Could survivor bias be a more likely explanation than a good system? I mean among a large pool of people systematically betting on horse racing, a few are likely to have winning outcomes.
Quite possible. David Walsh (of Tasmania's MoMA) had a similar betting system to make his fortune. A story/warning he told to a hedge fund conference was that he _did_ think his system was infallible/bound to win, but revisiting the calculations later it turned out the expected value would be failure - he just happened to win at the right moments, initially. (Australian Financial Review article from a couple of years ago)
It's closer to a hedge fund finding asymmetries (e.g., under/over valued odds by bookmakers, bulk buying strategies when phone buying is turned off, etc.) plus some structural benefits (e.g., HK was a gambler's dream. Winnings were exempt from taxation! And the "pit boss" for the horse-racing scene wasn't kicking them out.)
These don't apply to all horse-racing scenes.
These advantages emerge, but get competed away.
Look at how the protagonists here were in black jack card counting teams. They do make money until they get blacklisted.
If you have a large bankroll and a relationships with track staff etc, past posting would be an available system.
Or to put it another way, social engineering is usually a more reliable hack than technical means. I mean his card counting at blackjack was a team sport.
Hedge funds trade on inside information because making money is the goal. Not style points.
I only learned yesterday after reading this article that, apparently, a good many countries have no taxes on gambling wins. The reasoning is - again, from my quick bit of reading, if someone in the know wants to correct me please do - that most people lose, and the government doesn't want to be liable to help all the people who lose heavily.
Which is great for the pros, I suppose. Here's a list of countries, which you'd have to check individually, after I searched "gambling tax free countries":
Austria
Australia
Belgium
Bulgaria
Canada
Czech Republic
Denmark
Finland
Germany
Hungary
Italy
Luxembourg
Malta
Romania
Sweden
United Kingdom
> The laws concerning gambling tax around the world aren’t all black and white. In most cases, there is a sort of gray area which states that you will be taxed on winnings if gambling is your profession or your main source of income. However, if you gamble and win but you have a bigger source of income and don’t rely on professional gambling to pay the bills, you won’t be taxed.
In other countries, like Kenya and Ireland, players aren’t taxed on their winnings, but bookies must pay a certain percentage of taxes on the total bets or winnings they record. In Ireland bookies must pay 1% on all bets placed through them, while in Kenya bookies have to pay 7.5% tax on all winnings they record.
I am to provide some context, in many of those countries people do not normally fill in tax reports, themselves, either. Lots of those countries have rather sophisticated regulations when it comes to gambling.
Take Italy which (along the UK) has one of the largest gambling market and the strictest regulations. Effectively every bet is sent to the regulator in near real time and some stuff like bringing money to the table (game) requires an explicit approval of the regular beforehand. To put it simply taxing the gambling firms, that already need a license, is much easier.
There are monthly reports, regulator mandated vaults that have to reflect the state of each player, including all bets and wins done, player (and operator) set limits (e.g deposit limits)
So overall not taxing the end user is a good choice, it just it's a lot more involved that just 'no taxation'
I am a professional automated sports gambler, and I win basically every day, and the handful of losing days I have per quarter are significantly smaller than the average daily win.
If you place enough bets (I make about 15k bets each day that are matched) that have a positive expected value your chances of a losing day become pretty low.
For example, I had a losing day on Christmas Day, but was only able to place about 500 bets as it was such a big holiday that there were almost no events.
It’s automated, I bet on a betting exchange which has an API, so the bets get placed without any input from me.
As it’s a betting exchange they don’t care if you win or lose as you aren’t winning money from them, but they start to take steeper cuts of your profits if you’re a regular winner above some threshold that a random punter is very unlikely to hit.
These guys never talk about the details. Either they’re LARPing or there’s something to it. “Betting exchange” is your clue. I’ve followed this thread before. Apparently the exchanges are mostly in Asia and allow people to buy and sell bets. So presumably this person is placing bets well before the date the event occurs and using them to arbitrage the result as the event nears. This is due to line movement up to the event. To participate in this you have to use btc/crypto and risk being ripped off with no legal recourse. Also presumably there’s a system around what bet to place when. They never talk about that.
To give some details, the main betting exchange I use is Betfair, a UK betting company part of the same group that own Fanduel, and I place bets for or against outcomes in the last half an hour before the start. For example, you can back a team to win meaning you make a certain amount if the team wins, but you can also lay a team, meaning that if that team doesn’t win (another team wins or it’s a draw) you win that bet, with a payout of inverse the odds. There is no crypto involved, just GBP, and Betfair is a multibillion dollar company paying taxes and subject to the law and the UK regulating bodies. I have a model to predict short term movement in the odds, which is not amazing but enough better than random that it can overcome the fees and spread between the back and lay odds and be profitable.
