8 ms·

By my understanding, successful professional gamblers aren't actually gamblers, as they engineer the situation so the odds are in their favour and they are just

by femto 9y ago

By my understanding, successful professional gamblers aren't actually gamblers, as they engineer the situation so the odds are in their favour and they are just printing money. Here is my understanding of how a professional “gambler” (arbitrageur?) in Australia made a fortune. Take a powerball/lotto game, where balls are drawn and punters win a prizes from a fixed size pool. Say the long term rate of return is 90%. The arbitrageur starts placing large volumes of bets, so they make sizeable portion of the pool of bets (say 30%) and have a significant chance of winning the jackpot. They also negotiate a rebate (say 15%) with whoever runs the game, so their long term rate of return is now greater than 100%. The gaming company wins, as they are bringing in an additional 30% revenue each week from the arbitrageur and only paying out a 15% rebate, and the size of the prize pool is fixed. The arbitrageur wins, as their long term payout is more than 100% due to their rebate. The mug punter (without a rebate) loses, as they are winning a smaller portion of the prize pool due to payouts to the arbitrageur. Meanwhile the lottery company is sucking in more mugs by advertising how many jackpots are going off (winners can be anonymous in Australia). In summary, the arbitrageur's rebate is legally transferring money away from those without power (the mug punters) back to those with power (the company running the game and the arbitrageur). Lose-win-win respectively.

tritium 9y ago
They also negotiate a rebate. Uh, right. How does that part work, precisely?
- gambiting 9y ago
  You go to the company that runs the lottery and ask "hi, if I buy 100k tickets, what sort of discount can I get?". As long as there aren't laws that prevent selling tickets below the nominal price, it's no different than going to a company and asking for a discount when buying bulk quantity of their product.
  - tritium 9y ago
    A discount, in my mind isn’t quite the same as a rebate, even if the net result is the same. A rebate usually requires the full retail price to be paid up front, with the cost savings deferred to a seperate transaction, often paid by the vendor, when there’s a retail supply chain intervening between purchaser and the supplier.
blackbagboys 9y ago
The Australian gambler you're thinking of is most likely David Walsh, who made many millions by deploying similar systems in horse races across South East Asia; he is also noted as a collector of eccentric art. https://en.wikipedia.org/wiki/David_Walsh_(art_collector) https://en.wikipedia.org/wiki/David_Walsh_(art_collector)

by femto 9y ago

tritium 9y ago

They also negotiate a rebate. Uh, right. How does that part work, precisely?

gambiting 9y ago
You go to the company that runs the lottery and ask "hi, if I buy 100k tickets, what sort of discount can I get?". As long as there aren't laws that prevent selling tickets below the nominal price, it's no different than going to a company and asking for a discount when buying bulk quantity of their product.
- tritium 9y ago
  A discount, in my mind isn’t quite the same as a rebate, even if the net result is the same. A rebate usually requires the full retail price to be paid up front, with the cost savings deferred to a seperate transaction, often paid by the vendor, when there’s a retail supply chain intervening between purchaser and the supplier.

blackbagboys 9y ago

The Australian gambler you're thinking of is most likely David Walsh, who made many millions by deploying similar systems in horse races across South East Asia; he is also noted as a collector of eccentric art. https://en.wikipedia.org/wiki/David_Walsh_(art_collector) https://en.wikipedia.org/wiki/David_Walsh_(art_collector)