Lessons from the Blackjack Table

Billionaire Mystifies Public as He Tries to Fight Corruption with Math

By SM Dipali

Karel Janecek, one of the world’s most successful derivatives traders, claims that he is banned from all Las Vegas casinos.

Some consider Janecek a corrupt man, while he considers himself a combatant of corruption.Photo courtesy of http://www.ceskapozice.cz/

Janacek wants to change the voting system based on a complex mathematical formula that confounds even his admirers.
Photo courtesy of http://www.ceskapozice.cz/

While studying mathematical finance in the United States in the 1990s, Janecek applied his genius in mathematics on the casino floor by counting cards, an industry expression for the ability to quickly anticipate the next hand in blackjack. Soon, the money started pouring in – and the casino bosses started to notice. Janecek, a university student at the time, says he was kicked out of every casino on the strip.

“Casinos share information. All of the casino bosses simply told me I could play any other game at the casino, just not blackjack,” recalls Janecek, a Czech millionaire whose looks evoke a cross between David Bowie and Boris Becker. “But, just to clarify, I am nothing like Rain Main,” he notes, referring to the 1988 film that showcased a brilliant autistic savant character played by Dustin Hoffman. “I like to consider myself more like the character from the movie 21 – the MIT kid who played on a blackjack team,” he said.

Nowadays, Janecek is attempting to use his unique mathematical acumen to help others – he wants to save his countrymen. He hopes to conquer a problem that is endemic in the former Eastern-bloc: corruption. Of the 600 billion crowns spent on state projects every year (approximately 30 billion dollars) an estimated 100 billion crowns are absorbed in corruption, according to the Czech Social Watch organization. In the Czech Republic, government workers often take bribes from companies and award unfairly advantageous contracts – a societal custom that has Czechs frustrated with the current political system.

Janecek believes that a changed voting system is the crucial step in fighting widespread governmental corruption because it will have a direct effect on who can gain power. After creating a mathematical algorithm that accurately predicts the financial market, Janacek is trying to duplicate his success in the creation of a new voting system.

His proposed voting system would increase the number of districts in the country from 14 to 81, abandoning the current set-up in which districts have various population sizes. Voters would also have four votes at their disposal, as well as two “minus votes,” which would allow individuals to note which candidates they do not want.

However, his system has been criticized as incomprehensible to the public and far too complicated.

“I’ve told Karel, ‘you have to understand you are a mathematical genius. Not everyone thinks about electoral law like you do.’ You should have seen the pamphlet he gave me explaining his theories. There were so many equations and numbers; it looked like Einstein’s theory of relativity. People just don’t understand and internalize things like that,” said Jiri Pehe, director of New York University in Prague, and friend of Janecek’s.

At a recent guest lecture at New York University in Prague, Janecek attempted to explain the mathematical reasoning behind his new voting configuration.

“So, if we give individuals four votes, they can no longer vote based on party politics. Moving on to the minus vote,” Janecek rushed excitedly, writing what appeared to be a mathematical matrix on a whiteboard.  The audience soon found themselves staring at a series of positive and negative signs, as Janecek tried in vain to explain the usefulness of the “minus vote.”

“There are huge inefficiencies in the political and voting system.
I like to fix things that are inefficient.”

His audience of around 40 looked almost entirely lost, mystified by Janecek’s complicated mathematical anecdotes.

“Just take my word for it, this is mathematically accurate. It’s logical. We have the best solution here,” said Janecek in response to the looks of confusion in his audience, flipping his wild red-blonde hair with unbridled energy.

Weeks later, in his office – a quaint house in the suburbs of Prague that contains several meeting rooms and small offices – Janecek’s personality, and hair, are decidedly tamer. The billionaire has abandoned the tailored suit he wore at the event, and sits comfortably at his desk in a sweatshirt and jeans. On the wall behind him is a graph filled with unintelligible equations and symbols. A passerby would probably assume Janecek is a professor.

Such an assumption would not be too far-fetched. After graduating from the Faculty of Mathematics and Physics at Charles University, he furthered his studies in the United States. He earned his MBA from Bradley University and his Ph.D in mathematical finance from Carnegie Mellon University.

Self-governed by intense rationality and little emotion, Janecek describes mathematics as the “core of his existence,” a passion he cultivated very early in life.