If you mean as a percentage of my investment, it’s about 1000%, but I can’t scale up further, so it doesn’t grow exponentially. If I increased my stake tenfold I wouldn’t be making more bets or more money. It’s like with market makers or Renaissance Technology, I’m limited by the market opportunity so the roi or sharpe ratio or whatever don’t really make sense.
Can't sell - you can buy, or find a counterparty. The exchange part is finding a counterparty.
> placing bets well before the date the event occurs and using them to arbitrage the result as the event nears.
Narrowly correct -- we could, of course, offset our X wins bet at $100 with a Y wins bet for $20. The implication is this is done by selling bets, which as mentioned above, isn't a thing in this world.
Are there some websites where this can be done? yes.
Is it widespread? No.
Is it implied by the phrase betting exchange? No.
The implication with betting exchange is "you're not betting against us, we're not making lines, we're just matching you up with a counterparty, so our incentive structure is aligned with you, we'll build an API even. also fees are much lower, its a pure rake"
> you have to use btc/crypto and risk being ripped off with no legal recourse
Sites that only take crypto do exist, but its certainly not a given or predominant.
> Also presumably there’s a system around what bet to place when. They never talk about that.
This is confusing because:
- you spelled out a system, intuitively, that most people would grok instantly (arbitrage on the line)
- "presumably" is doing 0 work, besides implying there's some hidden secret: any system involved in placing bets would have to provide information on what bet to place. :)
Generally, I don't think it's anyones job to spell out how to pull off consistent net-positive money machine, and it's quite odd to not only want it, but expect it.
Thanks for the corrections; more info to refine my understanding. In a way it seems you are the book maker and the “exchange” is the platform that lets you do it (matches bettors).
I don’t know their ways, but I expect there’s a lot of emotion in sports betting that can be exploited (bookmakers will not purely optimize for expected profit, but also want lower variance in their profits). If so, betting against clubs in rich countries where betting is popular is the better option.
Whether it beats the bookmaker’s margin I wouldn’t know.
I've probably 10 more questions, but you've already shared generously in a couple of other comments. Thanks for that. I've bookmarked, and will investigate. Best of luck with it
Bill originally worked with a team of people doing this in HK (that later broke up, some of the people involved were...characters). There was a whole group of people doing this in the 90s (some of these teams also did Japan). I believe he did stuff in casinos but parimutal obviously had a lot more scale.
Exactly right. Impossible for individuals to operate at this scale. Bill led a large operation. Similarly, advantage play frequently requires teams to execute as you are often hoping to land a specific seat with a specific dealer.
I'm a very cynical man who has also had the honour of working for the national statistics organisation, so take what i say with a grain of salt.
While there are lots of "real and theoretical gains" to be made in gambling, a far more cynical take is that the "advanced analytics" is the frontbusiness for the real money being made by criminal enterprises, insider-trading, front-running, special access advantages, arbitrage, regulatory and competetive inefficiencies and insider-jobs.
"No no, we're all really smart see, look at this math that you don't understand, that's how we make millions while being bankrolled by mysterious money and business partners from vegas, who also by definition can't understand the math and hence can't validate what we're doing but who are totally willing to just front us a bankroll :)"
Its possible that there are certain gains left on the table, especially in old and early markets, but be wary of anyone being bankrolled by external forces and earning millions/billions and needing to explain that wealth with "smarts".
Often i wonder whether these articles that appear aren't a form of marketing or reputation laundering, but i have absolute no proof and i'm not particularly interested in looking into it much further. So you know, i'm probably way off :)
The article is messy in that sense, but you already knew that was the reality. It's smart people that found a system they could exploit.
In poker, the top cash players win by choosing who's (i.e., lesser players) in their games, not playing against other top players. People with math acumen are most likely to find some of these anomolies like the Stats PhD who kept winning scratch off lottos.[0]
> Its possible that there are certain gains left on the table, especially in old and early markets, but be wary of anyone being bankrolled by external forces and earning millions/billions and needing to explain that wealth with "smarts".
I don't have any immediately at hand, so whether you believe some random guy on the internet from here on out on is up to you.
I actually did a little bit of private investigation myself into betting markets of a handful of sports a number of years ago out of both curiosity, and potentially profit. And I'm currently working on perceptions of skill and merit along various systems just for my own intellectual project.
I find it interesting you've discovered the systematic bias strategy of choosing your opponents and events (these are done both consciously by players in various systems, but often formally and informally supported or enabled by various governing bodies and competitive structures).
