The Perfect Bet

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The Perfect Bet Page 27

by Adam Kucharski


  adult brain, 177–178

  aggressive strategy, 156, 176, 184, 192, 193

  AK-47 rifle, simplicity of, 83

  Albert, James, 106

  algorithms

  arbitrage, 113

  code-breaking, 26

  errant, 116–117, 118, 119, 175–176

  flash crashes and, 122, 130

  good game-playing, 168

  high-speed, 217

  increasing number of, in betting and finance, 119–120, 132

  intelligent, developing, 174, 175

  interaction among, 120, 123–124, 130, 134, 217

  Midas, in-play betting and, 87, 88, 89

  order-routing, 115

  poker, 136, 188

  press reports and, 122

  rationality and, 123–124

  simplicity of, 123, 131, 134

  sniffing, 115

  trading strategies driven by, 131–132

  useful, range of scenarios for, 188

  Allesina, Stefano, 129

  American Checkers Federation, 156

  Annual Computer Poker Competition, 185

  arbitrage, 110–112, 113, 129–130

  Arsenal Football Club, 104

  artificial intelligence, 163, 167, 170–171, 171–172, 174, 175, 217

  artificial intelligence conference, 185

  Associated Press, 120–121, 122

  assumptions, ability to make, about opponents, 184, 190–191

  asteroids, study of, 9–10

  Atass Sports, 77, 96

  automated programs. See robots (bots)

  backgammon, 172–173

  Baldwin, Roger, 36–37, 38

  bankroll management, 65–67, 144–145

  bankruptcy, 66

  bans

  on bank transfers, 198

  by casinos, 22, 40, 43

  by poker websites, 192–193, 195

  in sports, 90

  baseball, 79–80, 87, 88, 106, 200, 209

  basketball, 82, 85–86, 107

  Bass, Thomas, 14

  Bayern, Shawn, 181

  Beane, Billy, 209

  Beasley-Murray, Ben, 20

  Beat the Dealer (Thorp), 35, 39, 61, 208

  beauty contests, Keynes’ interpretation of, 122–123, 124

  behavior

  accounting for, 208

  deeper understanding of, developing, 217

  influence of, in poker, 191–192

  involved in lying, 190–191

  of opponents and the need for predictions, 163

  robots copying, 192

  social, influence of, 203

  tit-for-tat, 161

  unanticipated, errant algorithms and, 118

  unpredictability of, 3, 133, 134

  Benter, Bill, 35, 39, 42, 43, 45–46, 52, 55, 56–57, 67–68, 79, 91, 103, 206, 207, 211, 218

