Hack the Track: Put Your Money Where You 0wn Is!

by water + Lasix = #1

Allow me to shift the scenario a little regarding what people commonly consider to be hacking.

I am going to present to you a world of hacking that frequently goes unnoticed by both mainstream hackers and the general public alike.  It doesn't involve unauthorized entry.  It doesn't quite involve an information-sharing economy.  It doesn't involve a cat-and-mouse game.  And it doesn't directly involve outsmarting people.

The facet of hacking I'm referring to, however, does remain true to a hacker's expectations in many ways.  It involves taking control of technology and mathematics for one's own personal gain, while revealing personal insights to others at one's own discretion.  It involves consistently having to prove yourself to yourself and others in the face of opposing odds.  It inspires the use of technology in innovative ways in order to unearth naturally occurring patterns and trends from past data.  Software gurus are always honored in this realm, as it often becomes necessary to take your own research and compile it into usable software utilities.  It involves the time and dedication of a monk, and it may well become a full-time job in and of itself if you have the self-realized talent.

The world I am introducing you to is the world of handicapping.  In this context, albeit a tad politically incorrect, handicapping refers to the act of somehow theoretically "crippling" the management of pari-mutuel or other gambling systems.  Scientific methods provide a means by which winners of gambling competitions can be revealed by thoroughly analyzing contenders' past performances.  Of course, the assumption is stated clearly here; a competitor will, more often than not, continue to overcome their foes in competition simply because they were proven contenders in the past.  If you haven't figured it out already, this doesn't equate to a 100 percent sure thing.  However, it does provide a better-than-average window of opportunity to spot future potential winners.

Ever since computers and mainframes having been building up steam since the mid-1980s, there have been quite a number of people who identified the time-sharing system they had access to, both legally and illegally, as a means by which a handicapping regime might be developed.  Plenty of old-school hackers have been caught at their game while trying to use their analytical skills, along with the power of a computing platform, to make a profit in the face of bookmakers.  It just seemed like a natural progression to many to utilize a computer in an attempt to handicap the bookmaker.  It just somehow feels right.

Regardless, the landscape is much different today.  People can commonly afford enough computing power to place an efficient handicapping system in their homes, or even in a portable computing device that they can take with them to the track.  Of course, these days, it is not even necessary to transport one's self and equipment to the track to gamble on pari-mutuel systems, as it can be done legally online in the United States.

There have been plenty of stories where stock market investment leaders have taken their investment teams out to racing tracks in order to illustrate to them how stock investing is not so much unlike betting on thoroughbreds.  They also supposedly learn to understand hedging through this experience.  Regardless of its potential evils, gambling, in one form or another, universally acts to strengthen the economy, no matter how you look at it.

The world of gambling through the prism of mathematics and technology yields a very pretty picture, indeed.  Along with computer technology, gambling can become a fun and lucrative pastime.  I will make the default public service announcement here that gambling should never become anyone's addiction, and should always be undertaken in a responsible manner.  Handicapping merely converts gambling from a mostly passive experience into a more active and entertaining one.  Also, if you do gamble, remember that in most states, one can claim income tax deduction write-offs for the price of losing tickets up to the extent of your winnings from race tracks and other gambling venues, provided that you have the receipts available at filing time.  This includes respective state lotteries.  If interested, please consult a local state income tax professional in your area to see if and how this type of possible income tax deduction may apply to you.

Just like one will find interesting traditional hacking tools in the wild, one will also find lots of interesting gambling software out in the wild as well.  For instance, one may find what is called a "Dutching calculator."  A Dutching calculator will enable and instruct the user on what horses in any given race (provided that there are enough competing horses) to bid on in order to always reap a profit, no matter how small the actual profit may be.  It uses a method of gambling called arbitrage.  You will have to put up a large sum of money to undergo the process, but you can be confident that you will gain your money back, and then some, by using this technique.  It is largely inefficient for making a serious profit due to the effort and reserved money necessary to partake in the process, but it just serves as an example of how mathematics can open up a world of grandiose possibilities to the punter.

Some punters who are minimally into mathematics will swear by statistical linear regression techniques, along with past performance data, in order to make their judgments about winners.  This is especially the case for beginners.  The more sophisticated of handicappers may choose to use more complex mathematical structures like predictive neural network or Bayesian network technologies.

