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Revisiting the algorithm that changed horse race betting (2023)
- elpakal 1y ago> Four of the five seasons resulted in net profits, the loss incurred during the losing season being approximately 20% of starting capital. A strong upward trend in rate of return has been observed as improvements were made to the handicapping model. For anyone interested in the results
- tlyleung 1y agoAuthor here - funny to see this posted after a few years. Happy to answer any questions!
- fidotron 1y agoGreat write up. [am idiot]
- 4gotunameagain 1y agoPlease read the first paragraph of the post again. The original author of the paper is Bill Benter, and the GP is the author of this excellent writeup.
- tlyleung 1y agoSorry - to be clear this is just re-running the model detailed in Bill Benter’s 1995 paper (he uses the time period 1986-1993) on more recent time periods (1996-2003, 2006-2013, 2016-2023) using PyTorch.
- markoman 1y agoNice work. Have you made available the CSV of this data, or is it easily obtainable using horse racing information online? I didn't see how that HKJC site offered it in CSV format. Perhaps you scraped the data to generate your CSV? Thank you.
- jeffreyrogers 1y agoHow did you choose the artworks for the artworks section of your site?
- tlyleung 1y agoIt’s a hi-res artwork from Unsplash that I’ve sampled random croppings from.
- GreyZephyr 1y agoDid you ever try extending it out to other methods of probability estimation other than the forms of regression? I have only skimmed your excellent article, but I think you are first calculating the average probabilities from a regression model and then minimizing the loss to calculate Harville corrections for place and show markets? Is that correct or am I missing something here? I guess I am curious if there has been any improvement on using regressions for combining the various initial odds as I don't really follow the literature anymore.
- tlyleung 1y agoYes! There have been big improvements since then but they are beyond the scope of the post. I just wanted to reproduce the calculations in the paper using PyTorch. 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.
- gosub100 1y agoKeep in mind if you found a profitable algorithm today, you would have to put a lot of care into concealing your bets. Casinos in the US will ban you from playing if you consistently win. And if they catch you structuring your bets they can deny your payout on winning tickets. You might get away with it for a year or so, but in any sportsbook, if they see your face daily and figure out you're consistently winning, (and not just playing for entertainment) don't expect it to last. 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: https://youtu.be/unksvJ1JfDE?si=u1tUH285geBykfrC https://youtu.be/unksvJ1JfDE?si=u1tUH285geBykfrC
- plantain 1y agoThe opposite is true - the betting companies want algo traders to come and make the markets for them. They get reduced fees and bonuses for making the market.
- skippyboxedhero 1y agoThis isn't true. Very few places in the US run their books this way, and those that do limit your bet so most large bettors are still using beards. If you bet with someone who is moderately capable, for example Pinny, they will limit you then use your bets to reverse-engineer your strategy. Asian books are the only place where you can get action and, now, certain syndicates have become so large and dominant that they open lines earlier just for them. If you are only betting on outcomes, it is very hard to beat a line set by syndicate.
- UpAndAdam 1y agoHorse racing differs from most sports betting in the US because it predominantly uses pari-mutuel wagering where the house takes a fixed percentage of each wagering pool. Accordingly, the house is incentivized to encourage bettors to place larger bets, since their piece only grows.
- gosub100 1y ago
- bitshiftfaced 1y agoThis reminds me of an anecdote out of one of Thorp's papers (2007). He joined forces with a computer science Ph.D and started sports betting. They were very profitable, but he listed three reasons why he stopped: 1) it required having someone in Vegas placing bets, 2) he believed it was risky to have someone going around with large amounts of cash in order to make bets, and 3) it wasn't competitive with his stock market trading strategy. He mentions how his belief about #2 unfortunately turned out to be correct, as apparently something happened in another group's operation.
- AnotherGoodName 1y agoI'm always skeptical of these "i totally made money gambling i just stopped for other reasons" type of claims and for good reason. 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 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...
- DistractionRect 1y agoIt reads to me like he had he simple (relative to today) investment strategies which where profitable, and closed shop when those market inefficiencies started running dry.
- skippyboxedhero 1y agoHe was also, at that point, very old. He started his first fund in 1968. It tells you something about the modern world that you can your fund successfully for three decades, accumulate one of the best all-time records, and you will still have people online call you useless if you bow out in your 70s when your returns go dry for a couple of years.
- skippyboxedhero 1y agoNo, not full of shit. One of the most well-known investors in the world, worth $1bn, and he wrote papers on sports betting as well. 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).
- deleted 1y ago[deleted]
- AnotherGoodName 1y agoOne thing that i don't see in automated horse betting is the work to look at the horses before the race. 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.
- callamdelaney 1y agoI think that that is likely a low confidence indicator, extremely subjective and hard to measure.
- blindriver 1y agoThe point is that it doesn’t matter.
- jeffreyrogers 1y agoBenter allegedly did use something like this in his later models so it probably does matter.
- beepbopboopp 1y agoYou should go look at Nikola Jokic and Russell Westbrook before a game and see if you can guess which player has won 2/3 of the most recent MVP awards, both in pregame energy and physiognomy. Winners in almost all sports mostly dont present the same.
- lordnacho 1y agoAnecdote from the trading floor. 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.
- PaulHoule 1y agoI play the Dr. Z system [1] by the seat of my pants when I go to the track (got family who are always inviting me to the racino.) 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-william-t-ziemba/1000371905 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
- farceSpherule 1y agoYou can make money on horses if you know what you are doing. You have to have a betting strategy and have to stick to the strategy. 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.
- deleted 1y ago[deleted]
- farceSpherule 1y agoDown vote me all you want. You all can piss off. 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.
- fn-mote 1y agoThe downvotes are probably because the GP post gives no details about the strategy being used, making it sound like any strategy could be successful if only you would take the winnings and leave instead of continuing to bet.
- CamperBob2 1y agoAlso, how do you when "you are done?" If you have a successful strategy, you have no incentive to leave until they lock the doors behind you.
- jeffreyrogers 1y agoAlgorithmic betting is widespread in horse racing now. I can't remember the exact figures but I think it's estimated to be about 40% of the total handle. There is a company that will allow individuals to connect directly to the betting pools and wager automatically. It's rumored that the biggest two bettors are betting over $1bn a year (of course a lot of that is recycled from prior payouts).
- WalterBright 1y agoIf you bet on horses, you are betting against the tide (the house cut). If you bet on stocks, you are betting with the tide (a growing economy). I prefer the latter.
- srean 1y agoAre their big barriers to entry to become a booky ? 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.
- gkilmain 1y agoThe biggest barrier is finding customers.
- nssnsjsjsjs 1y agoDo you mean the person at the tracks taking odds or a business doing online bookmaking. 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?
- srean 1y agoI stand corrected.
- nssnsjsjsjs 1y ago:) thanks. Sorry hope it didn't come across argumentative.
- srean 1y agoHuh! Not at all.
- msarrel 1y agoI see a lot of comments here from people saying that how a horse looks and behaves on the day of the race is irrelevant. I suspect those people have never been involved in horse racing. It's comforting to believe that statistics tell the entire story, but it isn't true.