[HN Gopher] A Gambler Who Cracked the Horse-Racing Code (2018)
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A Gambler Who Cracked the Horse-Racing Code (2018)
Author : mrbbk
Score : 172 points
Date : 2021-04-30 11:28 UTC (2 days ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| afturkrull wrote:
| The short version is Benter used arbitrage on masses of bets.
| swader999 wrote:
| This didn't read like gambling, just a lot of work.
| mettamage wrote:
| IMO this is how professional gambling looks like.
| cbozeman wrote:
| Every professional gambler to whom I've spoken or have known
| easily puts in 60+ hours a week... some of them, to make no
| more than $40,000 - $50,000 a year.
|
| I struggle with understanding that mentality, since just about
| anywhere, doing just about anything, if you're working 60+
| hours, you can easily make double those numbers, but hey... I'm
| glad people like that exist.
| user5994461 wrote:
| Define what's a professional gambler?
|
| I've worked in betting and I've seen people consistently
| printing millions of pounds a year with remarkable stability
| over the years (I was myself running an exchange).
|
| However they may not fit the popular image of an older man
| addicted to horses and drinking. They're professional working
| at (small) companies doing that activity full time.
| cbozeman wrote:
| > Define what's a professional gambler?
|
| It's your full-time job and you pay all your bills doing
| it.
| eru wrote:
| There are lots of other jobs with crazy effort and not that
| much money for the median guy.
|
| Journalism for example. Or music, or sports.
| teddykoker wrote:
| You can find Benter's paper about the model here:
| https://www.gwern.net/docs/statistics/decision/1994-benter.p...
|
| About a year ago I read this and attempted to build a similar
| model (with more layers ;)) using data I scraped from Hong Kong
| Jockey Club's website. Although I used much fewer features, it
| still produced profit in held-out races:
| https://teddykoker.com/2019/12/beating-the-odds-machine-lear....
| Obviously there are many caveats when backtesting like this but I
| thought it was a fun project!
| ackbar03 wrote:
| So basically the model was just a single layer neural net with
| extra proprietary data?
| Spooky23 wrote:
| Data and meaning is the key.
|
| I had a coworker who would prepare for weeks for stakes races
| and follow a few second tier horses as well. Twitter made
| some aspects easier as there is a racetrack Twitter
| community. His specialty was identifying exactas where a long
| shot would place or win with a favorite.
|
| He'd pay people to film workout at Belmont and Saratoga and
| tweak his model (an Excel spreadsheet) based on what he saw.
| He would have a sense based on the workouts, weather, etc and
| would pick 4-10 races a week.
| teddykoker wrote:
| Yup! Just a multinomial logistic regression model with a
| bunch of proprietary data and engineered features.
| [deleted]
| sokoloff wrote:
| I don't get why they felt like they couldn't cash the winning
| bet. They paid the money and placed the bet; might as well take
| the win.
| woutr_be wrote:
| They said it would be unsporting and they would feel bad about
| themselves for cashing in.
| sokoloff wrote:
| I read their stated reason. I just don't get it.
|
| If you feel that way, then why even place the bets? I mean,
| you could generate a text file that said "I would have placed
| the following bets" and then see if you would have won...
| amelius wrote:
| Perhaps they could have taken the money if they earned less
| than the jackpot?
| toast0 wrote:
| Sometimes, you don't realize the magnitude of something
| you're about to do until it's done. Even if you setup to
| buy all the wagers, so you know you'll win, you might not
| understand the consequences of winning until it happens.
|
| Humans are weird.
| user5994461 wrote:
| It's a major national event for Hong Kong, like the guy winning
| a $1B national lottery. The winner will be shown on TV and
| newspapers, a random citizen who accidentally hits the jackpot
| and got lifted to being a king.
|
| Except in that case, it's some foreign math computer nerds, who
| have already profited billions. Billions of dollars taken off
| the cumulative bets of Hong Kong citizens. It's not acceptable
| socially or politically.
|
| The guy was already cashing hundreds of millions anyway,
| leaving a few millions on the table doesn't make a difference
| to him. Better stay anonymous and safe.
| woutr_be wrote:
| > The winner will be shown on TV and newspapers, a random
| citizen who accidentally hits the jackpot and got lifted to
| being a king.
|
| I'm not aware of this happening in HK. Mark six (lottery)
| winners are not shown on TV or in newspapers. Winners are
| announced, yes, but it doesn't include their identities. I'm
| not sure about the process when you win millions of dollars,
| but you can buy tickets at the track, which are anonymous,
| and you just cash them in later. Of course, my experience is
| only winning a few $100s.
|
| > It's not acceptable socially or politically.