I will briefly discuss predictive neural networks, while leaving Bayesian networks to your own private study.  There is Windows software called EasyNN which will comfortably introduce you to the concept of neural networks.  Essentially, past performance data is entered into a spreadsheet-like table, while reserving a column for the predicted output.  The neural network is trained on this data using an abstract structure of the human brain as a mathematical model.  Once the software is trained, you can query it for the next logical number to be outputted in a series.

One of the examples that is packaged with EasyNN is the color wheel example, which proves that a neural network can take numerical data that models a color wheel, and accurately predict and complete the information which represents missing color combination data.  In essence, the neural network can be trained to output the correct response to the question, "Hypothetically, what color will be yielded if I combine the primary colors red and green?"  Quite remarkable.  Neural networks work best if the data model is logically fluent, along with a large amount of supporting data in order to offset uncertainty in whatever patterns in the data the neural network will naturally expose to the user.

More serious coders will wish to use one of the various open-source or commercial neural network SDKs in their own software in order to produce elegant software solutions.  The field of predictive neural networks, indeed, remains a black art, even though it started to become common parlance about 20 years ago.  It is a vast playground for hacking.  There isn't much tutorial documentation out in the wild, but to some, this contributes to its value.  Even the introductory EasyNN software mentioned earlier has features that are not clearly documented, whereas it is difficult to find an explanation for them anywhere.  Due to the complexity of neural networks, it can be tempting to seek out prepackaged solutions which abstract all of the details so that you can spend more time focusing on your gambling strategies.  They come at a price, but it may be worth it to invest in one of these solutions if you have more money than time.

The handicapping communities online are sparse, and it can be difficult to gain respect in certain individual communities.  Remember, your questions are more likely to be answered by others if they are well thought out and concise.  Generally, if you don't know exactly what you are asking help for, these communities will fall short of your expectations.  Really, this advice generally applies to all learning endeavors.  It turns out that many of the people on these boards lack software programming skills to enhance their own ideas.  It would make these people's day if someone who was proficient at various elements of programming like constructing regular expressions, or utilizing forms of XHTML parsing techniques like BeautifulSoup for Python, would assist them.  Of course, this would be in exchange for whatever else they may know.  Screen scraping continually remains an example of a skill that most everyday punters would like to become proficient in dealing with.

One good forum to check out is the Sports Betting Forum.  Also, a great online magazine related to handicapping for all technological punters to check out is SmarterSig, which is released monthly at subscription prices.  If I haven't made it clear already, SmarterSig is a community and magazine dedicated to thoroughbred handicappers (U.K.-centric) who want to use technology in order to enhance their winning possibilities.  They even offer some exclusive software tools to members.

Gambling is about fun, but only if you're comfortable with losing surplus money that isn't considered necessary for your own well being.  Handicapping is a great way to connect with, amaze, and impress others.  There are punters who actually make a respectable living doing this, but don't expect them to share their secrets.  Larger, significant winnings (when they do happen) are made possible only if there aren't a great deal of people making the same theoretical winning bets that a successful punter would make on any given race.  It's just the nature of the game.  You can't blame some of these people for taking their secrets to the grave with them.

The majority of this article refers to parimutuel wagering.  It is a style of wagering that is being rendered obsolete by electronic gambling markets.  A good example of an electronic gambling market is Betfair.  These markets are to gambling what the NASDAQ is to the U.S. stock market.  Bettors are efficiently matched up by computer, instead of against the bookmaker, as in pari-mutuel gambling.  Using an electronic gambling market revolutionizes the whole landscape of gambling, since you can make any bet possible as long as there is someone out there willing to make the opposite bet as you are.  Betfair is not limited to sports gambling; they offer gambling on all sorts of sundry issues.  At the time of this writing, Betfair is not legal in the United States (nor is any other electronic gambling exchange, for that matter), but their legality is being pushed for.

Hopefully, you have found this article informative and helpful.  It doesn't make any sense to beat a dead horse, and you surely can't make any money from a dead horse.  So, be sure to boycott gambling organizations which actively abuse their animal employees.

See you at the track!