The Perfect Bet
Page 28
habitual, 202
in life, 216
line between skill and, 204
measuring, 205, 217
notion of, exploring, by studying gambling, 216
in poker, 168, 186, 198, 200, 201, 215
probability and, 98
questioning, 28
rarity of profits coming from, 218
in roulette, 202
runs of, 5
skill versus, debate over, 198–200, 201–202, 203
in sports, 84, 85, 204–205
Ma, Will, 214–215
magic formula, 105
magic trick, 217–218
Maisel, Herbert, 37
Major League Baseball playoffs, 209
major sports, problem with focusing on, 107
Maldini, Paolo, 103
Management Science (journal), 50
Mandelbrot, Benoit, 162
man-machine competitions
in checkers, 156, 159, 160
in chess, 166, 171, 176
in poker, 185–187
in TV game shows, 165–166, 171
Man-Machine World Championship, 156
maps
as abstractions, 210, 211
logistic, 125–128
Markov, Andrei, 62
Markov chain, 62, 64
Markov chain Monte Carlo technique, 64
Markov property, 62, 63
Martinez, Roberto, 209
Massachusetts State Lottery, 29–32
May, Robert, 13, 125, 127, 128, 129, 131
Mazrooei, Parisa, 182
Mazur, Matt, 192–196
McDermott, James, 37
McHale, Ian, 89
mediocrity, regression to, 205
Mega-Millions, 29
memorizing, 179, 180
memory and competitiveness, 161–162
memory capacity, 179–181
Meston, A. J., 47–48
Metropolis, Nicholas, 61, 63–64, 168–169, 180
Mezrich, Ben, 214
Michigan Lottery, 30
Midas algorithm, 87, 88, 89
Milgram, Stanley, 13
Miller, George, 179
Millman, Chad, 102
mind-set, 209
minimax approach, 145, 147–148, 155
minor sports, benefit of focusing on, 107
MIT gambling course, 213–214
MIT Sloan Sports Analytics Conference, 85, 105, 107
mixed strategies, 142–143, 147
Monte Carlo fallacy, 6, 200
Monte Carlo method, 61–62, 63, 64, 83, 178–179, 217
Morgenstern, Oskar, 139, 150, 181–182
mortgage loan crisis, 96–97
multiple regression, 49
Munchkin, Richard, 72, 214
Nadal, Rafael, 110
NASCAR, 107
Nash, John, 137, 148–149, 158
Nash equilibrium, 137–138, 148–149, 151, 154, 160, 161, 181, 183, 184, 185, 187
National Academy of Sciences, 133
Nature (journal), 48, 49, 51
NBA, 85
near-equilibrium strategies, 152–153, 153–154
neural networks, 173–174
new data, testing strategies against, 53, 54
New England Patriots, 88
new games, advantages in, 72–73
New York Stock Exchange, 117
New York Times (newspaper), 101, 172, 177, 178, 180
New Yorker (magazine), 143
newsfeeds, 120, 122, 133–134
NFL, 103, 209
NHL, 85, 205
no-limit poker, 189, 195
“nonlinear” trajectory, 12
Oakland A’s, 209
Occam’s razor, 53
Oller, Joseph, 44
online betting, 90
online blackjack, 71–73
online gambling, advantages of, 72–73, 90, 107, 132
online poker sites, 192–193, 194, 195, 198, 200
online security, 195
Onside Analysis, 78, 105
opponent modeling, 163, 181, 184, 187
optimal strategies
in bankroll management, 65–67
in blackjack, 36–37, 40, 72
in checkers, 158
in chess, 161, 202
in get-so-many-in-a row-style games, 158–159
in poker, 143–144, 145, 147, 149, 151, 152, 153, 160, 161, 177, 181, 184, 188, 208
in rock-paper-scissors, 143, 178, 180
in soccer, 146, 147
and stock/financial markets, 161
See also game theory; perfect strategies
“Optimum Strategy in Blackjack, The” (Baldwin, Cantey, Maisel, and McDermott), 37
order-routing algorithms, 115
Osipau, Andrei, 72
overestimating, 98
overlays bias, 56
oversimplification, 212
Packard, Norman, 14, 20, 120
Palacios-Heurta, Ignacio, 146, 147