  Bertsimas, Dimitris, 214

  Betfair, 93–94, 95, 97, 111, 112, 113, 114–115, 116–117

  betting exchanges, 93, 94, 95, 97, 99, 110, 111, 112–113, 114–115, 132, 217

  betting limits, 22, 140

  See also limited-stakes poker

  betting syndicates

  in horse racing, 35, 52–53, 54, 56, 57–58, 64, 66–69, 103, 206

  legalization of, 101

  lotteries and, 30, 31–32, 33–34, 202

  private, traditional preserve of, 96

  in sports, 89, 100, 102, 103, 110

  betting window, 112

  bias

  favorite-long-shot, 45, 46, 57

  in models, 211

  overlays, 56

  physical, 7, 8, 21

  psychological, 6, 98

  billiards, 19

  Billings, Darse, 167

  Binion’s Gambling Hall, 139–140

  Black, Andrew, 93–94

  black market bookmakers, 90–91

  blackjack

  bankroll management in, 65, 144

  card counting in, 35, 38, 41, 71, 152, 180, 202, 207, 208, 211, 213, 214

  complexity and, 83–84

  computerized prediction in, 42

  evolution of methods in, 208

  idea for an optimal strategy in, 36–37

  loopholes found in, 72, 197

  and the Monte Carlo method, 61

  online, 71–73

  randomness in, 38, 40, 41, 42, 71, 212

  university course studying, 213–214

  bluffing, 138, 139, 142, 143, 147, 177, 190, 208, 217

  body language, 162–163

  Bolton, Ruth, 46, 49–52, 54, 55, 68, 69, 211, 216, 218

  bonus abuse, 72

  bonuses, 71, 72

  bookmakers

  aims of, 88–89

  arbitrage and, 110, 111

  betting limits and, 91

  black market, 90–91

  competition faced by, 93, 94

  and information flow, 89, 90

  and legalization of gambling, 101

  online gambling and, 73

  predictions and, 73, 75, 77, 81, 87–88, 89

  robots as, 130

  and slippage, 114

  sports and, 90–92, 93, 95, 101, 110, 111

  traditional, 43, 93, 111

  Borel, Émile, 40, 41, 62, 63, 148, 156, 211–212

  Boston Globe (newspaper), 32

  bot hunters, 193

  Bowling, Michael, 187

  brains

  adult, 177–178

  artificial, 173–174, 175

  child, 172, 178

  injured parts of, related to regret, 153

  memory and, 180

  Bringing Down the House (Mezrich), 214

  brute force approach, 33–34, 64, 168, 171

  bucketing, 152, 180

  Bundesliga, 78

  Burch, Neil, 181, 188

  butterfly effect, 9, 124

  cable, 110, 113

  California State Lottery, 141

  call centers, 90

  Cantey, Wilbert, 37

  Cantor Fitzgerald, 87

  Cantor Gaming, 87–88, 89

  card counting, 35, 38, 41, 71, 152, 180, 202, 207, 208, 211, 213, 214

  card shuffling, 40–42, 62, 215

  Carnegie Library, 80

  Cash WinFall, 29–32

  casino industry, 212

  casinos

  bans by, 22, 40, 43

  gaming machines at, rules involving, 177

  security at, 2, 20, 21, 22, 40, 73, 197, 213

  See also blackjack; poker; roulette

  causation and correlation, issue of, 206–207

  Centaur, 100

  Cepheus poker bot, 188

  Chadwick, Henry, 80

  Champions League, 93

  Chaos (journal), 15

  chaos theory, 9, 13, 22, 120, 124, 127, 217

  chaotic decision making, 162

  Chapin, R. M., 211

  Chapman, Randall, 46, 49, 50–52, 54, 55, 68, 69, 211, 216

  chat feature, 194

  chat rooms, 142, 143

  cheating, 35, 182, 183, 194, 197

  checkers, 154–156, 157–158, 159–160, 167, 168, 171, 190

  “Checkers Is Solved” (Schaeffer et al.), 160

  chess, 154, 160, 161, 166, 167, 168, 171, 176, 189, 202

  child’s brain, 172, 178

  Chinook, 155–156, 157–158, 159–160, 162, 167

  choice modeling, 50

  Christie, Chris, 100

  Chutes and Ladders, 62

  Clinton, Hillary, 92

  Cloutier, T. J., 140–141, 142

  clustered volatility, 162

  coalitions, 181–183

  code breaking, 26, 62–63, 64, 169–170

  coefficient of determination, 54

  coin tosses, 4, 5, 58, 65, 66, 199, 210–211

  Coles, Stuart, 73–74, 75, 76–78, 82, 86, 97, 107, 218

  collusion, 181, 182

  competitive relationships, 129, 130–131, 136

  competitiveness and memory, 161–162

  complexity, 83�
��84, 120, 123, 128, 131, 134, 142, 154, 155, 159, 160, 161, 162, 170, 179–180, 188, 210, 211, 212

  Computer Group, 81–82, 96, 97

  computer programs, automated. See robots (bots)