|
| Socially, I more expect it to be the other way around. Other
| gamblers will probably applaud them for finally doing the
| impossible. This was also in 2001, nobody would even consider
| this to be politically unacceptable. Even now, that wouldn't
| be the case.
| magicroot75 wrote:
| Is there a book on this guy? Fascinating stuff and I'd love to
| dig deeper.
| sanxiyn wrote:
| Yes there is, from the man himself. Computer-Based Horse Race
| Handicapping and Wagering Systems (2020).
| PaulRobinson wrote:
| That's simply a reprint of his 1994 paper, which is available
| here: https://www.gwern.net/docs/statistics/decision/1994-ben
| ter.p...
| kqr wrote:
| The insight about starting from the public odds is so important.
| It's like running from a polar bear: you don't have to outrun the
| bear, only your buddy. Not counting the track take, any deviation
| from the public odds in the correct direction makes you money.
|
| (And the public is often reliably biased -- this is why they say
| sports betting is more about betting on gamblers than on games.)
|
| A smaller deviation makes you less money that one time, of
| course, but it also saves you lots of money if you're wrong,
| ensuring you live to bet another day.
|
| Also in real life: people in aggregate aren't dumb (just a bit
| biased), so using the public opinion as your prior and then
| adjusting it Bayesically with private information gets you a more
| reliable edge than guessing wildly.
| joosters wrote:
| It's not just a 'wisdom of the crowds' thing where you are
| using people's betting in aggregate. The odds also reflect
| private information that other in-the-know people may also
| have.
|
| The problem with pool betting (like in HK) is that the odds
| only become significant right before the start, when everyone
| has placed their bets. This means that there is a strong
| motivation for everyone to wait until the last possible moment
| to bet - meaning that the odds then only become useful even
| later!
| user5994461 wrote:
| >>> (And the public is often reliably biased -- this is why
| they say sports betting is more about betting on gamblers than
| on games.)
|
| One mistake here. It's the house that sets the odd, not the
| public.
|
| When the house sets the favorite to 1:3 odd and the second
| favorite is 1:4, they better be damn right about that
| proportion. At the end of the run, the money on the losing side
| will need to cover the winning side, and if it doesn't the
| company must pay the difference out of pocket.
|
| The direct effect is that there is an enormous spread, the
| article mentioned about 17%, for the exchange to cover high
| uncertainty and make some profit.
| kqr wrote:
| In parimutuel betting, which is what the article talks about,
| the public sets the odds.
| user5994461 wrote:
| I doubt it's parimutuel per the strict definition. It's
| subject to extreme variations due to liquidity and doesn't
| work well in practice, especially for quant trading and at
| the volumes involved here. (If it were, the article
| certainly did a terrible job of showing it, where's the
| part where odds moved last minute and massive losses
| ensued, or where both rivals took the same large position
| causing massive losses to one another).
|
| Anyway, the deeper point still stands, the house takes an
| ENORMOUS margin, could be in the order of 25% (even
| nowadays). This changes everything.
| topicseed wrote:
| From my understanding[1][2], the Honk Kong Jockey Club
| does indeed follows a strict parimutuel pool betting
| system, like the PMU in France (at least years ago).
|
| Though you are right, the house have historically taken
| massive cuts per pool. Eapecially as for years they were
| the only allowed gambling arenas.
|
| [1] https://betandbeat.com/betting/parimutuel/
|
| [2] http://special.hkjc.com/racing/info/en/betting/guide_
| qualifi...
| le-mark wrote:
| The dynamics of odds movements are interesting in their own
| right imo. Some sports, with many days between matches (nfl,
| college football) lines can move drastically between when odds
| are published to match start. Others sports that play daily or
| by-daily often don't see the swings.
|
| And then what facotors influence the line movement? People with
| predictive models that see great value in opening lines can
| move the line a lot. Things like injuries, starting lineup,
| breaking news before the match can certainly move the line.
| Casual bettors and fans betting on their team (the public) move
| the line but usually day of the match.
|
| The key insight is the books are trying to balance
| winners/losers to maximize their profit, that's why the line
| moves. It's also why historically spread betting is nearly 50%
| odds.
| kqr wrote:
| > Things like injuries, starting lineup, breaking news before
| the match can certainly move the line.
|
| But! At least until recently, people overreact to events like
| these. If you see the line moving strongly at once, it's more
| often an overreaction than an appropriate adjustment.
| joosters wrote:
| _The key insight is the books are trying to balance winners
| /losers to maximize their profit, that's why the line moves._
|
| In two-way markets (e.g. a tennis match) maybe. With more
| outcomes, it's a rare market that ends up with the bookmakers
| locking in a profit regardless of the outcome. For horse
| racing, the favourite in the race is most often a loser in
| the book for the betting firm.
