Revisiting the algorithm that changed horse race betting (2023)
actamachina.com
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You can get a sense of a horses energy and condition on the day (it can be different on different days). Horse racing even has a parade ring before the race for this reason. I don't gamble but i'm absolutely sure there's signal there in visually looking at the horse on the day that these systems don't take into account.
I wouldn't at all be surprised if a system could be far more successful by using vision of the parade ring (whether machine vision or expert human) as additional signal.
In fact given my experience with horses (grew up on a farm) and knowing the day to day differences i'd be surprised if any pure algorithmic system could beat the marker without the above since those who do bet on horses absolutely use this signal.
[0] https://en.wikipedia.org/wiki/David_Walsh_(art_collector) [1] https://en.wikipedia.org/wiki/Zeljko_Ranogajec [2] https://en.wikipedia.org/wiki/Alan_Woods_(gambler)
I used to sit on a trading desk, the kind with loads of guys sitting next to each other and about 8 screens each. Lots of noise, except when it got quiet. When it did get quiet, someone would shout down the squawk box that they had "heard from the stable boys" about some horse that was on form.
You couldn't not bet on this horse. Everyone did it, and everyone got fleeced, every time.
One day, my boss decides he's had enough of this crap, and he goes "no, I ain't doing it, I lose my lunch money every fkn time, screw this".
Horse comes in at 30-1, everyone is paying him a visit asking about what champagne to buy that day.
So what do you think, could this work? Presumably the technology to build this system is reasonably accessible these days.
Winners in almost all sports mostly dont present the same.
It was fun pretending we had insight.
My farm-boy father never bet on the horses, certain it was all rigged.
Edit: this was a great video about online casinos and several accounts of people who were blocked for winning too much or structuring at in-person casinos:
Most of the serious younger bettors are feeding daily form PDFs into an LLM and getting analysis, and placing bets using custom apps, rarely using UIs from the larger ADWs (advanced deposit wagering company). Older bettors are using phone wagering for larger bets.
There is never a shortage of kiosks available for casual fans. Most tracks are either owned or partnered with ADWs that all have mobile apps, or sites for placing wagers, and casuals are encouraged to use those as they're more sticky after they leave the track.
Even if algo bettors are influencing the odds because they're throwing money around, the house doesn't care because its percentage cut is the same (parimutual), and the casuals aren't bothered because they can't even tell what's happening.
The totes are the ones analyzing fraud and abuse, and they don't care what tea leaves you read to place bets. They just care about avoiding government oversight and ensuring profits for the ADWs and tracks.
Source, formerly a SWE for an ADW
The house loses if all the suckers are driven out, and it’s just algo, because then the algos leave.
As an aside - it was his firm that was responsible for the recent "breaking" of the Texas lottery[1]
[0] https://en.wikipedia.org/wiki/Zeljko_Ranogajec
[1] https://www.houstonchronicle.com/news/investigations/article...
Looking him up it looks like he managed to start and subsequently close (due to low returns) hedge funds. https://en.wikipedia.org/wiki/Edward_O._Thorp#Stock_market
So it seems he was full of shit right? He was saying what he needed to say to get investors and when those investors fell for it he did not deliver.
Sold a lot of books though...
Thorpe is a dyed in wool information theory, probability theory academic who happens to be a super cool hacker at heart *.
Among his many accomplishments are, him obtaining a more general version of Black-Scholes model, independently and before Black, Scholes and Mertens had derived theirs. You may recall that got them the Nobel prize.
Managing money and breaking Las Vegas casinos were one of his, side, and mostly academic, entertainments.
There is a nice story of him visiting Shannon to discuss an information theory research paper that he, Thorpe, was writing. The meeting had taken a lot effort to schedule -- Shannon was a busy man, already a celebrity. But then they ended up over-extending their scheduled meeting, discussing, brainstorming with playful eagerness, different mathematical methods to break several popular gambling games, starting with Blackjack. Turns out Shannon was a sucker for such entertaining hacks. (This would be one of the first formulations of card counting [0]) Thorpe and his students would then try these out in Vegas.
*Taking things apart logically, to probe where things break, to understand how they work, that's as quintessentially an exercise in hacking as you can get.
