6 ms·

A Gambler Who Cracked the Horse-Racing Code

223 points by bungie4 8y ago

joosters 8y ago
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!
- NetOpWibby 8y ago
  I come to HN for comments like this. Thanks for the info!
  - joosters 8y ago
    To be fair, I just got to the end of the article and discovered that it mentioned this paper too... One aspect that isn't mentioned, is that Benter (and Zeljko Ranogajec, mentioned at the very end) got a large edge over over punters by negotiating large discounts/rebates from the betting pools by providing such large volumes. It's easier to make a profit when you are getting (say) 10% back on your losing bets...
    - ethbro 8y ago
      Play the game with the rules you can make, not the rules you think exist... Disclosure: paraphrasing Sirlin http://www.sirlin.net/ptw/ http://www.sirlin.net/ptw/
    - philipodonnell 8y ago
      Pretty big thing to not mention TBH, given the odds are so slim once you take the track's take into account.
- probably_wrong 8y ago
  I wanted to read those papers, but I can't find anything about the second one beyond the fact that it exists.
  - jrochkind1 8y ago
    I've found that many conference "papers" were never actually written as papers at all, they were just oral presentations at a conference. Someone who was there cites it in a paper of their own, and then a bunch of other people copy the citation without actually having seen/read the "paper".
  - svmt 8y ago
    I found the second paper behind a paywall: https://www.researchgate.net/publication/299438463_Advances_in_mathematical_modelling_of_horse_race_outcome_probabilities https://www.researchgate.net/publication/299438463_Advances_... Edit: there's a 2008 version or reprint of the first paper: https://www.worldscientific.com/doi/abs/10.1142/9789812819192_0019 https://www.worldscientific.com/doi/abs/10.1142/978981281919...
    - gwern 8y ago
      > 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.
  - joosters 8y ago
    There's a copy of the first paper available at: https://www.scribd.com/doc/166556276/Benter https://www.scribd.com/doc/166556276/Benter If you're interested in those two papers, the earlier paper 'Searching for Positive Returns at the Track: A Multinomial Logit Model for Handicapping Horse Races' (Bolton, Ruth N. and Randall G. Chapman) is also worth reading: http://www.ruthnbolton.com/Publications/Track.pdf http://www.ruthnbolton.com/Publications/Track.pdf
- boomboomsubban 8y ago
  >there are no secrets being revealed for the first time here I think this is the first time Benter has admitted winning the Triple Trio. The only mention of it I could find just said it was suspected he had won the unclaimed prize.
- deleted 8y ago
  [deleted]
aditya5670 8y ago
https://www.welookups.com https://www.welookups.com
dwighttk 8y ago
Just in time for the (120th) Kentucky Derby!
- nopal 8y ago
  144th
  - dwighttk 8y ago
    heh. The original paper was released in 1994.
    - nopal 8y ago
      Ah!
philipodonnell 8y ago
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.
- joosters 8y ago
  It becomes a vicious circle because the only way to be more certain about the odds is to place your bets as late as possible. Which means that fewer and fewer bets are struck earlier on, making the 'current' odds even more inaccurate. Which motivates people to wait even longer before betting...
  - philipodonnell 8y ago
    Eventually it became almost an HFT-type thing like in the financial markets, the biggest advantage comes to the person able to put a bet in at the last possible nanosecond because they will have the most accurate prices. Which would be fine (or at least comparable), except the pool software is way slower at updating when new bets come in and the tracks take a 10-17% commission on every bet, which is a drag that is just really difficult to overcome.
- hudibras 8y ago
  >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-fifty-million-dollar-man-8366 https://www.cigaraficionado.com/article/the-hundred-and-fift...
PaulRobinson 8y ago
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... :-)
- throa2213 8y ago
  Did you gamble experience help you in real life (in case you work for some trading company)?
  - PaulRobinson 8y ago
squozzer 8y ago
The story gripping, the take lucrative. But, in the end, Benter turned a diversion into a job. Still, well played! :)
aaroniba 8y ago
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?
doomjunky 8y ago
Kind of related: The Lottery Hackers https://news.ycombinator.com/item?id=16494280 https://news.ycombinator.com/item?id=16494280
anonu 8y ago
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.

