It’s not every day that a professor gets a phone call from a former student who has a $52 million question. But Adam Schwartz recently got just such a call—and was even able to answer it.

Schwartz, UM’s Tom B. Scott Assistant Professor of Finance, helped former student Jack Effel (BBA 04) set up the biggest payout in the history of tournament poker. Effel’s work has earned accolades from one of the world’s largest casino operators and smoothed the way for a national telecast of the tournament action.

Effel, a Dallas native, started working for Horseshoe Casino in Tunica (which was later purchased by Harrah’s) in December 1997, when he turned 21. When he finished his real estate degree from Ole Miss in December 2004, the casino made him an offer he couldn’t refuse: traveling with the circuit as poker tournament director.

“Soon after that I was offered the 2005 World Series of Poker assistant tournament director position,” says Effel, who has been interested in pool and card games since high school. His job gives him the opportunity to bring his poker knowledge, as well as his administrative abilities, to the table.

This summer, before the 2005 World Series of Poker $10,000 Championship event in Las Vegas, Effel came across a bit of a problem. He discovered the event, which had drawn 5,619 entrants, would result in the biggest payout in tournament history: $52 million.

“I realized we were going to have problems figuring out the payment because a payout had never been done for that big a field before,” Effel says. “We had payouts based on smaller tournaments, and we were having a hard time mathematically coming up with the percentages.”

Effel recalled talking with Schwartz about the topic of poker and math during his time at Ole Miss. “I reached out to Adam because he is so great at math, and he understood poker and the business world,” he says.

To figure out exactly what would be needed, Schwartz was invited to Tunica to collaborate with Effel, Ken Lambert, director of tournament poker for Harrah’s, and Johnny Groom, 2005 World Series of Poker tournament director.

“Jack called me because he remembered the things we had done in class, and he knew I was a computer programmer. I thought it was such a good problem that I couldn’t resist it,” Schwartz says.

The problem was complicated because organizers wanted the top 560 players to get payouts, plus they wanted the bottom 59 of those to earn more than the $10,000 entry fee.

“The casino knew they wanted the top player to get $7.5 million, and the bottom players to receive $12,500,” Schwartz says. “The tricky part was to determine how you pay the players in the middle.”

He says it was a simple math problem for the computer.

“It’s just a constrained optimization problem that arrives at a numerical method to develop a solution to a math problem given constraints. On the day of the tournament they called me from Las Vegas at 5:40 p.m., and I called back five minutes later and e-mailed them a spreadsheet. Within 20 minutes they were announcing the winners on the floor of the tournament.”

“There was no structured payout in the world that could distribute it fairly to get the best payout on return,” Effel says. “With Adam’s help we were able to make sure the money was distributed fairly. He created a simple way to solve the problem, and it was really neat how it all came together.”

Effel says he wants to utilize Scwartz’s skills in the future to help streamline the payout process. In the meantime, the results of their collaboration can be seen each Tuesday night on ESPN when the World Poker Championships are aired BF