panic, 99, 133
pari-mutuel betting system, 43–45, 66, 114
Pascal, Blaise, 10
Pasteur, Louis, 202
patience and ingenuity, 218
PDO statistic, 205
Pearson, Karl, 4–7, 15, 24, 46–47, 48–49, 54, 61, 217
Pentagon, 92
perfect bet, story of the, 218
perfect strategies, 37, 53, 146, 149, 154, 159, 160, 168, 187
See also optimal strategies
performance measurement, 85, 102–105, 208–209
physical bias, 7, 8, 21
Picasso, Pablo, 209–210
Pinnacle Sports, 91–92, 93
Poincare, Henri, 2–3, 8–9, 9–10, 11, 12, 21, 22, 40, 41, 46, 62, 63, 127, 217
Poisson, Siméon, 75
Poisson process, 75–76, 78
poker
abstractions and, 212
analysis of the endgame in, 143
applying game theory to, 141, 148, 181, 183
bankroll management in, 144–145
basic options in, 138–139, 142
behaviors in, 191–192
coalitions in, 181–183
combined approach to, 208
heads-up, 172, 186, 188, 195
incomplete information in, 168
in Internet chat rooms, 142
as less vulnerable to brute force methods, 171
limited-stakes, 172, 177, 185, 187, 189
luck versus skill in, 198–200, 201, 215
more options in, complexity of, 142
near-equilibrium strategy for, 152–153, 153–154
no-limit, 189, 195
optimal strategy in, 143–144, 145, 147, 149, 151, 152, 153, 160, 161, 177, 181, 184, 188, 208
potential for errors in, 160
prediction in, 163
randomness in, 152, 156
robot players in, 135–136, 149–150, 151, 153, 154, 161, 163, 167–168, 172, 173, 175, 176–177, 182, 184, 185–189, 190, 192–196, 212, 217
scientific idea inspired by, 217
Texas hold’em, 140–141, 151–152, 172, 177, 185–186, 187–188
university course studying, 214–215
well-known research into, 169
World Series, 140–141
as a zero-sum game, 145, 181
poker boom, 198
poker face, optimal, 192
poker industry, 198
poker websites. See online poker sites
Polaris poker bot, 185–186
Polaris 2.0, 186–187
policy analysis market, 92
Poots, Brendan, 97, 98, 99, 100, 104
popularity, randomness of, 203–204
populations, 125–129
Power Peg program, 118
Powerball, 29
predator-prey relationships, 129–130
Prediction Company, 120, 131
predictions
baseball and, 87, 88
basketball and, 82, 85–86
blackjack and, 40,
42
bookmakers and, 91–92, 93
checkers and, 156, 157
comparing, against new data, 53, 54
computerized, 2, 13, 14, 15–20, 22, 46, 51, 61, 68, 80–82, 87, 88, 89–90, 97, 105, 156, 157, 217
degree of ignorance and, 3, 8
external disruptions as a factor in, 19–20
focus in making, 205–206
football and, 79, 82, 87, 88
golf and, 84–85
horse racing and, 46, 49–50, 51–54, 55–58, 64, 68, 69, 74, 206, 207, 216, 218
hydrogen bomb building and, 59, 61
opponent behavior and the need for, 163
poker and, 163
problem with explaining, 206–207
roulette and, 2, 3–4, 5–8, 10–11, 12–13, 14, 15–20, 21–22, 124, 127, 162, 210–211, 218
soccer and, 73–79, 82, 86, 90, 97–98, 98–99, 218
weather and, 9, 13, 53
of worst-case scenarios, 74
Preis, Tobias, 96
Premium Bonds, 204
Priomha Capital, 97, 99, 100, 101
prisoner’s dilemma, 137–138, 160
probability
basic, successful strategies go beyond, 208
in blackjack, 36
of default on a home loan, 96
different conclusions about, 212
of ecosystem survival, 128
in horse racing, 45, 46, 51, 56–57, 58, 66, 206, 207
in lotteries, 32, 98
in poker, 138, 152, 171, 208
in rock-paper-scissors, 143
in roulette, 6, 17–18, 98
in soccer, 75, 146, 147, 209
in solitaire, 60
weighing against, 216
