It’s been suggested that Bill Benter is the world’s most successful gambler. While estimates of his fortune are largely speculation, there’s certainly no doubt that he has been one of the founding fathers of computer-based statistical modelling in the gambling world.
Benter grew up in Pittsburgh, Pennsylvania and always had a mathematical mind. He studied Physics at University, but instead of taking a more traditional career path, his destiny changed when he came across a copy of the famous gambling bible, “Beat the Dealer”, by Edward Thorp.
Bill Benter wanted to use his mathematical prowess to profit and chose Las Vegas as the best place to test out his skills. He memorised every detail of Thorp’s book and started out by taking on the blackjack tables.
In blackjack, you can gain an edge over the house by tracking the ratio of high and low cards. When there are a high ratio of high-value cards, 10s and Aces, then you can gain an edge if you play the optimal strategy (known as basic strategy). Bentor reportedly spent seven years in Vegas and won a considerable sum of money, until he was ultimately banned.
There has also been speculation that during his time in Las Vegas, Benter developed a system that was able to win at roulette. The program that he created at home was able to calculate the speed at which the ball was spinning and determine which quadrant it would end up – ultimately creating an edge.
It was around that time that he met a fellow blackjack professional by the name of Alan Woods. Woods had studied to be an actuary but was an all-round gambler and at the time was already an expert in horse racing. Given Benter’s mathematical ability the two joined forces in 1984 and set about turning their success at the tables of Las Vegas, into finding a consistent edge at the racing tracks of Hong Kong. Hong Kong is one of the world’s biggest horse racing markets and there are plenty of casual punters more focused on luck than worrying about winning long-term.
Benter, Woods and a third member Wally Sommons, started working together on a horse racing system that bet on favourites. They quickly discovered that if they bet on the overlays they had a decent edge. However, it took some time before their efforts were rewarded.
Over the course of two years, the team managed to whittle away most of their $150,000 starting bankroll. However, after another couple of rounds of cash injections, they managed to get their system working and they made $100,000 in their third year.
In 1987 the betting team ultimately split up and they went their separate ways after some disputes over money. However, Benter was determined to take the early model and build it into something more powerful. The focus of Benter’s model was to determine the various factors and then weigh them accordingly.
One of the main models he used to weigh the factors was known as multinomial logit regression. The way the process worked was to test factors to determine their significance as to whether they were able to impact the outcome of a race – more specifically if it leads to the horse winning. The multinomial logit regression model then calculates the weighting of the factors.
In the early days, Bill Benter started out with only 16 factors that he was using to determine the outcome of a race. Many of the factors were calculated manually and databases were created from scratch. Over time the number of factors has grown to more than 100 and Benter incorporated not only statistics but also video analysis and subjective form factors. Benter’s model allows him to determine the ‘true odds’ of every runner in a race and only bet on overlays. He also uses the same mathematical techniques to bet on the exotics. In Hong Kong, the Quinella market is not only large in size but also a favourite of the betting syndicates.
Since 1987 Benter’s ‘computer team’, has gone on to win of billions of dollars from the race tracks of Hong Kong. These days he also spends his time lecturing on mathematics and statistics at Harvard, Hong Kong and Southampton. Much of his time is also spent dedicated to philanthropy through the Benter Foundation and he also has a considerable presence in politics and makes regular political donations.
At this point in time, it’s unclear if Bill Benter still attacks the race tracks of Hong Kong. What is known for sure though, is that he was truly a pioneer in the use of computer-based modelling and has gone on to be one of the world’s all-time great professional gamblers.