The Perfect Bet

by Adam Kucharski

  57“People had so little faith in the system”: Dougherty, “Horse Sense.”

  57Disagreements meant the partnership ended: Dougherty, “Horse Sense.”

  58As a result, both horses take the same time: Author interview with Bill Benter, July 2013.

  58Finding his brain severely inflamed: Grimberg, Sharon (producer/writer) and Rick Groleau (producer/writer). “Race for the Super-bomb,” directed by Thomas Ott, aired for The American Experience series (PBS Video, 1999).

  59It wasn’t his first choice: Rota, Gian-Carlo. “The Lost Café.” Los Alamos Science, 1987.

  59When he finally got the answer: Rota, “The Lost Café.”

  60“Suddenly, I knew where”: Lounsberry, Alyse. “A-Bomb Cloaked in Mystery.” Ocala Star-Banner, December 4, 1978, 13.

  60“This train is linear, isn’t it?”: Halmos, Paul. “The Legend of John von Neumann.” American Mathematical Monthly 8 (1973): 382–394.

  61“Any one who considers arithmetical methods”: Von Neumann, John. “Various Techniques Used in Connection with Random Digits.” Journal of Research of the National Bureau of Standards, Appl. Math. Series, 1951. Quoted in Herman Heine Goldstine, The Computer from Pascal to von Neumann (Princeton, NJ: Princeton University Press, 2008).

  62“Andrei Neistovy”: Andrei the angry: Mazliak, Laurent. “From Markov to Doeblin: Events in Chain” (talk given at RMR-2010, Rouen, France, June 1, 2010). http://www.proba.jussieu.fr/~mazliak/Markov_Rouen.pdf.

  62a local prison psychologist turned up: Described in Diaconis, P. “The Markov Chain Monte Carlo Revolution.” Bulletin of the American Mathematical Society 46 (2009): 179–205.

  64Metropolis and his colleagues realized: Metropolis, Nicholas, Arianna W. Rosenbluth, Marshall N. Rosenbluth, Augusta H. Teller, and Edward Teller. “Equation of State Calculations by Fast Computing Machines.” Journal of Chemical Physics 21 (1953): 1087. http://dx.doi.org/10.1063/1.1699114.

  64Markov chain Monte Carlo has helped syndicates: Author interview with Bill Benter, July 2013. Key citation: Gu, Ming Gao, and Fan Hui Kong. “A Stochastic Approximation Algorithm with Markov Chain Monte-Carlo Method for Incomplete Data Estimation Problems.” Proceedings of the National Academy of Science USA 95 (1998): 7270–7274.

  65The formula is named after John Kelly: Poundstone, W. Fortune’s Formula: The Untold Story of the Scientific Betting System That Beat the Casinos and Wall Street (New York: Hill and Wang, 2006).

  66Consistently overestimate by twofold: Chapman, S. “The Kelly Criterion for Spread Bets.” IMA Journal of Applied Mathematics 72 (2007): 43−51.

  66This reduces the risk: Benter, “Computer Based Horse Race Handicapping.”

  67“The late money tends to be smart money”: Author interview with Bill Benter, July 2013.

  67The techniques are now so effective: Dougherty, “Horse Sense.”

  68Benter and Woods chose Hong Kong: Author interview with Bill Benter, July 2013.

  68teams using computer predictions bet around $2 billion: Description of current events comes from Jagow, Scott. “I, Robot: The Future of Horse Wagering?” Paulick Report, 2013. http://www.paulickreport.com/news/ray-s-paddock/i-robot-the-future-of-horse-race-wagering/.

  68Like Swedish harness racing: Author interview with Bill Benter, July 2013.

  69“We would joke that we could do it”: Author interview with Ruth Bolton, February 2014.

  CHAPTER 4

  71When a new blackjack system hit Britain: Author experience.

  71The strategy emerged as a result: House of Commons Culture, Media and Sport Committee. “The Gambling Act 2005: A Bet Worth Taking?” HC 421, 2012.

