4 hours ago by kqr
The insight about starting from the public odds is so important. It's like running from a polar bear: you don't have to outrun the bear, only your buddy. Not counting the track take, any deviation from the public odds in the correct direction makes you money.
(And the public is often reliably biased -- this is why they say sports betting is more about betting on gamblers than on games.)
A smaller deviation makes you less money that one time, of course, but it also saves you lots of money if you're wrong, ensuring you live to bet another day.
Also in real life: people in aggregate aren't dumb (just a bit biased), so using the public opinion as your prior and then adjusting it Bayesically with private information gets you a more reliable edge than guessing wildly.
3 hours ago by le-mark
The dynamics of odds movements are interesting in their own right imo. Some sports, with many days between matches (nfl, college football) lines can move drastically between when odds are published to match start. Others sports that play daily or by-daily often donât see the swings.
And then what facotors influence the line movement? People with predictive models that see great value in opening lines can move the line a lot. Things like injuries, starting lineup, breaking news before the match can certainly move the line. Casual bettors and fans betting on their team (the public) move the line but usually day of the match.
The key insight is the books are trying to balance winners/losers to maximize their profit, thatâs why the line moves. Itâs also why historically spread betting is nearly 50% odds.
13 minutes ago by kqr
> Things like injuries, starting lineup, breaking news before the match can certainly move the line.
But! At least until recently, people overreact to events like these. If you see the line moving strongly at once, it's more often an overreaction than an appropriate adjustment.
2 hours ago by joosters
The key insight is the books are trying to balance winners/losers to maximize their profit, thatâs why the line moves.
In two-way markets (e.g. a tennis match) maybe. With more outcomes, it's a rare market that ends up with the bookmakers locking in a profit regardless of the outcome. For horse racing, the favourite in the race is most often a loser in the book for the betting firm.
Even for football (soccer) betting, i.e. team A/draw/team B, generally a bookie is very happy for a draw, because people just can't get very enthusiastic about betting on a tied result. Raising the odds on offer for a draw won't attract many extra regular punters, it only risks luring professionals who are more sensitive to the odds - and they aren't the customers you really want!
an hour ago by joosters
It's not just a 'wisdom of the crowds' thing where you are using people's betting in aggregate. The odds also reflect private information that other in-the-know people may also have.
The problem with pool betting (like in HK) is that the odds only become significant right before the start, when everyone has placed their bets. This means that there is a strong motivation for everyone to wait until the last possible moment to bet - meaning that the odds then only become useful even later!
2 hours ago by user5994461
>>> (And the public is often reliably biased -- this is why they say sports betting is more about betting on gamblers than on games.)
One mistake here. It's the house that sets the odd, not the public.
When the house sets the favorite to 1:3 odd and the second favorite is 1:4, they better be damn right about that proportion. At the end of the run, the money on the losing side will need to cover the winning side, and if it doesn't the company must pay the difference out of pocket.
The direct effect is that there is an enormous spread, the article mentioned about 17%, for the exchange to cover high uncertainty and make some profit.
2 hours ago by kqr
In parimutuel betting, which is what the article talks about, the public sets the odds.
2 hours ago by user5994461
I doubt it's parimutuel per the strict definition. It's subject to extreme variations due to liquidity and doesn't work well in practice, especially for quant trading and at the volumes involved here. (If it were, the article certainly did a terrible job of showing it, where's the part where odds moved last minute and massive losses ensued, or where both rivals took the same large position causing massive losses to one another).
Anyway, the deeper point still stands, the house takes an ENORMOUS margin, could be in the order of 25% (even nowadays). This changes everything.
3 hours ago by bluecalm
Along those lines it used to be a very good strategy to bet against popular clubs/players. As fans like to bet on their favorite teams/players there was too much money on that side so the bookies moved the line to balance.
I don't follow sports betting anymore and my guess is that there is enough smart money out there these days to close that market inefficiency but it's an interesting mechanism.
3 hours ago by teddykoker
You can find Benterâs paper about the model here: https://www.gwern.net/docs/statistics/decision/1994-benter.p...
About a year ago I read this and attempted to build a similar model (with more layers ;)) using data I scraped from Hong Kong Jockey Clubâs website. Although I used much fewer features, it still produced profit in held-out races: https://teddykoker.com/2019/12/beating-the-odds-machine-lear.... Obviously there are many caveats when backtesting like this but I thought it was a fun project!
38 minutes ago by ackbar03
So basically the model was just a single layer neural net with extra proprietary data?