Prof Thorpe wrote about and proved his strategies along with characterizing the assumptions under which they would and had worked.
Finally, you are you and then there is Prof. Thorpe.
It seems like the subject of nerd culture changed from waaay back when he was a kid being chemistry (you could make bombs), to electronics such as radio (you could do ham radio), to computers and then programming (video games).
Nowadays you won't find anyone who can tell you how chemistry works, and a few old guys will tell you how to solder your own electronics, but everyone will be able to tell you how to code a website.
On the otherhand, how can one not yield to the temptation of synthesizing some harmless nitrocellulose in the chemistry lab, or some flash powder.
"Experimenting" with the flash powder set my socks on fire while I was temporarily blinded. I was not expecting that. Fun times.
Yeah: https://news.ycombinator.com/item?id=43742108
Was also perhaps career focused on latest tech?? For example my granddad did structural engineering, my father studied chemical engineering, I did electronic engineering
You have the market itself which is like the environment, it can go hot or cold based on broad trends, and if that's all their was fundamentals would likely work well.
The problem is there the dumb prey you feed on may adapt and remove your niche you fit in. Even worse is there is no shortage of predators watching you and waiting for you to make a mistake and they'll eat you alive.
All of the things he mentions are massive problems with making money from gambling. All of the large gamblers in the US use beards, it is time-consuming and you are generally dealing with gambling addicts who are unreliable. The situation in HK was unique (and the people Benter partnered with proved to be very unreliable anyway when they began making large amounts of money).
I understand why you think that. I am a small time gambler on sports, purely American football. I start each season with 10 bucks and end with 5k-20k.
And then I stop, until the next season starts.
Really fucks up my taxes.
There's no very specific situation where you're technically getting that money but you can't scale it up, your original statement gave an accurate impression, you're that good but don't want the money.
I don't know if you're lying to us or lying to yourself.
The basic idea is that more people are in the win pool so the odds to win are more accurate (as a probability estimator) than the odds to place and show (finishing second and third.) If you compute probability estimates for place and show based on the win probabilities you sometimes find that place or show are underbet on the favorites. Maybe one to three races a day have a good betting opportunity.
Dr. Z's books have a number of tables for what you should do heuristically that he got from doing simulations. I have a Python script that simulates all race outcomes and points out good opportunities that I've been thinking of recoding for my HP Alpha calculator. Practically I will do a hand-waving calculation based on the ratio of the win to place and show odds for the favorite and just bet that way.
Th trouble with it is you only get to bet a few times a day and most people want more action that that. You tend to win most of the time because you are betting on the favorite [2] and (roughly) you have three times as many ways to win betting the favorite to show than you do the win. You don't win very much when you win, however, so just a few losses can eat up what you win.
You can't really make a living this way and I think if you've got the grindset to do this one seriously you can apply the same skills and attitude to currency options or something like that and make a lot more money.
[1] https://www.barnesandnoble.com/w/dr-zs-beat-the-racetrack-wi...
[2] actually the favorite is underbet so it would be a winning strategy to always bet on the favorite if it wasn't for the track taking a cut
For anyone interested in the results
Bill Benter subsequently replaced the multinomial logit model with a multinomial probit model, which assumes Normally distributed errors rather than errors that follow the Laplace distribution.
I prefer the latter.
One would assume it would be quite attractive to become one if he enjoys gambling. One gets to participate in the action and make money no matter which horse wins -- as long as they manage the edge right.
Being a bookie would be fun if you like maths, are street smart, somewhat not highly ethical but you are disciplined and can control your emotions. Similar to poker I guess. And are knowledgeable about the sport with respect to odds not trivia.
I doubt a typical gambler would enjoy it. Does a "foodie" love working in a lab testing flour samples?
You go to the track with $X and your strategy. When you are done, you leave. You do not stay and keep betting with your winnings.
One of my family members - a successful General Dynamics mid-level exec - made a business out of horse racing and his handicapping strategy.
He set up an LLC, paid a software engineer to, at that time, write a software program that would download horse and track stats from all of the available sources. The software would also ask for betting and other strategies from my family member.
He would go to the track, bet his strategy, and leave.
He easily made ~$100,000 a year from this venture. He also took full advantage of the the tax benefits because he made it look and act like a business.