Thursday, September 11, 2008

Wow! That's a turnaround jump shot

Barack Obama is the basketball player in this race, but he seems to have had his guard down when John McCain pulled off an impressive turnaround jump shot from outside the three point line a couple of weeks ago by picking Sarah Palin to be his VP running mate.

The odds on McCain as the next president are now up to 51% on Intrade, while the odds on Obama are down to 48%. The odds on McCain were well below 40% seven days ago.

Intrade is a website for legal gambling, in case you didn't know, just like Hialeah Park, the New York Stock Exchange and the PA State Lottery. If you buy a share of McCain for $51 today they will pay you $100 on November 4th, if he wins. So he's like a horse running in the fifth race at Hialeah who goes off at a little under two to one. Last week his payoff was somewhat over five to two; and a month ago his payoff was over three to one.

Uh, Oh! Joe Biden can't like this trend. The odds of him being replaced on the Democratic ticket are up to twelve to one today. The odds of him being replaced were over thirty to one a week ago. I wonder if some members of Obama's staff are placing a few bets on the side, selling old Joe short, so to speak.

I think I have all that odds stuff right. If Pop were still with us I would ask him. He could explain it with great certainty. Mom also. They both knew a lot about the odds on lots of things.

This all brings back fond memories of a long running conversation I had with Pop about the possibility of developing a system for beating the horses based on Pop's knowledgeably held belief that most punters tend to be biased toward longs shots and thus increase the payoff odds of favorites above the actual probability that they will win the race.

This bettor bias belief of Pop's was deeply ironic and interesting in that the only person he knew with certainty to be a long term winner at the track was Doc. Doc's investment methodology was to watch all the various factors closely and patiently until he identified a particular long shot horse who was ready to win a particular race based on his history, the running conditions and the histories of the other horses in the field of competition, about all of which he maintained encyclopedic knowledge.

And Doc was also disciplined. If doc happened to go to the track with the boys and no such special pick was running that day, or if the conditions were not exactly right for a horse he had picked, say because it was raining, or because another horse had been scratched from the field, Doc would content himself with $2 bets all day. "Discipline and patience," Pop used to say, "Doc has the patience to wait and the discipline to withhold his bet unless everything is perfect." Not that Doc's horse would win every time; but enough of his twenty and thirty and fifty to one longshots won to return his overall investments and more. Pop knew this because Doc, as his best buddy, shared his picks, and Pop would send a few bucks to the track with Doc when he went, as he did a few times a year, to take advantage of a special situation.

After saying that over the long run he had won some money on Doc's picks, Pop would always mention that Doc would chide him at the track when they went together and Pop wagered a five or ten dollar bill on some horse because he liked the name or whatever. "Why do you do that, Johnny," Doc would say, "You, of all people, know that you can't win at gambling."

Pop and Doc, those were a prize pair to listen to, and if Norfi was with them. . . heavens, the conversations you could hear.

But back to my long running conversation with Pop about betting systems. Pop knew a lot about betting systems because a lot of people he knew were firm believers in a wide variety of betting systems. Pop believed that the betting bias in favor of longshots was real, but that it was was not sufficient to make it possible to beat the track's fifteen percent vigorish by betting regularly on favorites. And, he would always say, "What the hell's the fun of betting on a five to four favorite and then going up to the window to collect twelve fifty on a ten dollar bet. "

Near the end of his life Pop was tickled pink when I brought him a long and pretty careful news article about a scholarly paper by a group of college professors who not only proved the theory that the track odds could be beaten by betting on favorites, but who actually presented the reasoning and the sequence of bets they had made to prove the theory. As I recall it their system depended on identifying and taking advantage of certain kinds of odds spreads over the field of horses in a race combined with the running times of those horses in prior races.

I haven't looked it up online, but you can if you want to, I expect. It would be a scholarly paper written in the mid to late 1980's. And if you look it up you can apply the system yourself, although I'll warn you that it required a lot of study over some weeks before Pop agreed that it might work, resulting in a couple of percentage point edge beyond the track take for the bettor in those specific races where the stars aligned perfectly.

Also, unfortunately, the system itself appeared to me to be massively time consuming to work, although today I imagine you could set it up on a personal computer, if you know a lot about Excel or any of the Mathlab type packages, and if you're ready to do a lot of work learning about downloading betting and odds history, and the time performance histories of a lot of horses.

Then too - The fact that it can work means that many people have probably already perfected automated versions of that system, which in turn means the odds edge it can provide will have dropped since the professors published it.


Anonymous said...

And here I was thinking that the talk about Obama ditching Biden was just someone's wishful thinking.

It never occurred to me that people actually bet on this stuff.

Sully said...

People bet on everything, everything. Once upon a time, if I have the story straight, people all over the country, millions of people, were betting on a certain three digits within the Federal Reserve bank's daily statement of the money supply, or some other government supplied number like that. They stopped betting on those digits and started betting on the digits generated by the odds on the win, place and show horses of three different races at three different racetracks when somebody figured out how to fix the reporting of the lower end digits of the Federal Reserve number.

But how I know that, or at least think I know that, is a story for another day. It could have been an apocryphal cautionary tale, but it was at a time before Snopes, although, come to think of it, I've never checked Snopes to see.