  72The first conviction for bonus abuse: “Man Jailed for ‘Bonus Abuse.’” Metropolitan Police Online, April 2012. http://content.met.police.uk/News/Man-jailed-for-Bonus-Abuse/1400007796996/1257246745756.

  72casinos rarely understand how much of an advantage: Interview with Richard Munchkin, August 2013.

  73The events have more in common: Author experience.

  74it is the science of the very unlikely: De Haan, L., and A. Ferreira. Preface. In Extreme Value Theory: An Introduction (New York: Springer Science & Business Media, 2007).

  74Coles’s research spanned everything: For example: Coles, Stuart, and Jonathan Tawn. “Bayesian Modelling of Extreme Surges on the UK East Coast.” Philosophical Transactions 363, no. 1831 (2005): 1387–1406; and Coles, Stuart, and Francesca Pan. “The Analysis of Extreme Pollution Levels: A Case Study.” Journal of Applied Statistics 23, no. 2–3 (1996): 333–348.

  74Dixon had become interested in the topic: Author interview with Stuart Coles, May 2013.

  74The work eventually appeared: Dixon, M. J., and S. G. Coles. “Modelling Association Football Scores and Inefficiencies in the Football Betting Market.” Journal of the Royal Statistical Society: Series C 46 (1997): 2.

  74“It was one of those things”: Author interview with Stuart Coles, May 2013.

  75a single soccer match was so dominated by chance: Dixon and Coles, “Modelling Association Football Scores.”

  75Researchers have used the Poisson process: Rakocevic, G., T. Djukic, N. Filipovic, and V. Milutinovic. Computational Medicine in Data Mining and Modeling (New York: Springer-Verlag, 2013), 154.

  76A 2009 study by Christoph Leitner and colleagues: Leitner, C., A. Zeileis, and K. Hornik. “Forecasting Sports Tournaments by Ratings of (Prob)Abilities: A Comparison for the EURO 2008.” International Journal of Forecasting 26, no. 3 (2009): 471–481.

  77Coles would join Smartodds: Author interview with Stuart Coles, May 2013.

  78“Those papers are still the main starting points”: Author interview with David Hastie, March 2013.

  78“It’s not an entirely polished piece”: Author interview with Stuart Coles, May 2013.

  78according to Andreas Heuer and Oliver Rubner: Heuer, Andreas, and Oliver Rubner. “How Does the Past of a Soccer Match Influence Its Future? Concepts and Statistical Analysis.” PLoS ONE 7, no. 11 (2012). doi:10.1371/journal.pone.0047678.

  79“A team would beat another team 28–12”: Details of earlier career come from author interview with Michael Kent, October 2013.

  79“You need to make your own number”: Author interview with Michael Kent, October 2013.

  80Because the society’s acronym was SABR: Society for American Baseball Research. “A Guide to Sabermetric Research.” http://sabr.org/sabermetrics.

  81He came to rely on valet parking: Thomsen, Ian. “The Gang That Beat Las Vegas.” National Sports Daily, 1990.

  82There were FBI raids: Ibid.

  82the Computer Group placed over $135 million: Ibid.

  83“It is a totally different scheme”: Ulam, S. M. Adventures of a Mathematician (Oakland: University of California Press, 1991), 311.

  83It was called the “Avtomat Kalashnikova”: Trex, Ethan. “What Made the AK-47 So Popular?” Mental Floss, April 2011. http://mentalfloss.com/article/27455/what-made-ak-47-so-popular.

  83The gun is still in use today: Killicoat, Phillip. “Weaponomics: The Global Market for Assault Rifles” (World Bank Policy Research Working Paper 4202, Washington, DC, April 2007).

  83Complexity means more friction: Da Silveira, M., L. Gertz, A. Cervieri, A. Rodrigues, et al. “Analysis of the Friction Losses in an Internal Combustion Engine” (SAE Technical Paper 2012–36–0303, 2012). doi:10.4271/2012–36–0303.

  84US President Woodrow Wilson once described golf: “A ‘Sissy Game’ Was the Sport of Presidents.” Life Magazine, July 1968, 72.