probability theory, 73, 132, 216–217
professional sports bettors, 102
proof by contradiction, 158–159
pseudorandom numbers, 61
psychological bias, 6, 98
psychology, 171, 177, 189, 208
pure strategies, 142, 143, 147, 152
qualitative information, 105
quality measurement, 50–51, 74
quantitative information, 105
raising, 143
Random Strategies Investments, LLC, 30
randomness
as an abstraction, 210–211, 212
in basketball, 85
in blackjack, 38, 40, 41, 42, 71, 212
in chess, 168, 176, 202
in coin tosses, 199
collecting data on, 4–8
controlled, 25–26, 28
in ecosystems, 128, 129
generating, in game moves, 179
in golf, 84
and the infinite monkey theorem, 156–157
logistic map and, 126
Monte Carlo method and, 61
nonrandom patterns in, 178–179
in poker, 152, 156
of popularity, 203–204
in rock-paper-scissors, 143, 178, 181
in roulette, 2, 3–4, 5–8, 9, 10–11, 12–13, 15–20, 21–22, 38, 162, 178–179, 202, 212
and uniform distribution, 41
rationality, 123–124, 160
reality, model of, 211, 212
rebates, 69
recruitment teams, 73
regression analysis, 47–49, 50, 52, 79, 106, 206
regression to mediocrity, 47, 48–49, 205
regression to the mean, 106
regret minimization, 152–154, 187–188
regulation, 91, 101, 133
Reinhart, Vincent, 133
Retail Liquidity Program, 117
risk, 32, 36, 65, 66, 78, 95, 96, 99, 102, 120, 133, 144–145, 153, 156, 171, 184, 216
Ritz Club, 1–2, 20, 21
Robinson, Michael, 97–98
robots (bots)
and the ability to learn, 151, 161, 163, 173, 174, 176, 177, 187, 188, 190, 217
in backgammon, 172–173
betting exchanges and, 112–113, 116–117
as bookmakers, 130
in checkers, 155–156, 157–158, 159–160, 167, 168, 190
in chess, 166, 167, 168, 171, 176, 189, 190
cognitive, other useful applications for, 166, 188
different types of, 129–130
faulty, 116–117, 118, 119, 120
in horse racing, 115–117
hybrid, 184
in Jeopardy! 165–166, 167, 171, 190
limitations of, 190
memory and, 180–181
newsfeeds and, 122, 133–134
in poker, 135–136, 149–150, 151, 153, 154, 161, 163, 167–168, 172, 173, 175, 176–177, 182, 184, 185–189, 190, 192–196, 212, 217
rock-paper-scissors and, 178, 180–181
stock/financial markets and, 113, 115, 117–120, 122, 123–124, 129–130, 131–132
teaching themselves, 151, 176–177, 190
training, 155, 168, 174, 175, 176, 188
vulnerabilities in using, 118–119
rock-paper-scissors, 142–143, 178, 180–181
roll downs, 29–32, 33
rollovers, 29, 33–34, 204
roulette, 1, 197
bias in, 6, 7
control over events in, 199
evolution of successful strategies in, 21–22, 208
factors restricting scientific betting in, 22
fading of data availability limitations in, 73
gambling law and, 200
and lotteries, biased view of, 98
and luck, 202
and the Monte Carlo fallacy, 6, 200
randomness and predictions in, 2, 3–4, 5–8, 9, 10–11, 12–13, 14, 15–20, 21–22, 38, 124, 127, 162, 178–179, 202, 210–211, 212, 218
scientific idea inspired by, 217
spin stages, 16
university courses studying, 215
Roulston, Mark, 204
Rubik’s Cube, 63
Rubner, Oliver, 78
Rugby World Cup, 84
rule-based approaches, 149, 151, 153, 176
Rutter, Brad, 165–166
S&P 500, 121
sabermetrics, 209
Salganik, Matthew, 203
San Francisco Giants, 88
Sandholm, Tuomas, 167, 184, 189, 212
scandals, 90
Schaeffer, Jonathan, 154, 155, 156, 158, 160, 167, 168, 177, 190
Science (journal), 160, 188
scouting, 105
scratchcards, 26–28
screen scraping, 86
“Searching for Positive Returns at the Track” (Bolton and Chapman), 46