  computerized prediction

  in blackjack, 42

  in checkers, 156, 157

  in horse racing, 46, 51, 57, 68

  and the Monte Carlo method, 61

  in roulette, 2, 13, 14, 15–20, 22

  in sports, 80–82, 87, 88, 89–90, 97, 105, 217

  “Computing Machinery and Intelligence” (Turing), 175

  Connect Four, 158–159

  control over events, 199

  controlled randomness, 25–26, 28

  cooperative relationships, 129, 136

  copycats, 132

  Coram, Marc, 63, 64

  correlation and causation, issue of, 206–207

  Corsi rating, 85

  Cosmopolitan, Las Vegas 87

  countermeasures, 21, 86, 195, 214

  counting cards. See card counting

  Crick, Francis, 23

  cricket, 90

  curiosity, following, 218

  Dahl, Fredrik, 172–173, 175, 176, 177, 182–183, 184, 185

  Darwin, Charles, 46

  data

  access to, 142

  availability of, 54, 55, 68, 73, 86, 102, 174, 209

  better, sports analysis methods and access to, 207, 217

  binary, 116

  collecting as much as possible, 4–5, 103

  enough, to test strategies, 131

  faster transatlantic travel of, 113

  juggling, 166

  limited, 84

  new, testing strategies against, 53, 54

  statistics and, importance of, in sports, 79, 80

  storage and communication of, 11

  data chunks, memory capacity and size of, 179–180

  Deceptive Interaction Task, 190–191

  decision making, chaotic, 162

  decision-making layers, 173–174

  Deep Blue chess computer, 166, 167, 171, 176

  Deep Thought chess computer, 167

  DeepFace Facebook algorithm, 174–175

  DeRosa, David, 198–199, 200

  Design of Experiments, The (Fisher), 24

  deterministic game, 156

  Diaconis, Persi, 62–63

  DiCristina, Lawrence, 198, 199, 200, 201

  Dixon, Mark, 74, 75, 76–78, 82, 97–98, 107, 218

  Djokovic, Novak, 110

  Dobson, Andrew, 129

  Dodds, Peter Sheridan, 203

  dogma, avoiding, 218

  dovetail shuffle, 41–42, 62

  Dow Jones Industrial Average, 96, 121, 122

  Drug Enforcement Administration, 214

  eBay, 94

  Econometrica (journal), 148

  economic theory, 153

  ecosystems, 125–129, 130–131, 133

  Einstein, Albert, 210

  endgame database, 159–160

  English Draughts Association, 156

  English Premier League, 209

  Enigma machines, 169–170

  Eslami, Ali, 185–186, 187

  Ethier, Stewart, 7–8

  Eudaemonic Pie, The (Bass), 14, 15

  Eudaemonic prediction method, 14, 15–20, 22, 124, 208

  Euro 2008 soccer tournament, 76

  European Championship (soccer tournament), 111

  European currency union, 129

  every-day gamblers, 102, 107

  exchange rate, 110

  exchanges. See betting exchanges; stock exchanges

  expected outcomes. See predictions; probability

  experience-weighted attraction, 161

  exploitation and exploitability, balance between, 184, 188

  extreme value theory, 74

  eye contact, 191

  Facebook, 13, 174

  facial recognition ability, 174–175

  fantasy sports leagues, 100–101

  Farmer, Doyne, 14, 18, 19, 20, 120, 123, 131, 132, 160, 161, 162, 212

  favorite-long-shot bias, 45, 46, 57

  FBI, 81–82, 214

  Fédération International de Football Association (FIFA), 76

  Ferguson, Chris, 140–142, 143–145, 148, 151–152, 162–163

  Fidens, 100

  “15.S50” (MIT course), 214–215

  financial crisis (2008), 96

  financial markets. See stock/financial markets

  financial systems, regulation and, 133

  Fisher, Ronald, 23–25, 74, 84

  flash crashes, 121, 122, 124, 130

  floating, 176

  Follek, Robert, 149–150, 151

  football, 79, 82, 87, 88, 103, 107, 112, 114, 209

  football (soccer). See soccer

  Four Horseman’s method, 36–38, 45, 72

  Fréchet, Maurice, 148

  freeroll tournament, 144

  Friedman, Milton, 111

  Friedrich, Carl, 80–81

  fundamental analysis, 55–56

  future payoffs, maximizing, 153

  Galileo fund, 100

  Galla, Tobias, 160, 161, 162

  Galton, Francis, 46–47, 51, 106, 205

  Gambling Act, 71, 201

  gambling laws, 20–21, 22, 71, 100, 198, 200, 201

  gambling traits, traditional, 208

  “Game of Poker, The” (Turing), 170

  game theory, 137, 141, 148, 149, 151, 154, 155, 156, 160, 162, 163, 169, 178, 180, 181, 183, 208, 217

