Friday, 4 May 2018

The Man Who Cracked the Horse-Racing Code

Benter in his office in Pittsburg 2018
A fascinating read about a gambler named Bill Benter, written by Kit Chellel, published on Bloomberg. 

This man made a fortune from horse racing by writing an algorithm than seemingly couldn't lose. In fact, he is close to winning a billion dollars. 

The story begins in Hong Kong a mecca for gambling vast sums of money. As the article says: ''Horse racing is like a religion in Hong Kong, whose citizens bet more than anywhere on Earth.'' 

You have only to look at Happy Valley racecourse, surrounded by skyscrapers and neon lights to realise this place is like nothing you have seen before. 

''On the evening of Nov. 6, 2001, all of Hong Kong was talking about the biggest jackpot the city had ever seen: at least HK$100 million (then about $13 million) for the winner of a single bet called the Triple Trio. The wager is a little like a trifecta of trifectas; it requires players to predict the top three horses, in any order, in three different heats. More than 10 million combinations are possible. When no one picks correctly, the prize money rolls over to the next set of races. That balmy November night, the pot had gone unclaimed six times over. About a million people placed a bet—equivalent to 1 in 7 city residents.'' 

''At Happy Valley’s ground level, young women in beer tents passed foamy pitchers to laughing expats, while the local Chinese, for whom gambling is a more serious affair, clutched racing newspapers and leaned over the handrails. At the crack of the starter’s pistol, the announcer’s voice rang out over loudspeakers: “Last leg of the Triple Trio,” he shouted in Australian-accented English, “and away they go!” ''

''As the pack thundered around the final bend, two horses muscled ahead. “It’s Mascot Treasure a length in front, but Bobo Duck is gunning him down,” said the announcer, voice rising. “Bobo Duck in front. Mascot fighting back!” The crowd roared as the riders raced across the finish line. Bobo Duck edged Mascot Treasure, and Frat Rat came in third.''

''Across the road from Happy Valley, 27 floors up, two Americans sat in a plush office, ignoring a live feed of the action that played mutely on a TV screen. The only sound was the hum of a dozen computers. Bill Benter and an associate named Paul Coladonato had their eyes fixed on a bank of three monitors, which displayed a matrix of bets their algorithm had made on the race—51,381 in all.''

''Benter and Coladonato watched as a software script filtered out the losing bets, one at a time, until there were 36 lines left on the screens. Thirty-five of their bets had correctly called the finishers in two of the races, qualifying for a consolation prize. And one wager had correctly predicted all nine horses. “F---,” Benter said. “We hit it.”''

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