A billion dollars off the ponies: how a statistician became the most profitable gambler
On 6 November 2001, Hong Kong was abuzz with the news that an anonymous bettor had won the largest jackpot the city had ever seen – roughly HK$100 million (then about $13 million / £9,594,585).
Someone at the Happy Valley Racecourse had predicted the top three horses, in any order, in three different heats – a feat with over 10 million possible combinations. Like the lottery system, if nobody wins the prize for the first race, the amount is rolled over – and that night, the jackpot was rolled over six times, with nearly one million people placing a bet, equivalent to about 1 in 7 Hong Kong residents.
Even more surprising was that nobody claimed the prize – for weeks, newspapers and civilians traded theories for what happened to the mysterious millionaire (did he die of shock? Is he a criminal? Was he somehow unaware of his newfound fortune?) but still, nobody stepped up to provide answers.
Well, at least not publicly.
An anonymous letter eventually arrived at the Hong Kong Jockey’s Club, instructing them to donate the amount to charitable trust, as was policy for unclaimed bets. But the organization never shared the letter with the public, instead telling them that they had no way of knowing who the bettor was, and “Although this is bad luck for one winner, it means there will be a lot of winners through the charities.”
Almost 15 years later, Bloomberg News finally put the pieces of the puzzle together. The anonymous winner was multimillionaire William “Bill” Benter (USA), a Pennsylvanian math-whiz who turned his talent with numbers into a successful career as a gambler.
At that time, Bill had won hundreds of thousands of dollars by betting on the horses in Hong Kong – a surprising feat, given that betting on living creatures is nothing like counting cards. Countless factors can impact a horse’s performance on the track each race, such as its diet, the temperature, how much rest the animal received, and even its mood that day.
But by 2001, Bill had found a way to balance over 120 variables per horse, via an algorithm he created that took in data to calculate each runner’s near-exact chance of winning a race. Any risk of losing was offset by the sheer amount of bets he was placing – and though he is secretive about his exact winnings, his net-worth is estimated to reach nearly $1 billion (£737,805,913), making him widely-regarded to be the most successful horse racing gambler of all time.
But how did he do it? It all started in a Las Vegas 7-Eleven convenience store.
In 1979, when Bill was 22-years-old, he took a Greyhound Bus to Las Vegas, Nevada, USA. He was captivated by the 1962 book Beat the Dealer, which coined the idea of counting cards, and he wanted to try his own hand.
Bill would work in the 7-Eleven for $3 an hour, and bet his wages at the budget casinos – where he would see similarly dressed math-whizzes also betting their $40 and winning based on the same system. He eventually made friends with some of these gamblers, who introduced him to Alan Woods, the leader of an Australian card-counting team.
Together, Bill and Alan had upped their game – with more gamblers pooling their prizes, they lessened the chances of one loss wiping out their entire score. Soon, they found themselves playing Black Jack in Monte Carlo with suited-up dignitaries and millionaires… and better yet, they were winning. At that point, Bill estimated he was making around $80,000 a year.
But soon enough, the casinos started to tell that something was off, and in 1984 Bill recalled a beefy hand grasping his shoulder one night while he was at the table, and taking him into a back room to demand his ID. Afterwards, Bill and Alan and their associates found themselves in the Griffin Book – a blacklist provided by detectives to casinos to tip them off to suspicious customers.
The pair needed to find a new place to gamble, but luckily, Alan knew just the spot.
Image credit: Alamy
Horse-betting was immensely popular and lucrative in Asia, and the biggest pool of all was the Hong Kong Jockey Club. Its two courses, Happy Valley and Sha Tin, were crammed during racing season – and even though Hong Kong’s population was then only about 5.5 million, it bet more on horses than the entire U.S., reaching about $10 billion (£7,374,332,160) annually by the 1990s.
Bill did his research before moving to Asia – particularly, he came across an academic paper entitled “Searching for Positive Returns at the Track: A Multinomial Logit Model for Handicapping Horse Races.” The paper argued that a horse’s success was dependent on a number of variables that could be quantified with probability, and the more variables, the better chance you have at making a prediction. Perfect.
Bill taught himself advanced statistics and how to code software, which he did on an early computer. Meanwhile, Alan went to Hong Kong and sent back textbooks full of data about past races, and Bill hired two women to manually insert all the data into his system. Their preparation took nine months, but eventually in 1985 he flew to China with three bulky computers and all his hopes in his checked baggage.
By the end of the summer, they had lost $120,000 of their $150,000 stake – and Alan and Bill had a friendship-ending fight, a hostility which would last until Alan’s death in 2008.
With the pair now split, and their friends and resources divided amongst the two camps, Bill ultimately threw himself into writing an algorithm that would be more profitable. In his first year after returning to Hong Kong, he won $600,000. The next racing season, ending in the summer of 1990, he lost some but was still up overall.
The key break for Bill ended up being right under his nose – the Jockey Club’s publicly available betting odds. Instead of writing his own odds from scratch, he found it much more profitable to run their odds through his algorithm to refine his chances – a system that netted him $3 million (£2,213,336) in the 1990-1991 season. His winnings only went up from there.
However, the club soon realized that with a foreign mathematician taking the bulk of their winnings, the general public would be less-inclined to place larger bets against a computer. They eventually banned Bill – and Alan – from making bets electronically, so individually they tasked their employees to make cash bets at off-track betting locales.
This worked for a while, especially as Bill expanded his algorithm more and more until he was accounting for 120 different variables. But at the same time, he started to feel like his life in Asia was coming to a close – and after Alan overdosed, and the police started investigating gamblers who treat betting like corporations, Bill decided to leave.
But not before placing one final bet – the Triple Trio, a jackpot too big for him to resist. Bill wagered HK$1.6 million ($204,495 USD, or £150,892) on the 51,000 combinations, and decided that if he won, he would leave the tickets unclaimed. The result captivated the Hong Kong public.
In 2001, Bill moved back to Pittsburgh, leaving an altered world of gambling in his wake. Syndicates had popped up attempting to recreate his success, but clubs began publishing more data simultaneously to try and level out the playing field. To date, nobody is reported to have made more money than the quiet statistician – not even his mentor Alan, who died with “a very simple will that pretty much summed up his lifestyle. Assets: A$939,172,372.51. Liabilities: A$15.93.”
Today, online sports betting is almost a $150 billion industry in the United States, and many of its popular gamblers utilize computer systems based on the algorithm that Bill created. But the statistician tries to keep out of the spotlight, and has donated a significant portion of his winnings back to philanthropic causes, such as for charter schools in Pennsylvania and polio immunization efforts.
And even though he’s expanded his business ventures, Bill still bets at horse tracks around the world, saying: “I find the real business world to be a lot more difficult than horse racing. I’m kind of a one-trick pony.”
Please gamble responsibly. The actions described in this article are undertaken by professionals.
Header image: Alamy