  Gaming Act, 21

  Gandy, Robin, 170

  Ganzfried, Sam, 184

  Garrood, Andrew, 87, 88

  Gerrard, Steven, 104

  get-so-many-in-a-row-style games, 158–159

  See also tic-tac-toe

  Ginther, Joan, 28

  Gödel, Kurt, 150, 151, 169, 176

  golf, 84–85, 107

  Gossett, William, 26, 52

  Government Code and Cypher School, 169

  gravity, 19

  Guardian (newspaper), 94, 117

  Guinness brewery, 52

  hackers, 121

  Hand, David, 204

  Hanson, Robin, 92

  Hard Rock casino, 87

  Harvey, James, 28–29, 30, 31–32, 218

  Hastie, David, 78, 105, 113

  headline wager, 75

  “Heads-Up Limit Hold’em Poker Is Solved” (Bowling et al.), 188

  heads-up poker, 172, 186, 188, 195

  See also Texas hold’em poker

  hedge funds, 96, 97, 99–100, 101, 120, 122, 204

  hedging bets, 95, 96, 99

  Heeb, Randal, 198, 199, 200, 201

  Henry, Thierry, 104

  Heuer, Andreas, 78

  Hibbs, Albert, 3–4, 7, 21

  Hibernia Atlantic, 113

  Hilbert, David, 150

  hockey, 85, 204, 205, 207

  Holt, Matthew, 88

  Hong Kong Jockey Club, 43, 90

  horse racing

  bankroll management in, 65–67

  betting syndicates and, 35, 52–53, 54, 56, 57–58, 64, 66–69, 103, 206

  compared to golf, 84

  fading of data availability limitations in, 73

  favorite-long-shot bias in, 45, 46, 57

  gambling law and, 198

  and the Hong Kong tracks, 43–44, 54–55, 66–69, 74, 114

  measuring individual performance in, 103

  and the Monte Carlo method, 61–62

  pari-mutuel system in, 43–45, 66, 114

  Pinnacle Sports and, 93

  prediction methods in, 46, 49–50, 51–54, 55–58, 64, 68, 69, 74, 206, 207, 216, 218

  and quality measurement, 50–51, 74

  and regression analysis, 49, 50

  robotic betting and, 115–117

  university courses studying, 215

  “How to Gamble If You Must” (MIT course), 213–214

  human insight, importance of, 105

  human language, analyzing, 1
66

  hybrid bots, 184

  hydrogen bomb, 58, 59, 60, 61, 83, 202

  IBM, 166–167

  iceberg order, 115

  ignorance

  first degree of, 2

  second degree of, 3, 8, 11, 21–22

  third degree of, 3, 8, 12, 21

  illegal betting/gambling, 42, 81–82, 90–91, 101, 198

  Illegal Gambling Business Act, 200

  illusion, 218

  imitation game, 170–171, 177, 194

  incompleteness, 150, 168, 173

  incompleteness theorem, 150, 176

  inconsistencies, 150

  Indian Premier League, 90

  infinite monkey theorem, 156–157, 199

  information theory, 11

  information-processing problem, 168

  inheritance, 47–49, 51, 106

  in-play analysis, 97–98

  Internet, benefits of, 72–73

  investing, 96, 97–100, 204

  See also hedge funds; stock/financial markets

  Irish National Lottery, 33

  Jackson, Eric, 167

  Jagger, Joseph, 7

  Jennings, Ken, 165–166

  Jeopardy! (TV game show), 165–166, 167, 171, 190

  Johanson, Michael, 177, 183, 188, 189, 192

  Johnson, Neil, 124

  Journal of Applied Statistics (journal), 74

  Julius, George, 44

  Kalashnikov, Mikhail, 83

  Kaplan, Michael, 172, 177

  Kasparov, Garry, 166, 171, 176, 185

  Kelly, John, 65

  Kelly criterion, 65–67, 144

  Kent, Michael, 79, 80–81, 82, 86–87, 102–103, 105, 107, 167

  Kentucky Derby, 43

  Keynes, John Maynard, 122, 123

  King, Brian, 205

  Klein, Matthew, 96

  Klincewicz, Stefan, 33–34

  Knight Capital, 117–118, 119

  Laak, Phil, 185–186, 187

  Laplace, Pierre Simon, 217

  Larsen, Svend Egil, 119

  Las Vegas Sports Consultants, 87–88

  Latin square, 24

  Le Monaco (newspaper), 5, 7

  learning ability, 151, 161, 163, 171–172, 173, 174, 176, 177, 187, 188, 190, 217

  legalization, 100–102

  Leitner, Christoph, 76

  Lickel, Charles, 166

  lie detection, 190–191

  limited-stakes poker, 172, 177, 185, 187, 189

  limits, betting, 22, 140

  Liverpool soccer club, 104

  logistic map, 125–128

  Lorenz, Edward, 9, 53, 124

  Lorenz cipher, 26

  lotteries

  betting syndicates and, 30, 31–32, 33–34, 202

  consultant for, 141

  controlled randomness and, 25–26

  loopholes found in, 28, 30, 32, 218

  roll downs in, 29–32, 33

  rollovers in, 29, 33–34, 204

  and roulette, biased view of, 98

  scooping up jackpots in, 197

  security team, 27

  traditional, 28–34

  university courses studying, 215

  Lovelace, Ada, 175

  luck

  in checkers, 156, 157

  in chess, 168, 176, 202

 

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