by bungie4 on 5/3/18, 12:42 PM with 40 comments
by joosters on 5/3/18, 1:06 PM
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!
by PaulRobinson on 5/3/18, 2:04 PM
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
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... :-)
by philipodonnell on 5/3/18, 1:32 PM
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.
by doomjunky on 5/4/18, 1:11 AM
by anonu on 5/4/18, 12:42 PM
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.
by aaroniba on 5/3/18, 3:03 PM
by squozzer on 5/3/18, 2:48 PM
by dwighttk on 5/3/18, 1:21 PM