Alan Woods and Bill Benter

[coach_lowe]

So what is it that sets their programs apart from the others? It fascinates me that there are just a handful of people that can make a killing and everybody else has limited success or none at all. Obviously they are mathematical geniuses, but what else? I find their stories very compelling.

[Sinner369]

If anyone of us knows.........do you think I would be communicating it to you or this board???????.........................

[DanG]

So what is it that sets their programs apart from the others? It fascinates me that there are just a handful of people that can make a killing and everybody else has limited success or none at all. Obviously they are mathematical geniuses, but what else? I find their stories very compelling.
I agree Coach; they are very compelling stories and would make a very interesting movie / or better yet documentary if live footage existed.

One thing to keep in mind with their “success” is the massive amount of failure they also went through. Benter is quoted as saying the main program was 10 years in development and they had a few 6 figure bust-outs before hitting on the right method.

BTW: To those who don’t think a strict computer approach can successfully beat racing only 3% of the final Benter model was subjective trip information. This isn’t saying tape watching isn’t an edge; it obviously is…but just a broad comment on the occasional posts that claim you can’t win with just ‘X, or you can’t win without ‘Y. Neither is actually true; you just need to out work and apply X, Y or Z better then your competition.

[markgoldie]

Clearly, this is a Dave Schwartz thread and I'm sure hel'll be along to answer all questions.

[Dave Schwartz]

So, Mark, have I become that obnoxious?


Guess, I'll pass.

[markgoldie]

Dave: I didn't mean that the way it apparently sounded. I meant this is your justifiable area of expertise and I am interested to hear your comments on these famous programs.

Mark

[coach_lowe]

So, Mark, have I become that obnoxious?


Guess, I'll pass.

No, seriously Dave. I would appreciate any comments. It's just unreal to me that these guys were able to just crush at the track. I would love to hear any thoughts you may have on the subject.

[coach_lowe]

If anyone of us knows.........do you think I would be communicating it to you or this board???????.........................


It was intended to be a general and not specific question. Sorry you interpreted it the other way.

[Jeff P]

http://puppetmastertrading.com/blog/2008/07/12/a-stat-arb-story/

If you haven't ever read any of the articles about Ed Thorp and his carreer after blackjack (he's the author of Beat the Dealer) as a hedge fund manager in the financial sector you might find the series of articles available from the above link a fascinating read.

In my opinion, the reason that Benter and Woods enjoyed success in racing is that they did exactly the same thing as Thorp.

All three created stat arb models for their chosen arena, and then made thousands upon thousands of repeated positive expectation plays while ploughing the profits back into the business.


-jp

.

[Dave Schwartz]

Thank you.

The last thing I want to become is to become another "46" - having an internal compulsion to post into every thread. (Especially those that I know very little about.)

The truth is that the go-to-guy for the Benter and Woods topic is ArkansasMan. He's forgotten more than I know.


Dave

[bigmack]

The secret is the software. It scores each horse on 120 different handicapping factors, then estimates its probability of winning and calculates the appropriate amount to bet...

...The beginning was rough. They started out only considering 16 variables for each horse — but they had to use pencil and paper to collect the data. By the third season they had computerized their system, allowing cumulative data to be analyzed. Still, the two didn't make a profit for five years. "It takes 10 man- years of effort to build up the system," he says. "I used to work non-stop." Since then, technology has helped ease the team's workload. "Computer speed has increased 100 times over since we first started," Benter says. Over the years, he has also hired academics specializing in statistics from Ireland, Las Vegas and Boston to serve as consultants.

He calculates a score for each horse based on the number of lengths it has lost by in past races, giving heavier weighting to more recent ones and taking into account the fact that horses tend to spread out more in long races. It sounds tedious. But those are the sorts of subtle considerations that have made his syndicate victorious.

http://www.laytheodds.com/articles/546/1/Bill-Benter-Computerized-Attack-on-Horse-Racing/Page1.html

If you're hoping there's a secret recipe for winning hundreds of millions of dollars on the horses and have been reading through the 'Gasolina' song lyrics on the off chance it may be provided, there's good news and bad news. 'You can ask, but you won't necessarily get answers that are meaningful to you or anyone else,' says Alan. 'Imagine if someone asks a meteorologist how he calculates future temperatures, or NASA scientists how they calculate the boosts for the spacecraft going up. I couldn't tell you in a way that made sense to the general public.' Alan smiles and the creases across his forehead deepen. Although he dropped out of university, and later an actuarial course, his mathematical talents are phenomenal. His ex-wife Meredith later tells me that a test was conducted during his actuarial course - 'and he was off the scale for mathematical abilities, even amongst them'.