  84If the ball hits a random object: Mella, Mirio. “Success = Talent + Luck.” Pinnacle Sports, July 15, 2015. http://www.pinnaclesports.com/en/betting-articles/golf/success-talent-luck.

  85Teams playing in the NHL score: ESPN. NHL page. http://espn.go.com/nhl/.

  85where NBA teams will regularly score: ESPN. NBA page. http://espn.go.com/nba/.

  85stats such as the “Corsi rating”: Macdonald, Brian. “An Expected Goals Model for Evaluating NHL Teams and Players” (
paper presented at MIT Sloan Sports Analytics Conference, Boston, MA, March 2–3, 2012).

  85the nature of scoring in basketball was changing: Predictive Sports Betting. MIT Sloan Sports Analytics Conference, Boston, MA, March 1–2, 2013. Panel discussion with: Chad Millman, Haralabos Voulgaris, and Matthew Holt. Moderator: Jeff Ma. http://www.sloansportsconference.com/?p=9607.

  86Sifting through reams of data: Eden, Scott. “Meet the World’s Top NBA Gambler.” ESPN, February 25, 2013. http://espn.go.com/blog/playbook/dollars/post/_/id/2935/meet-the-worlds-top-nba-gambler.

  86“We don’t realise how easy we have”: Author interview with Stuart Coles, May 2013.

  86people created automated programs: Author interview with David Hastie, March 2013.

  86Some installed countermeasures: Ward, Mark. “Screen Scraping: How to Profit from Your Rival’s Data.” BBC News, September 30, 2013. http://www.bbc.com/news/technology-23988890.

  86“You get a huge database”: Author interview with Michael Kent, October 2013.

  87That company was Cantor Gaming: Craig, Susanne. “Taking Risks, Making Odds.” New York Times, December 24, 2010. http://dealbook.nytimes.com/2010/12/24/taking-risks-making-odds/.

  87The room feels like a hybrid of a sports bar: Author experience.

  87The numbers on Cantor’s screens: Midas background from: Kaplan, Michael. “Wall Street Firm Uses Algorithms to Make Sports Betting Like Stock Trading.” Wired, November 1, 2010. http://www.wired.com/2010/11/ff_midas/.

  87Garrood simply went from designing models: Eden, “Meet the World’s Top NBA Gambler.”

  87Cantor wasn’t just interested in its predictions: Craig, “Taking Risks, Making Odds.”

  88Garrood has found that most plays: Garrood comments from “Betting After the Games Are Underway.” ThePostGame, January 11, 2011. http://www.thepostgame.com/blog/spread-sheet/201101/betting-after-games-are-underway.

  88“We make lines in anticipation”: Predictive Sports Betting, MIT Sloan Sports Analytics Conference, 2013.

  89“The proprietary nature of prediction models”: McHale, Ian. “Why Spain Will Win . . . Maybe?” Engineering & Technology, 5 (June 2010): 25–27.

  90“There is a lot of paranoia”: Author interview with Rob Esteva, March 2013.

  90After some suspicious bowling in cricket matches: Khan, M. Ilyas. “Pakistan’s Murky Cricket-Fixing Underworld.” BBC News, November 3, 2011. http://www.bbc.com/news/world-asia-15576065.

  90The scandals have since continued: Hoult, Nick. “Indian Premier League in Crisis After Three Players Are Charged with Spot Fixing.” Telegraph, May 16, 2013. http://www.telegraph.co.uk/sport/cricket/twenty20/ipl/10060988/Indian-Premier-League-in-crisis-after-three-players-are-charged-with-spot-fixing.html.

  90UK police arrested six soccer players: Hart, Simon. “DJ Campbell Arrested in Connection with Football Fixing.” Telegraph, December 9, 2013. http://www.telegraph.co.uk/sport/football/10505343/DJ-Campbell-arrested-in-connection-with-football-fixing.html.

  90the total amount wagered can approach $3 billion: Wilson, Bill. “World Sport ‘Must Tackle Big Business of Match Fixing.’” BBC News, November 25, 2013. http://www.bbc.com/news/business-24984787.

