They were in the middle of an epic winning season, up more than $50 million. Benter was struck by the similarities between Kelly’s hypothetical tip wire and his own prediction-generating software. Lessons on Data Analytics from Benter who made $1 Billion on Horse Betting. In December 2007 he sent a letter to Business Review Weekly, an Australian magazine, asking to be considered for its rich list. Bill Benter applied data analytics on horse racing and his model had been consistently successful for the last twenty years. And Benter spread the secrets of his success in various ways: He gave math talks at universities, shared his theories with employees and consultants, and even published an academic paper laying out his system. He made sure to get a space on the ground floor for easy access. The crowded skyline that had recently inspired Ridley Scott’s dystopian megacity in Blade Runner seemed to sprout towers weekly. For this we will use a neural network that takes an Today, the betting market By the end of Benter’s first season in Hong Kong, in the summer of 1986, he and Woods had lost $120,000 of their $150,000 stake. Woods had more money than Benter and was willing to recapitalize their partnership—if it was renegotiated. last raced. Then they posed, laughing, for a photo—two professional gamblers with the biggest prize of their careers, one they would never claim—and locked the tickets in a safe. Probably in the next decade, data science and coding will no longer just be relevant for computer geeks. 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. Twice a week, on race days, Benter would sit at the computer and Woods would study the racing form. It thrilled him to see scientific principles play out in real life, and he liked the hedonistic city’s eccentric characters. The implications would be dire if the Inland Revenue Department decided to tax profits retroactively. Today, online betting on sports of all kinds is a $60 billion industry, growing rapidly everywhere outside the U.S., where the practice is mostly banned. After In pursuit of mathematical perfection, he became convinced that horses raced differently according to temperature, and when he learned that British meteorologists kept an archive of Hong Kong weather data in southwest England, he traveled there by plane and rail. 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. And one wager had correctly predicted all nine horses. Benter has few regrets. “However, as of today, it does not appear I will live long enough.” Woods had been diagnosed with cancer. Best Figure at Going: Best speed figure the horse has gotten at the He's still tweaking his algorithm now and still making money from horse racing betting. 938 races spanning 14 months. There are no upcoming events at this time. Even government agencies are using data like commuters’ travel patterns to better calculate train frequency, adjust directions of escalators at MRT exchanges to facilitate movements of commuters. During our interviews, it was the one topic that made him visibly uncomfortable. 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. Benter explains he got his ideas from an academic paper “ Searching for Positive Returns at the Track: A Multinomial Logit Model for Handicapping Horse Races.” In the paper, a horse’s probability of winning a race depends on various factors like straight line speed, size, winning record, jockey, etc. The robo-bettors’ numbers have continued to proliferate. before the race. He could often be seen sitting at the end of a bar, engaged in quiet conversation. Benter claimed that his era was a “Golden Age” for computer betting Benter joined the squad. compare horses that have not raced under the same circumstances. 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. With his self-made model, he developed his own odds and compared them with the public odds. The couple have a young son, and Benter seems in every sense a contented man. strategies there is, not betting at all. Throughout 1997 a shadow loomed over Hong Kong. often used for facial recognition. Woods kept betting in a slightly different manner, sending members of an extended roster of Philippine girlfriends directly to the racetrack with bags full of cash. 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. He resolved that he would, too. odds, and whose odds are less then a certain threshold, which we winner approaches 0. At 2:15 p.m. the laptops downloaded the next package of bets from the office. And how much is that—exactly? This is randomly assigned When no one picks correctly, the prize money rolls over to the next set of races. Mike Smith, a former Hong Kong policeman who knew Woods, wrote about him in his book In the Shadow of the Noonday Gun: “He left a very simple will that pretty much summed up his lifestyle. He came back to Happy Valley for treatment; the Hong Kong Sanatorium & Hospital was within sight of the racetrack. It takes concentration, and lots of hands, to turn a tiny advantage into a profit, but it works. (Remember, the tips are good but not perfect.) Algorithmic Trading and Machine Learning. created a script to scrape result cards from all of the historical To the small group of insiders who knew that software had conquered Happy Valley—perhaps a dozen people—Benter was the acknowledged master. Mifflin Harcourt, 1994). Their cathedral is Happy Valley Racecourse, whose grassy oval track and floodlit stands are ringed at night by one of the sport’s grandest views: neon skyscrapers and neat stacks of high-rises, a constellation of illuminated windows, and beyond them, lush hills silhouetted in darkness. input vector of length $m$ (where $m$ is the number of features), and How to Make a Billion Dollars on Horse Racing, Photographer: Xyza Bacani for Bloomberg Businessweek. “Although this is bad luck for one winner,” he said, “it means there will be a lot of winners through the charities.”. Wagering on it was something of a lark, albeit an expensive one: He spent HK$1.6 million on the 51,000 combinations. More variables, better variables, and finer weightings improve the predictions. Kelly’s equations, applied to the scale of betting made possible by computer modeling, seemed to guarantee success. every race on the horse with the best odds, and one of the best validation, and test set, ensuring there would be no lookahead-bias. As businesses collect more data in a data-driven world, the potential of data analytics to solve business problems will just keep growing. The two men picked through them, isolating three slips that contained all 36 winning lines. If he won, he decided, he would leave the tickets unclaimed. rating $R_h$ of a horse $h$, given input features $x_h \in \R^m$: Assuming a horse with a higher rating has a higher probability of It is important to mention that this method is different than a binary Prior to his Master’s, he has worked for about five years in the treasury and accounting space. ↩. For example, if he calculated the odds of winning to be one-in-three while the public odds is one-in-four, he is then able to risk arbitrage and make profits. Other than building Excel spreadsheets and poring through annual reports, he spends his time reading and watching sci-fi movies. Benter explains he got his ideas from an academic paper “ Searching for Positive Returns at the Track: A Multinomial Logit Model for Handicapping Horse Races.” Take variables—straight-line speed, size, winning record, the skill of the jockey—weight them, and presto! “When there aren’t many computer players, the guy with the best system can have a huge advantage.”. Horse Win Percent: Horse’s win percent over the past 5 races. The Hong Kong Jockey Club now offers individual gamblers tools to help them mimic the betting patterns of the syndicates. “Bobo Duck in front. has likely become much more efficient with large numbers of computer 2018, Benter wanted something more rigorous, so he went to the library at the University of Nevada at Las Vegas, which kept a special collection on gaming. The online betting industry is now said to be worth $60 billion and visionaries such as Benter have no doubt played a key role in its growth. calculated using a shared rating network and then converted to Liabilities: A$15.93.”. After 156 years of colonial rule, the British were set to hand the territory back to China on July 1. Going into this project, I had no industry knowledge about horse racing. By the time he moved back to Pittsburgh, he’d inspired others in Hong Kong to form syndicates of their own. The only sound was the hum of a dozen computers. Posts: 389 1994 Bill Benter Paper. tracks, distances, and going (track conditions). Horse racing is something like a religion in Hong Kong, whose citizens bet more than anyone else on Earth. The club had come to see the syndicates’ success as a headache. It wasn’t immediately clear how much they’d made, so the two Americans attempted some back-of-the-envelope math until the official dividend flashed on TV eight minutes later. On Saturday morning—race day—they checked the internet connection and put a “Do Not Disturb” sign on the door. “Gambling,” Benter told me in his Pittsburgh office, “has always been the domain of wise guys from the wrong side of the track.” Perhaps more than anyone else, Benter has changed that perception—within the tiny population of people who gamble for a living, that is.

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