Securities and Exchange Commission (SEC), 130
security
casino, 2, 20, 21, 22, 40, 73, 197, 213
online, 195
Selbee, Gerald, 30, 33
“sensitive dependence on initial conditions,” 9, 10
Shannon, Claude, 11–12, 12–13, 14, 15
sharps, 102, 107
Shaw, Robert, 14, 22
short stacking strategy, 193
shuffling cards. See card shuffling
signup bonuses, 71, 72
Silver, Adam, 101
simplicity, 83, 123, 128, 131, 134, 154, 155, 211, 217–218
simplifications, making, 138–139, 142, 151–152, 172, 210, 211
“Sit ’n Go” games, 195
six degrees of separation, 13
skill, 176, 198–200, 201–202, 203, 204, 205, 206, 215, 217
slippage, 114–115
slot machines, 172, 200
Slumbot, 167
Small, Michael, 15–18, 22
small-scale bettors, 102
SMARS software, 117–118
smart gamblers, gleaning information from, 91, 92
Smartodds, 77–78, 84–85, 106
sniffing algorithms, 115
SoarBot, 149–150, 151
soccer
ability measurement in, 76–77, 209
arbitrage involved in, 111
cliché in, 98
&nbs
p; measuring luck and skill in, 204, 205
penalty shootout in, as zero-sum, 145–147
Pinnacle Sports and, 93
prediction methods in, 73–79, 82, 86, 90, 97–98, 98–99, 103, 104, 106–107, 218
robotic betting in, 113
scandals in, 90
sports betting funds and, 99, 100
sports prediction firms and, 78
social behavior, 203
social network theory, 13
Society for American Baseball Research (SABR), 80
software programs, automated. See robots (bots)
solitaire, 60
sports
arbitrage involved in, 110–111, 112, 113
bans in, 90
complexity of, 84
control over events in, 199
and fantasy sports leagues, 100–101
hedge funds focused on, 96, 97, 99–100, 101
importance of statistics in, 79, 80, 209
investor betting in, 96, 97–100, 101
legalization of betting on, 100–102
lesser-known, focusing attention on, 107
outlier in, in terms of forecasting, 84–85
performance measurement in, 85, 102–105, 208–209
prediction methods in, 80–82, 87–90, 97, 102–105, 106–107, 217
and slippage, 114–115
See also specific type of sport
sports betting. See betting exchanges; betting syndicates; bookmakers
Sports Illustrated jinx, 105–106
sports prediction firms, 77–78, 78–79, 81–82, 84–85
spread betting, 132–133
Srivastava, Mohan, 26–28
start-ups
advantages of, 102
suggestions for, 107
statistics
importance of, in sports, 79, 80, 209
modern, one of the founders of, 23
oft-quoted mantra in, 206
roulette and, 7–8, 21
See also predictions; probability; regression analysis
stereotypes, 192, 213
stock exchanges, 109–110, 113, 117, 121, 130
stock/financial markets, 96, 97, 100, 113, 115, 117–120, 121–122, 123–124, 129–132, 161, 162, 198
strategy-stealing approach, 159
Straus, Jack, 140
strong solutions, 158, 159
substitution cipher, 63
successful system, 218
Sullivan, Gregory, 32
Super Bowl, 100
superhuman strategies, 190, 217
surprises, 175, 176, 188, 217
syndicates. See betting syndicates
systemic risk, 133
Tang, Si, 129
Tartanian poker bot, 167, 189
taxation, 25, 101, 132, 133
technical analysis, 55
technological improvements, 107–108
telegraph/telegrams, 109, 110
tennis, 88–89, 107, 110
Texas hold’em poker, 140–141, 151–152, 172, 177, 185–186, 187–188
Theory of Games and Economic Behavior (von Neumann and Morgenstern), 139, 169
Theory of Parlour Games (von Neumann), 147
Thorp, Edward, 11–12, 12–13, 14, 15, 35–36, 37–39, 40, 43, 61, 62, 65, 197, 208, 212, 213, 218