The Gambler Who Cracked the Horse-Racing Code

I’ve only been to a racetrack once, and found the whole thing mildly entertaining. Gambling on horses never really did it for me, but I do understand it’s big money. What I didn’t understand was just how much money can be involved, particularly in Hong Kong.

In The Gambler Who Cracked the Horse-Racing Code, we’re introduced to Bill Benter – a man who has made close to a billion dollars betting on horses, using predictive software.

While always interested in Mathematics, Benter’s early approaches to gambling were fairly humble:

When Benter got to Las Vegas, he worked at a 7-Eleven for $3 an hour and took his wages to budget casinos. The Western—with its dollar cocktails and shabby patrons getting drunk at 10 a.m.—and the faded El Cortez were his turf. He didn’t mind the scruff. It thrilled him to see scientific principles play out in real life, and he liked the hedonistic city’s eccentric characters.

While only winning $40 a day, eventually Benter would join a team of card counters (led by Alan Woods) and began pulling in around $80,000 per year.

After Woods and Benter decided to tackle horse racing, that’s when things got a little crazy:

Benter taught himself advanced statistics and learned to write software on an early PC with a green-and-black screen. Meanwhile, in the fall of 1984, Woods flew to Hong Kong and sent back a stack of yearbooks containing the results of thousands of races. Benter hired two women to key the results into a database by hand so he could spend more time studying regressions and developing code. It took nine months. In September 1985 he flew to Hong Kong with three bulky IBM computers in his checked luggage.

The article is a fascating read, long but just full of amazing stuff. Though I’m really not a gambler by nature, I’m drawn to stories like this – big money, big amounts, and people using math and processes to overcome odds. It’s like a rags to riches story, but in this case it’s more of a stats to riches story.

[Photo by Mathew Schwartz]

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