Aside from both the boredom (arbitraging and scraping stats can be meticulously dull especially in fields you have no interest in or if you lack a hustler or profit maximising mentality or significant bankroll), opportunity cost (how much you can earn in other markets with such skills given equal investment of time and safety), the moral question (you're taking money from other ignorant bettors and I personally consider a lot of gambling and exploitation of people's ignorance relatively immoral, the house/market maker in many contexts still profits just through sheer trading frequency or other profit making actions), these days you have many market makers targeting little sharps presumably because they want to keep their ignorant base happy and gambling and don't want the perception of playing agaist certain losses or against people capable of seeing through the systems to reveal internal operations.
That's the only reason I can come up with for why they target and close accounts of profitable gamblers while they're still taking the house edge on every bet as profit.
What I (of course) also informally discovered in some markets I looked into was evidence of various fixing activities and systemic biases.
Now if you were going to do this for large scale profit, one of the things you are going to have to do is stop the illusion you're modelling skill and start modelling corruption.
It's all well and good for these articles to come out and pretend skilled prediction will win you millions, but you can be the best statistician in the house and if you place bets in a game based on models of skill, but the game outcome is rigged, you can kiss goodbye to your bankroll.
Criminals win because their outcomes aren't statistical or based on skill.
And now you're suddenly in the business of modelling and fighting people who profit from rigging markets rather than morally neutral statistical models in games of skill.
You can of course model such and go down that rabbit hole, but at some point you either buy into such a world and get involved (either by being hired by or interacting with criminal and questionable enterprise) or you are effectively trying to do statistical surveillance of criminal activities... Which will then show up in the statistical patterns of your own betting activities and potentially alert said enterprises to your existence.
And that's about where I bowed out of my investigations and turned back to more theoretical work.
That's not particularly a world I want to be involved in, but I am relatively confident popular sports and markets have illicit match fixing and other activities going on in them at significant levels, but I'm not interested in fighting with or building implicit knowledge bases of people who have million dollar anonymous backers from Vegas, billion dollar contracts, and whom die from accidental sleeping pill overdoses... If you know what I mean ...
> Now if you were going to do this for large scale profit, one of the things you are going to have to do is stop the illusion you're modelling skill and start modelling corruption.
Well...I reject that dichotomy. If someone intentionally introduces an exploit, sure. But I can think of numerous examples where someone found "bugs" and exploited them, while playing by criminal and ethical rules. It sounds like you realized that these are just rare and hard to reproduce without taking on more legal risk. Hats off to the people like the Stats PhD I linked to who ran a multi-person outfit and everyone has kept their mouth shut.
A similar exploit happened recently where a syndicate bought all of the lotto combinations. The math was straightforward, but execution was hard. They had to spin up a few licensed terminals at shuttered storefronts to execute all of the purchases. This forced a rule change.
Yes, that's fair. You can generally either go for the "1 time bet the house" bugs, or you can go for the salami slicing so small across many transactions and there's minimal grey areas in between...
But as a general rule there's a trade off between signal generated by your winnings vs the frequency of your trading all balanced against your power and ability to manipulate and capture the market.
If you bet big enough and pull off the implementation successfully once such that you can get away in that one time (and ensure the system doesn't respond to cancel your winnings as it will often try to due to the cost benefit of paying you out), congrats. And you can go the opposite strategy and have lots of small winnings and fly under the radar and make profit just below the cost of entry or dealing with you, but you won't make squillions.
If anyone repeatedly makes big money, what is almost certainly going on is some other expression of market power, because if you don't have that power, the real market power will make the calculations on shutting you down once you're detected.
You can't become a billionaire by betting on hundreds of thousands of events via "survivorship bias". It's about as likely as getting 1000 monkeys typing on typewriters and producing Shakespeare's works in 10 years.
I think only the top one of those was actually a billion. Sum of payments is poor financial math, and I really wish news agencies would grow some standards and not use them in the headlines.
it's a typical HN Gotcha of which I myself am often guilty, given hundreds of different chances, and one of those chances can make you a billionaire, then you can become a billionaire by betting on hundreds of different chances - but of course horse race gambling doesn't give you that billion in one shot chance.
on edit - well I guess it technically does it give it, but at such a high rate of investment it isn't really that worthwhile either. The point about the lottery is that a single ticket which costs little can return a billion. A horse race that returned a billion probably needs at least a 100 million to be bet, which is probably not even possible.
it sounds to me like you think I've said something about the likelihood of a working system, and also that you think I am somehow in opposition to your second sentence, and require setting straight on the matter?
I admit I am at a loss how either of these suppositions could actually come to be, based on what I wrote, so I suppose I am mistaken.
yes survivorship bias almost certainly plays a little bit, but i also imagine that there is great arbitrage on int'l horse betting markets prior to like 2012
