
A Gambler Who Cracked the Horse-Racing Code - bungie4
https://www.bloomberg.com/news/features/2018-05-03/the-gambler-who-cracked-the-horse-racing-code
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joosters
_Bill Benter did the impossible: He wrote an algorithm that couldn’t lose at
the track. Close to a billion dollars later, he tells his story for the first
time._

No, he told this story decades ago, and published papers detailing his
algorithms, e.g.

Benter, W. (1994).“Computer Based Horserace Handicapping and Wagering Systems:
A Report.” In L. Hausch and Ziemba (eds.), Efficiency of Racetrack Betting
Markets. San Diego, CA: Academic Press, pp. 183–198.

Benter, W. (2003). “Advances in the Mathematical Modeling of Horse Race
Outcomes.” 12th International Conference on Gambling and Risk-Taking,
Vancouver, BC, Canada (May 2003)

There are videos of him (just search youtube) presenting at conferences
detailing some of his algorithms too... there are no secrets being revealed
for the first time here!

~~~
probably_wrong
I wanted to read those papers, but I can't find anything about the second one
beyond the fact that it exists.

~~~
svmt
I found the second paper behind a paywall:
[https://www.researchgate.net/publication/299438463_Advances_...](https://www.researchgate.net/publication/299438463_Advances_in_mathematical_modelling_of_horse_race_outcome_probabilities)

Edit: there's a 2008 version or reprint of the first paper:
[https://www.worldscientific.com/doi/abs/10.1142/978981281919...](https://www.worldscientific.com/doi/abs/10.1142/9789812819192_0019)

~~~
gwern
> I found the second paper behind a paywall:
> [https://www.researchgate.net/publication/299438463_Advances_...](https://www.researchgate.net/publication/299438463_Advances_..).

I don't believe that's a paywall, just Researchgate being scummy like usual
and using a citation while pretending to have a copy - all that would do is
ping Benter to ask for a copy. I can't find any evidence that that conference
presentation was published or that the conference proceedings as a whole were
ever published.

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PaulRobinson
Ex-professional gambler checking in.

It's no secret that it's possible to figure out which horse is going to win a
race with reasonable statistical confidence.

The trick - and always has been - is making sure you can make a profit from
it.

If a horse has a 30% chance of winning a race, and you're being offered odds
as if it only has a 10% chance (i.e. 9/1), you have identified "value" or what
Kelly Criterion would describe as "edge". You can mathematically in the long
term make a profit, and Kelly can even tell you what %age of your bank to
wager to optimise your expected returns:
[https://en.wikipedia.org/wiki/Kelly_criterion](https://en.wikipedia.org/wiki/Kelly_criterion)

Identifying the "true" odds of an outcome and then identifying what odds
you're prepared to take (adding an over-round), is a key piece to what
bookmakers do when creating what they call "the tissue" \- the opening odds
they offer that is then adjusted to manage liabilities in line with incoming
weight of money (WoM) from bettors.

Kelly was a colleague of Claude Shannon. His papers have stood up to the
rigour of mathematical analysis and also make intuitive sense to those who
spend enough time thinking about it.

It has successfully been applied in casinos (Blackjack system pioneer Edward
Thorpe is/was a fan), bookmakers, hedge funds (Thorpe again, but many other
funds apply Kelly too), and everything in between.

But here's the rub: you won't get to keep your edge for very long. Bookmakers,
betting exchanges and parimutuel systems all adapt to deal with long-term
winners. Your window of opportunity is limited. Already bookmakers have good
systems for identifying true odds for English Premier League games and make a
tidy sum on over-rounds (profit margins) as thin as 3% because they can
eliminate value.

That said, as any fan of Sabremetrics will tell you, statistical analysis of a
sport you love can be very rewarding and I would not put anybody off this if
they already love the horses (as I still do).

Just tread carefully, and to make a long-term killing you're going to have to
treat your setup like a hedge fund and always be moving around finding new
edges.

I'm @p7r on Twitter if anybody wants to talk about this - I could talk for
hours and hours and hours... :-)

~~~
da02
> I could talk for hours and hours and hours

Have you thought about just recording yourself talking with a few friends for
hours and hours about it and uploading online (e.g. Youtube)?

(I don't gamble and never learned statistics, but I am interested occasionally
and digging in more details "behind the headlines", so what's why I wouldn't
mind listening to this.)

~~~
PaulRobinson
I have actually, but most of my friends are bored rigid by this stuff.

I might well do some video blogs actually - nice idea, thanks for giving me
the thought!

~~~
slashink
Wanted to also add my voice here, would love to see a video or a couple of
them if you taking about the dynamics of this!

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philipodonnell
Is this a reprint? I swear I've read this article before.

I spent some time doing handicapping algorithms, if anyone is coming from
other types of sports betting, the biggest challenge with predicting horse
racing is the lack of fixed odds in a US-style parimutuel system. No matter
how good your handicapping model is, you also have to build an additional
model to predict how much of the pool will end up on particular horses.

The price changes constantly and you have no ability to lock in a price or
withdraw your bet if you made it at a certain price and the price changes. It
wasn't uncommon to see a horse at 3/1 when the race starts which could seem
like a good value and attract a well-placed bet, only to see a huge volume of
money come in with milliseconds left that only hit the board after betting is
closed to push the price down to 8/5 and make it a very very poor value. As a
parimutuel bettor you are stuck with whatever the final price is.

~~~
hudibras
>Is this a reprint? I swear I've read this article before.

There was an article in _Cigar Aficionado_ in 2003 that told the same story,
but focusing on Alan Woods.

[https://www.cigaraficionado.com/article/the-hundred-and-
fift...](https://www.cigaraficionado.com/article/the-hundred-and-fifty-
million-dollar-man-8366)

~~~
philipodonnell
That was it! Thanks.

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doomjunky
Kind of related: The Lottery Hackers
[https://news.ycombinator.com/item?id=16494280](https://news.ycombinator.com/item?id=16494280)

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anonu
Salient item from the article - theres tons of opportunity out there so the
quant funds get involved:

In 2016, Susquehanna International Group LLP, an American quantitative trading
company, started an Ireland-based operation called Nellie Analytics Inc.,
targeting basketball, American football, soccer, and tennis. Phoenix, a
proprietary sports-betting company with headquarters in Malta and data-mining
operations in the Philippines, won a £9 million ($13 million) investment in
2010 from a unit of RIT Capital Partners Plc, the £3 billion trust chaired by
Lord Jacob Rothschild of the global banking dynasty. (RIT sold its stake in
2016 to a private buyer, quadrupling its money.) What isn’t widely known is
that Phoenix was founded by former employees of Woods, including his protégé
Paul Longmuir.

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aaroniba
I know that algorithmic betting on horse racing is popular in the UK via
exchanges like Betfair. Does anyone know if there is an exchange/API for Hong
Kong horse racing?

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squozzer
The story gripping, the take lucrative. But, in the end, Benter turned a
diversion into a _job_. Still, well played! :)

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dwighttk
Just in time for the (120th) Kentucky Derby!

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nopal
144th

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dwighttk
heh. The original paper was released in 1994.

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nopal
Ah!