223 points by bungie4 8y ago

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!

NetOpWibby 8y ago
I come to HN for comments like this. Thanks for the info!
- joosters 8y ago
  To be fair, I just got to the end of the article and discovered that it mentioned this paper too... One aspect that isn't mentioned, is that Benter (and Zeljko Ranogajec, mentioned at the very end) got a large edge over over punters by negotiating large discounts/rebates from the betting pools by providing such large volumes. It's easier to make a profit when you are getting (say) 10% back on your losing bets...
  - ethbro 8y ago
    Play the game with the rules you can make, not the rules you think exist... Disclosure: paraphrasing Sirlin http://www.sirlin.net/ptw/ http://www.sirlin.net/ptw/
  - philipodonnell 8y ago
    Pretty big thing to not mention TBH, given the odds are so slim once you take the track's take into account.
probably_wrong 8y ago
I wanted to read those papers, but I can't find anything about the second one beyond the fact that it exists.
- jrochkind1 8y ago
  I've found that many conference "papers" were never actually written as papers at all, they were just oral presentations at a conference. Someone who was there cites it in a paper of their own, and then a bunch of other people copy the citation without actually having seen/read the "paper".
- svmt 8y ago
  I found the second paper behind a paywall: https://www.researchgate.net/publication/299438463_Advances_in_mathematical_modelling_of_horse_race_outcome_probabilities https://www.researchgate.net/publication/299438463_Advances_... Edit: there's a 2008 version or reprint of the first paper: https://www.worldscientific.com/doi/abs/10.1142/9789812819192_0019 https://www.worldscientific.com/doi/abs/10.1142/978981281919...
  - gwern 8y ago
    > 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.
- joosters 8y ago
  There's a copy of the first paper available at: https://www.scribd.com/doc/166556276/Benter https://www.scribd.com/doc/166556276/Benter If you're interested in those two papers, the earlier paper 'Searching for Positive Returns at the Track: A Multinomial Logit Model for Handicapping Horse Races' (Bolton, Ruth N. and Randall G. Chapman) is also worth reading: http://www.ruthnbolton.com/Publications/Track.pdf http://www.ruthnbolton.com/Publications/Track.pdf
boomboomsubban 8y ago
>there are no secrets being revealed for the first time here I think this is the first time Benter has admitted winning the Triple Trio. The only mention of it I could find just said it was suspected he had won the unclaimed prize.
deleted 8y ago
[deleted]

aditya5670 8y ago

https://www.welookups.com https://www.welookups.com

dwighttk 8y ago

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

nopal 8y ago
144th
- dwighttk 8y ago
  heh. The original paper was released in 1994.
  - nopal 8y ago
    Ah!

philipodonnell 8y ago

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.

joosters 8y ago
It becomes a vicious circle because the only way to be more certain about the odds is to place your bets as late as possible. Which means that fewer and fewer bets are struck earlier on, making the 'current' odds even more inaccurate. Which motivates people to wait even longer before betting...
- philipodonnell 8y ago
  Eventually it became almost an HFT-type thing like in the financial markets, the biggest advantage comes to the person able to put a bet in at the last possible nanosecond because they will have the most accurate prices. Which would be fine (or at least comparable), except the pool software is way slower at updating when new bets come in and the tracks take a 10-17% commission on every bet, which is a drag that is just really difficult to overcome.
hudibras 8y ago
>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-fifty-million-dollar-man-8366 https://www.cigaraficionado.com/article/the-hundred-and-fift...

PaulRobinson 8y ago

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... :-)

throa2213 8y ago
Did you gamble experience help you in real life (in case you work for some trading company)?
- PaulRobinson 8y ago

squozzer 8y ago

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

aaroniba 8y ago

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?

doomjunky 8y ago

Kind of related: The Lottery Hackers https://news.ycombinator.com/item?id=16494280 https://news.ycombinator.com/item?id=16494280

anonu 8y ago

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.