The students were from Massachusetts Institute of Technology, Harvard University, and other leading colleges; they used card counting techniques and more sophisticated strategies to beat casinos at blackjack worldwide.
Since the early 1960s, a large number of card counting schemes have been published, and casinos have adjusted the rules of play in an attempt to counter the most popular methods.
Using funds he received on graduation as Harvard's outstanding scholar-athlete, he generated more than a 35 fold rate of return in less than nine months of play.
[3] 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.
Kaplan said he would back a team but it had to be run as a business with formal management procedures, a required counting and betting system, strict training and player approval processes, and careful tracking of all casino play.
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.
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%.
As a result he decided to fall back on his growing real estate investment and development company, his "day job" since 1980, and stopped managing the team.
Every partnership was profitable during this time period, after paying all expenses as well as the players' and managers' share of the winnings, with returns to investors ranging from 4%/year to over 300%/year.
In 1992, Bill Kaplan, J.P. Massar, and John Chang decided to capitalize on the opening of Foxwoods Casino in nearby Connecticut, where they planned to train new players.
Acting as the General Partner, they formed a Massachusetts Limited Partnership in June 1992 called Strategic Investments to bankroll the new team.
Sarah McCord, who joined the team in 1983 as an MIT student and later moved to California, was added as a partner soon after SI was formed and became responsible for training and recruitment of West Coast players.
Eventually, investigators hired by casinos realized that many of those they had banned had addresses in or near Cambridge, and the connection to MIT and a formalized team became clear.
The event was featured in an October 1999 Cigar Aficionado article, which said the winner earned the unofficial title "Most Feared Man in the Casino Business".
New members of the team would train for weeks or months, starting on MIT's campus, then practicing in backroom card games in Boston's Chinatown.
[4] The group combined individual play with a team approach of counters and big players to maximize opportunities and disguise the betting patterns that card counting produces.
[citation needed] 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 concept enabled players and investors to leverage both their time and money, reducing their "risk of ruin" while also making it more difficult for casinos to detect card counting at their tables.