The good news is that the fundamental principles are relatively simple: Alan and his computer team win by capitalising on bad betting by the general public. The bad news is that the key to doing so is having more information than the public. Much more. Alan's team employs a dozen or so staff to review, analyse and compile data for every horse running in Hong Kong, every time it runs. They are a disparate bunch, scattered across Asia and Australasia, coming together only in the cyber-confines of an email inbox. The data is then plugged into a computer program, and using a formula based on past results that has been refined over many years, a probability for every horse in every race is calculated.

Producing the formula is the tough bit. It has been mathematically chiselled out of all the factors that Alan and his team have determined decide races. Each factor is a coefficient in the formula. Some factors - gender, track, distance, weight, last-start result - are objective and can be collected from the humble form guide. The key is getting the weighting of these objective factors right. For example, early on, Alan and his then team partner Bill Benter worked out that number of starts was more important than age. Apparently the data bears it out: the more times a nag is flogged around a racetrack, the less enthused it gets about the whole idea. Then there's form: second in an eight-horse field might not be as impressive as fourth in a 14-horse field. We chat about barrier numbers, and Alan tells me about the time in November 1995 when the computer model stopped working for a month or two. Eventually Alan worked out that the last turn at Happy Valley had been re-cambered - which means the track is shaped to slope upwards from the inside rail - creating a disadvantage for inside horses as the outside horses shifted in. His team adjusted the coefficients relating to barrier position and immediately resumed their winning ways.

Other factors are more subjective, which is why Alan's team employs expert analysts to watch every horse in every race. 'We had a factor called bad rides. We had a factor called not trying. If a couple of horses disputed the lead together, the guys would give it numbers for that. Premature speed - if the horse went too fast too early. Late speed - if it came home very fast in the last 400.' It's the kind of stuff any experienced punter might consider. What the computer teams do is systemise the process, eliminating sentiment and superstition and minimising human error.

http://www.tonywilson.com.au/writing/alanwoods.php

[jfdinneen]

This recent article, Contingencies Online (http://www.contingenciesonline.com/contingenciesonline/20090506/?pg=22), provides a useful summary of the impact Benter and Woods had on handicapping. Also, it may be worth reviewing the old Hong Kong Syndicate (http://www.paceadvantage.com/forum/showthread.php?t=23864) thread.

Best wishes,

John

[robert99]

http://puppetmastertrading.com/blog/2008/07/12/a-stat-arb-story/

If you haven't ever read any of the articles about Ed Thorp and his carreer after blackjack (he's the author of Beat the Dealer) as a hedge fund manager in the financial sector you might find the series of articles available from the above link a fascinating read.

In my opinion, the reason that Benter and Woods enjoyed success in racing is that they did exactly the same thing as Thorp.

All three created stat arb models for their chosen arena, and then made thousands upon thousands of repeated positive expectation plays while ploughing the profits back into the business.


-jp

.

I would agree with that and add that they had an edge and actually went about exploiting it in an organised way. Many are far too timid and hesitate to fail. Then someone else pinches the edge and it is gone, as it has today in HK. The software and the racing analysis input was actually on the crude side to today's standards but it was more than good enough at the time and against very weak lottery minded opposition. Even then they had to factor in the crowd's odds to make it work. They also had the sense to operate where the number of races and horses were few; drug and riding enforcement strict and the PMU take huge - else they end up wining back a lot of their own money.

[acorn54]

i read an article in cigar magazine about alan woods and was struck by the fact that he had little interest in north american racing. i think the environment in hong racing is far different than what we experience here in the states, with alot more money being put into the betting pools based on people's lucky numbers and what not.

[offtrack]

Benter has been in the international news lately via his funding initiatives:
http://cifwatch.com/2010/10/03/what-will-11-million-buy-you-in-london/

He's also linked to the Dalai Lama's visit to the White House recently.

Interesting what people do with their fortune once it is attained.

[dnlgfnk]

Is it so much the computer expertise at 24 % ROI relative to other pros , or the massive pools that allowed for wagering 1,000K a day?