“I always knew I loved math, ever since preschool. My parents didn’t encourage mathematics.  They wanted me to go study languages. My father was a diplomat. They just didn’t see the importance of mathematics,” said Janecek, now 40 years old, who grew up during communism.

Still, Janecek unapologetically chased his passion for mathematics. After returning to the Czech Republic from the United States, Janecek founded RSJ in 1995. Driven by the success of Janecek’s mathematical algorithms, RSJ became the largest derivatives trader on the London Stock Exchange – a beacon of capitalism in a post-communist country.

But as one of the country’s richest men, he is hardly just a math nerd. With success has come all the accoutremants of a derivatives rock star. Janecek has described the thrill of skydiving as “unmatchable,” and enjoys the swathes of women that flock to his celebrity status. Now divorced, Janecek explained that he is currently dating three different women – his talent for numbers apparently extends to his luck for ladies.

Janacek's gift for counting cards got him banned from playing blackjack at Las Vegas Casinos.Photo courtesy of www.wingilariver.com

Janacek’s gift for counting cards got him banned from playing blackjack at Las Vegas Casinos.
Photo courtesy of http://www.wingilariver.com

Recently, he has made a jump from his beloved numbers to the pursuit of an improved society. In 2011, Janacek, along with business partner Stanislav Bernard and talk-show host Jan Kraus, founded the Anticorruption Endowment, which aims to draw attention to major corruption scandals in the Czech Republic and support whistleblowers.

Janecek has always been drawn to creating a more evolved society, explained his close friend Patrik Kocica, who works as a physical therapist.

“Karel is an idealist. You see that with his fascination with Buddhism. In Buddhism, there’s an idea of higher consciousness governed by rational, logical thought. It’s a vision of a more evolved world, and Janecek is drawn to that,” said Kocica.

While the jump from financial mathematics to anticorruption may seem unexpected, for Janecek, it was quite black and white: “To me, it’s all about logic. Society is not functioning well right now. There are huge inefficiencies in the political and voting system. I like to fix things that are inefficient.”

In the Czech Republic, inefficiencies caused by corruption are felt in daily life. According to Transparency International, Czechs perceive their government to be far more corrupt than Western Europe, or other post-communist countries like Poland.

Like other Czechs, Janacek found himself fed up with his government, specifically by the major scandal that was unfolding over Prague’s public transportation, which involved the Czech OpenCard, a smart card system designed for Prague’s public transportation. Since its approval eight years ago, the public project has come under considerable scrutiny by critics who claim the contract had suspiciously high costs, totaling around 880 million crowns. Prague City Hall officials are currently being charged for awarding opaque contracts to the firm who designed the system, thereby raising the cost of the OpenCard for all commuters.

Janacek describes his proposed voting system as the “logical” solution to preventing future corruption scandals like the OpenCard controversy. In order to change the political system, he says, the Czech Republic needs moral leaders and a voting system that encourages the involvement of these types of leaders.

He assures, with vague promises of an improved society, that his proposed voting system will mathematically ensure the election of better leaders. The specific mathematical rationale, however, has yet to be widely understood or accepted by the public.

“I think Karel’s biggest problem is the way he presents things – he just assumes he’s right. To many people, he comes off as self-righteous. People get angry because they think he doesn’t see the whole context,” said Pehe.

Janacek, in other words, might be a bit too focused for his own good.

“Karel’s whole life and way of thinking are based on rational decision-making,” said Tomas Klvana, former press secretary and policy advisor to ex-President Vaclav Klaus, “But people aren’t like him. They don’t necessarily conform to rationality. Especially in politics, there are always compromises between the rational and irrational. And it can be dangerous to think otherwise.”

Yet, Janecek remains undeterred by the critics, a steadfast attitude that carries over into his personal life.

“Karel and I fight all the time – he loves to argue and sometimes I think his ideas are pure fantasy,” said Kocica, “But that’s the great thing about Karel. You can have a good fight with him, and the next day he’ll still smile and give you a hug.”

SM Dipali is in the NYU Stern class of 2016. Her hometown is Cincinnati, Ohio.

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Categories: Fall 2013 Issue Number 3

Author:The Prague Wandering

The Prague Wandering is an NYU based study abroad webzine- the only one of its kind. It focuses on issues in contemporary Czech culture and the city of Prague, exploring beyond the study abroad bubble.

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