  91This is the “gray market”: Hawkins, Ed. “Grey Betting Market in Asia Offers Loophole to Be Exploited.” Times (London), November 30, 2013. http://hawkeyespy.blogspot.com/2013/11/grey-betting-market-in-asia-offers.html.

  91Haralabos Voulgaris has complained: Predictive Sports Betting. MIT Sloan Sports Analytics Conference.

  91Pinnacle claimed it was happy: Beyer, Andrew. “After Pinnacle, It’s All Downhill from Here.” Washington Post, January 17, 2007. http://www.washingtonpost.com/wp-dyn/content/article/2007/01/16/AR2007011601375.html.

  91By accepting wagers from sharp bettors: Noble, Simon. “Inside the Wagering Line.” Pinnacle Pulse (blog), Sports Insights, February 22, 2006. https://www.sportsinsights.com/sports-betting-articles/pinnacle-pulse/the-pinnacle-pulse-2222006/.

  92US Senators stumbled across a Department of Defense proposal: Taylor, Elanor. “Policy Analysis Market and the Political Yuck Factor.” Social Issues Research Centre, April 2004. http://www.sirc.org/articles/policy_analysis.shtml.

  92One called the idea “grotesque”: Tran, Mark. “Pentagon Scraps Terror Betting Plans.” Guardian, July 29, 2003. http://www.theguardian.com/world/2003/jul/29/iraq.usa1.

  92According to Hillary Clinton: Taylor, “Policy Analysis Market.”

  93Pinnacle has so much faith in the approach: Wise, Gary. “Head of Sportsbook Q&A Transcript.” Pinnacle Sports, August 8, 2013. http://www.pinnaclesports.com/en/betting-articles/social-media/question-answers-with-pinnacle-sports.

  93Pinnacle dropped horse racing: “Pinnacle Sports Halts US Horse Racing Service.” Casinomeister, December 19, 2008. http://www.casinomeister.com/news/december2008/online_casino_news3/PINNACLE-SPORTS-HALTS-US-HORSE-RACING-SERVICE.php.

  93Perhaps the best-known betting exchange: Read, J. J., and J. Goddard. “Information Efficiency in High-Frequency Betting Markets.” In The Oxford Handbook of the Economics of Gambling, ed. L. V. Williams and D. S. Siegel (New York: Oxford University Press, 2014).

  94“The boredom was horrendous”: Bowers, Simon. “Odds-on Favourite.” Guardian, June 6, 2003. http://www.theguardian.com/business/2003/jun/07/9.

  94the company arranged for a mock funeral procession: Clarke, Jody. “Andrew Black: Punter Who Revolutionised Gambling.” Moneyweek, August 21, 2009. http://moneyweek.com/entrepreneurs-my-first-million-andrew-black-betfair-44933/.

  94if someone wanted to place a bet of £1,000: Ibid.

  96“If I find a guy who is good at sports betting”: Klein, Matthew. “Hedge Funds Are Not Necessarily for Suckers.” BloombergView, July 12, 2013. http://www.bloombergview.com/articles/2013–07–12/hedge-funds-are-not-necessarily-for-suckers.

  96According to Tobias Preis: Preis, Tobias, Dror Y. Kenett, H. Eugene Stanley, Dirk Helbing, and Eshel Ben-Jacob. “Quantifying the Behavior of Stock Correlations Under Market Stress.” Scientific Reports 2 (2012). doi:10.1038/srep00752.

  97persuaded Brendan Poots to set up: Details and quotes from author interview with Brendan Poots, September 2013.

  97Mark Dixon turned his attention: Dixon, M. J., and M. E. Robinson. “A Birth Process Model for Association Football Matches.” The Statistician 47, no. 3 (1998).

  98you’re far more likely to die in a bathtub: Bailey, Ronald. “How Scared of Terrorism Should You Be?” Reason Magazine, September 6, 2011. http://reason.com/archives/2011/09/06/how-scared-of-terrorism-should.