|
| Even for football (soccer) betting, i.e. team A/draw/team B,
| generally a bookie is very happy for a draw, because people
| just can't get very enthusiastic about betting on a tied
| result. Raising the odds on offer for a draw won't attract
| many extra regular punters, it only risks luring
| professionals who are more sensitive to the odds - and they
| aren't the customers you really want!
| vgeek wrote:
| https://www.hpb.com/products/the-wisdom-of-crowds-9780385721...
|
| This is a good book that discusses how an individual may be
| wildly wrong, but in aggregate, groups are remarkably good at
| estimating many common things. Although with horse racing, the
| betting favorite only typically wins ~30% of the time or places
| (1st or 2nd) ~50% of the time. Given that this is with average
| field sizes of probably 6-8 horses, it is materially better
| than blindly betting.
| bluecalm wrote:
| Along those lines it used to be a very good strategy to bet
| against popular clubs/players. As fans like to bet on their
| favorite teams/players there was too much money on that side so
| the bookies moved the line to balance.
|
| I don't follow sports betting anymore and my guess is that
| there is enough smart money out there these days to close that
| market inefficiency but it's an interesting mechanism.
| dougb wrote:
| His company is http://www.ave4.com/ I meet him a few times,
| interviewed to work there (didn't get the job.) I mostly talked
| to a lawyer who was very nice, but reminded me of Kobayashi from
| the Usual Suspects. The offices are a bit extravagant with some
| amazing original artwork on the walls,
| https://www.jendoco.com/portfolio/fourth-avenue-analytics/
|
| Pre covid he hosted meetups with Pittsburgh's R Users Group,
| https://www.meetup.com/Pittsburgh-useR-Group/events/26070166...
|
| He is also mentioned in http://www.fortunesformula.com/ which I
| really enjoyed.
| goodoldboys wrote:
| I think you mean Keyser Soze - Kobiyashi is the hot dog eating
| champion
| Malp wrote:
| Kobayashi is Keyser Soze's right-hand man
| goodoldboys wrote:
| Ah that's right... totally forgot
| sneak wrote:
| > _"F---," Benter said. "We hit it."_
|
| Pretty sure he didn't say "F---". Why the fuck is bloomberg
| misquoting this guy? Why publish a quote you're just going to
| censor?
| reedf1 wrote:
| Someone may be offended seeing the letters u, c, and k.
| eru wrote:
| Which might even be the guy they quoted himself.
| fighterpilot wrote:
| If I remember properly: lots of proprietary data that was
| painstakingly assembled, and quite simple models on that data.
| nojito wrote:
| Data science in a nutshell.
| hamhamed wrote:
| I've been spending almost every weekend for the past few months
| trying to break a crypto crash game (called bustabit) using ML.
| While I'm also dealing with probabilities, my challenge has to do
| with the limited data I'm dealt with even though their API is
| public.
|
| In horse racing, you have access to so much shit that you can
| feed into the AI, like rider statistics, horse performance, horse
| attributes, etc. In my case, I only have the game/round number
| and the bust result (red or green). From thereon, I have to
| create many other variables (aka featuring engineering) like
| round win/lose streaks, moving averages, MACD, etc. I can also
| feed in what and if other players are currently betting for the
| round or not.
|
| Currently, the house always wins. And their game is rigged so
| they have that 1% advantage over you. However, so far with my AI,
| I've came with enough confidence score to win as long as my bot
| plays 0.001% of the games.. which isn't declared victory since
| those blackswan games happen once every 3 weeks.
|
| There's also another way to beat it without using any ML, just
| plain old fibbonaci martingale - requires around 10k starting
| money for error margin but it ends up always ahead of the house..
| That's just a math way to beat it and not very fun :)
|
| It's probably crazy of me to even attempt to predict randomness,
| but there's something intriguing when you mix big data and ML
| with forced randomness. Again, they have to keep forcing the odds
| to be 49% vs 51%..
| kqr wrote:
| Do I get the premise of the game right if I think you either
| lose all of your wager or get some random odds on it?
|
| But with the house take at 1 %, isn't it a negative sum game
| and therefore impossible to beat in the long run?
|
| And even if you could play it at fair odds, wouldn't the
| solution simply be the Kelly bet?
|
| I'm struggling to see under what circumstances it is an
| interesting game to work, so I suspect I'm missing some
| important nuance.
| eru wrote:
| I found their website at https://www.bustabit.com/
|
| Seems like bankrolling the bank, a feature they offer, is
| much more lucrative. Assuming they don't run away with your
| money.
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