3 hours ago by dougb
His company is http://www.ave4.com/ I meet him a few times, interviewed to work there (didn't get the job.) I mostly talked to a lawyer who was very nice, but reminded me of Kobayashi from the Usual Suspects. The offices are a bit extravagant with some amazing original artwork on the walls, https://www.jendoco.com/portfolio/fourth-avenue-analytics/
Pre covid he hosted meetups with Pittsburgh's R Users Group, https://www.meetup.com/Pittsburgh-useR-Group/events/26070166...
He is also mentioned in http://www.fortunesformula.com/ which I really enjoyed.
4 hours ago by fighterpilot
If I remember properly: lots of proprietary data that was painstakingly assembled, and quite simple models on that data.
4 hours ago by nojito
Data science in a nutshell.
2 hours ago by sokoloff
I donât get why they felt like they couldnât cash the winning bet. They paid the money and placed the bet; might as well take the win.
an hour ago by user5994461
It's a major national event for Hong Kong, like the guy winning a $1B national lottery. The winner will be shown on TV and newspapers, a random citizen who accidentally hits the jackpot and got lifted to being a king.
Except in that case, it's some foreign math computer nerds, who have already profited billions. Billions of dollars taken off the cumulative bets of Hong Kong citizens. It's not acceptable socially or politically.
The guy was already cashing hundreds of millions anyway, leaving a few millions on the table doesn't make a difference to him. Better stay anonymous and safe.
an hour ago by woutr_be
> The winner will be shown on TV and newspapers, a random citizen who accidentally hits the jackpot and got lifted to being a king.
Iâm not aware of this happening in HK. Mark six (lottery) winners are not shown on TV or in newspapers. Winners are announced, yes, but it doesnât include their identities. Iâm not sure about the process when you win millions of dollars, but you can buy tickets at the track, which are anonymous, and you just cash them in later. Of course, my experience is only winning a few $100s.
> It's not acceptable socially or politically.
Socially, I more expect it to be the other way around. Other gamblers will probably applaud them for finally doing the impossible. This was also in 2001, nobody would even consider this to be politically unacceptable. Even now, that wouldnât be the case.
44 minutes ago by woutr_be
They said it would be unsporting and they would feel bad about themselves for cashing in.
27 minutes ago by sokoloff
I read their stated reason. I just don't get it.
If you feel that way, then why even place the bets? I mean, you could generate a text file that said "I would have placed the following bets" and then see if you would have won...
5 hours ago by magicroot75
Is there a book on this guy? Fascinating stuff and I'd love to dig deeper.
4 hours ago by sanxiyn
Yes there is, from the man himself. Computer-Based Horse Race Handicapping and Wagering Systems (2020).
5 minutes ago by PaulRobinson
That's simply a reprint of his 1994 paper, which is available here: https://www.gwern.net/docs/statistics/decision/1994-benter.p...
4 hours ago by hamhamed
I've been spending almost every weekend for the past few months trying to break a crypto crash game (called bustabit) using ML. While I'm also dealing with probabilities, my challenge has to do with the limited data I'm dealt with even though their API is public.
In horse racing, you have access to so much shit that you can feed into the AI, like rider statistics, horse performance, horse attributes, etc. In my case, I only have the game/round number and the bust result (red or green). From thereon, I have to create many other variables (aka featuring engineering) like round win/lose streaks, moving averages, MACD, etc. I can also feed in what and if other players are currently betting for the round or not.
Currently, the house always wins. And their game is rigged so they have that 1% advantage over you. However, so far with my AI, I've came with enough confidence score to win as long as my bot plays 0.001% of the games.. which isn't declared victory since those blackswan games happen once every 3 weeks.
There's also another way to beat it without using any ML, just plain old fibbonaci martingale - requires around 10k starting money for error margin but it ends up always ahead of the house.. That's just a math way to beat it and not very fun :)
It's probably crazy of me to even attempt to predict randomness, but there's something intriguing when you mix big data and ML with forced randomness. Again, they have to keep forcing the odds to be 49% vs 51%..
3 hours ago by kqr
Do I get the premise of the game right if I think you either lose all of your wager or get some random odds on it?
But with the house take at 1 %, isn't it a negative sum game and therefore impossible to beat in the long run?
And even if you could play it at fair odds, wouldn't the solution simply be the Kelly bet?
I'm struggling to see under what circumstances it is an interesting game to work, so I suspect I'm missing some important nuance.
2 hours ago by eru
I found their website at https://www.bustabit.com/
Seems like bankrolling the bank, a feature they offer, is much more lucrative. Assuming they don't run away with your money.
6 hours ago by undefined
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