accountant or an insurance actuary, rewarding though that must certainly be. Math geeks don’t always settle down to the 2.4 children, home in the Hamptons idyll. In fact, some use their talent to invent a shortcut to prosperity. Here, we meet two of Australia’s most notorious math geeks who did exactly that. Let’s see what lessons we might be able to pick up.
Stefan Mandel had a secret formula for winning the lotto
Even the most naïve among us would not be gullible enough to believe there is a “secret formula” for predicting lottery numbers. But Australian numbers geek Stefan Mandel came up with something in the 1980s that proved so successful it forced the regulator to change the laws.
His methodology was nothing complex, at least in theory. All he did was calculate the number of possible outcomes – for example, in a lottery that picks six numbered balls from a set of 40, there are 3,838,380 possible combinations. Then he would look for a jackpot valued at least three times the number of possible combinations. So in our example, it needs to be at least 11.5 million. Then the tricky bit – he found enough investors to buy a ticket with every combination. According to Mr Mandel’s theory, you couldn’t lose, and even after paying off his investors, he walked away with a five-figure profit every time.
After 14 lottery wins, the Australia regulator prohibited the bulk-buying of tickets and home-printing, both of which were essential parts of Mr Mandel’s strategy. He moved to the US and briefly tried the same strategy with the Virginia lottery before regulators there took similar steps.
Stefan Mandel made the most of his strategy while he could. Today, the 89-year-old lives on the island paradise of Vanatu in the South Pacific. They don’t operate a national lottery.
Alan Woods was more than a casino playboy
Casinos in Australia, Las Vegas and the world over love guys like Alan Woods. Known as the playboy punter, the gregarious New South Welshman loved to make large wagers at the card tables, and every casino knows that the house always wins in the end, that’s a mathematical certainty. So the comps would keep flowing as long as he kept playing.
Australians know more about casino betting than most – they wager more on casino games than any other nationality, and the best online casinos in Australia for real money offer an even wider range of games for gamblers in Australia to try. But they also know about the house edge and how to manage their bankroll responsibly to keep the gaming fun.
Alan Woods, however, had a deeper mathematical understanding than most. Blackjack was his game of choice, and it is a game in which players can use strategy to reduce the house edge. That typically involves memorizing the optimum calls for when to call, stand, split pairs and double down. Getting it absolutely right every time reduces the house edge to somewhere close to one percent.
Casinos don’t mind that because a one percent edge is still an edge, and they will still make a profit. Skilled players use card counting techniques to adjust their strategy according to what cards are still left in the shoe. This can knock a few more tenths of a percent from the house edge, and that is when the casinos get nervous.
Woods was arguably the most brilliant card counter of all time. He initially played for fun, but when his wife left him in 1979, he adopted the playboy globetrotter lifestyle and was soon barred from major casinos, not just in his native Australia but across the globe from Las Vegas to London to Macau. From the casinos’ perspective, he left a trail of destruction in his wake, but Woods was great at portraying the Aussie playboy having a fun night out. How were they to know that behind the façade, a brain like a supercomputer was at work?
His blackjack career was short but lucrative. He retired from the game in 1982 having made a seven-figure profit and changed his focus to betting on the horses – but that’s another story for another day!