The Myth of the Hot Sports Betting Handicapper

The most prevalent means of sports service marketing is some variant on the theme that so and so is “red hot” and you should therefore pay him your money and follow his plays. The crooked services do this by coming up with all sorts of confusing and contradictory rating systems and hyperbolic descriptions for their games. How many times have you heard a handicapper brag about being “16-2 on his 500 star MWC underdog plays of the month” or saying that his “Southern Conference total of the month is 60% lifetime”?

Basically, the bottom feeders of this industry can slice and dice their statistics all sorts of ways to make themselves seem “hot”. Or they can do what a lot of them do, and simply lie about their performance. When I was first starting out as a sports handicapper there was no such thing as the Internet (at least as it exists today) and I had to rely on a scorephone for line and score updates. This scorephone was sponsored by a group of touts not noted for their veracity, and you had to sit through a few pitches for their 900 numbers before you got to the scores. A bit of a Faustian bargain, to say the least, but it was an effective way of keeping up with scores in the pre-Internet dark ages.

So one night we’re at a party thrown by some kid that we didn’t like too much. My crew and I were racking our brains to think of some mean pranks to pull on the guy. Someone got the idea to rack up some 900# charges on our mark’s phone bill. Since there’s no such thing as 900# directory assistance, I resulted to the only 900# I could remember – one of the touts from the scorephone that had drilled his digits into my memory through the sheer force of repetition.

For the sake of argument, I decided to write down the tout’s NBA plays. I had less faith in his handicapping ability than I would in a prognostication based on a divining rod or Ouija Board, but since I wasn’t paying for the call I figured I’d just see how the guy did. I wrote down his plays and checked his performance the next morning.

To his credit, the tout went 5-3 on his 8 plays. By any criteria a 5-3 night is a solid performance. Later that day I called the scorephone and waited for the tout to start crowing about his 5-3 night. Much to my surprise, the tout didn’t say a word about his 5-3 night. That’s because he was too buy bragging about his mythical 7-1 performance the preceding day.

Now, I understand that the revelation that boiler room touts like about their performance is on par with “pro wrestling is fake” or “the games at the fair aren’t on the up-and-up” as self evident truths. The point I’m trying to make, however, is that the desire to be the “hot handicapper: is so great that the tout felt he had to embellish a solid performance the night before.

So despite the fact that some handicappers like about their performance, what’s wrong with trying to ride the hot handicapper? Plenty-it’s not only an ineffective way to evaluate a handicapper’s abilities, it also has a number of statistical and theoretical shortcomings.

The simplest way to explain what I’m talking about is to borrow a disclaimer that you’ll hear on every commercial for a mutual fund: “Past performance is no guarantee of future results”. The sports gambling milieu, like those of stocks, commodities and other financial instruments, is a marketplace and subject to a number of the same tendencies of other financial institutions (what economists call “market dynamics”).

The fact that a sports wager’s success or failure is dependent to a degree on the “whims” of a marketplace (of odds and pointspreads) and to a greater degree on other external events outside of the bettor’s control exacerbates what is already a matter of simple logic: what a handicapper does over a period of time (be it a day, week, month or season) has no intrinsic correlation between a handicapper’s performance one year and the next. In other words, the sports gambling marketplace and the random patterns of events that act upon them don’t care if I hit 60% last year. If I don’t do my work, crunch the numbers, get good prices to bet into, and catch a few breaks along the way I may end up beaten regardless of how well I performed in a subsequent period of time.

The Worlds Greatest Horse Race Handicapper – Winning Over $670 Million

My friend and mentor Australian Alan Woods, passed away on January 28th 2008 at the age of sixty-two. He was, without a double the world’s most successful horse-racing gambler. It was estimated that at the time of death last January, he was worth over £320m ($670 million US). For twenty years, he was regarded as one of the world’s largest punters and was generally named as one of the three biggest bettors alive. We called him “Mister Huge”.

He did not see racing as a sport of horses and humans, he only saw it as a never ending string of statistics and numbers. He did not socialize with the upper crust of racing. In fact he couldn’t’ even recognize common names of Jockeys, trainers, or important racing personalities. He would brag that he had not been to a racetrack for over twenty-five years. He was the best of the game and had little interest in the beautiful animals that make up the sport. Alan was strictly a numbers guy. Born in 1945 in Murwillumbah, New South Wales, Alan showed an early brilliance for mathematics. He was a losing punter at university and did not develop gaming interest until later on. He was a mathematician and worked as an actuary in the 1970s. His job was to figure out how long you would live if you smoked two packs a day and did not exercise. The insurance companies would then sell you insurance based on his numbers.

In the mid 70’s, he was intrigued by reading a copy of The Revere Point Count Strategy on blackjack card counting. This was his initiation as a serious gambler. For three years he undertook disguises to avoid identification as he traveled from Australia to Las Vegas, playing alone or with teams of blackjack pirates. In 1982 he was tired of the travel, fake identities, and dodging the casino bosses, he headed for Hong Kong. He was successful in the world of card counting, but it was a drop in the bucket compared to what was ahead in horse racing. After investigating what the Computer Group was doing with computers in sports betting, his priorities changed. With a couple of programmers, he would establish a new purpose and change the sport forever. Hong Kong is the perfect spot for professional gamblers. Racing is controlled by the not-for-profit Hong Kong Jockey Club, and is scrupulously honest. You don’t want to be caught fixing races in China and have the authorities find out. Untrue results or race fixing hurts computer calculations. Hong Kong racing features huge betting pools with a limited number of horses and jockeys. He would build a database, his programmers would write a program and they would make history. Hong Kong racing is packed with multiple exotic wagering providing numerous financial opportunities for computer wizards.

For twenty years, Woods would rise to the zenith of this business and become one of the world’s largest horse players. His teams of computer experts and money running agents made it all work. He directed his empire them from a luxury high-rise apartment in Manila. Over the journey he had his ups and downs but it’s reported that during one race day in 1995, Woods made $8 million. It was estimated that in the 2006-07 season, Woods accounted for 2% of the $71.46 billion total Hong Kong Jockey Club betting turnover. His downturn only came when he ventured outside of the Racing world. In the late 1990’s, he took a $100-million stock-market hit when he attempted to short the NASDAQ index just weeks before the bubble actually burst. Had he waited sixty more days, he would have been a billionaire. But it is showing how effective computers can be to the professional punters in succeeding at horse racing. Though Alan is gone, another cancer victim, his legacy will live on. We will miss you my friend.