  98playing roulette again and again: Spiegelhalter, David. “What’s the Best Way to Win Money: Lottery or Roulette?” BBC News, October 14, 2011. http://www.bbc.com/news/uk-15309953.

  98one 2014 study reckoned the rate: Titman, A. C., D. A. Costain, P. G. Ridall, and K. Gregory. “Joint Modelling of Goals and Bookings in Association Football.” Journal of the Royal Statistical Society: Series A, July 15, 2014. doi:10.1111/rssa.12075.

  100This involves betting on ten soccer leagues: Author interview with Will Wilde, May 2015.

  100investment firm Centaur launched the Galileo fund: Rovell, Darren. “Sports Betting Hedge Fund Becomes Reality.” CNBC, April 7, 2010. http://www.cnbc.com/id/36218041.

  101less than 1 percent of sports bets: Bell, Kay. “Taxes on Gambling Winnings in Sports.” Bankrate, January 2014. http://www.bankrate.com/finance/taxes/taxes-on-gambling-winnings-in-sports-1.aspx.

  101A new bill, submitted in April 2015: Takahashi, Maiko. “Japan Lawmakers Group Submits Legislation to Legalize Casinos.” Bloomberg Business, April 28, 2015. http://www.bloomberg.com/news/articles/2015–04–28/japan-lawmakers-group-submits-legislation-to-legalize-casinos.

  101New opportunities will also arise: Author interview with Will Wilde, May 2015.

  102Millman got talking to Mike Wohl: Millman, Chad. “A New System to Bet College Football” (paper presented at MIT Sloan Sports Analytics Conference, Boston, MA, March 1–2, 2013).

  102
“I would want to have play-by-play data”: Author interview with Michael Kent, October 2013.

  103“We do analysis on the effect”: Author interview with Will Wilde, May 2015.

  103how a horse’s speed changes: Kaplan, Michael. “The High Tech Trifecta.” Wired, no. 10.03 (March 2002). http://archive.wired.com/wired/archive/10.03/betting.html.

  103These “video variables”: Dougherty, Tim. “Horse Sense: Using Applied Mathematics to Game the System.” Contingencies, May/June 2009. http://www.contingenciesonline.com/contingenciesonline/20090506/?sub_id=qxyLfphSqUiJ#pg22.

  103Paolo Maldini averaged one tackle: Kuper, Simon. “How the Spreadsheet-Wielding Geeks Are Taking over Football.” New Statesman, June 5, 2013. http://www.newstatesman.com/culture/2013/06/how-spreadsheet-wielding-geeks-are-taking-over-football.

  103the best cornerbacks in the NFL: Author interview with Rob Esteva, March 2013.

  104they won only 52 percent of the games: Soccer statistics from: Ingle, Sean. “Why the Power of One Is Overhyped in Football.” TalkingSport (blog), Guardian, March 24, 2013. http://www.theguardian.com/football/blog/2013/mar/24/gareth-bale-one-man-team-overhyped.

  104“In the sum of the parts”: Author interview with Brendan Poots, September 2013.

  105“There is a common perception that betting”: Author interview with David Hastie, March 2013.

  105“We had a guy in New York City”: Author interview with Michael Kent, 2013.

  105team managers chat with statisticians and modelers: Eden, “Meet the World’s Top NBA Gambler.”

  105The “Sports Illustrated jinx”: Wolff, Alexander. “That Old Black Magic.” Sports Illustrated, January 21, 2002. http://www.si.com/vault/2002/01/21/317048/that-old-black-magic-millions-of-superstitious-readers—and-many-athletes—believe-that-an-appearance-on-sports-illustrateds-cover-is-the-kiss-of-death-but-is-there-really-such-a-thing-as-the-si-jinx.

  106When a club signs a new player: McHale, Ian, and Łukasz Szczepański. “A Mixed Effects Model for Identifying Goal Scoring Ability of Footballers.” Journal of the Royal Statistical Society: Series A 177, no. 2 (2014): 397–417. doi:10.1111/rssa.12015.