Betting systems have existed for as long as gambling has. A betting system is either bogus or clever depending upon whether it is based on a sufficiently deep understanding of the given game so that there is some method to the madness.
Gambling systems, even bogus ones, are always interesting to hear about, because they say something about how people perceive (or misperceive) probability. My favorite bogus systems include:
What's the problem? Nothing really, so long as you have an infinitely deep pocket and are playing on a table without a betting limit. If your table has a betting limit or you are not able to print money, you will eventually reach a point where the house will not let you bet as much as you need in order to play by this system. At this point you have been completely wiped out.
This doubling or Martingale system offers you a high probability of small returns in exchange for a small possibility of becoming homeless. Casinos are more than happy to let you take this chance. After all, Donald Trump has a much deeper pocket than either you or I have.
Mathematically, the key to making this work is being bold enough to wager all the money on a single bet, rather than making multiple smaller bets. The casino extracts a tax on each `even-money' wager via the 0 and 00 slots on the wheel. You pay more tax each time you re-bet the winnings, thus lowering your chances of a big killing. However, the most likely result of playing the O'Hare straddle will be a sudden need to increase your fluency in Spanish.
As we will see, poor random number generators certainly exist; I will talk more about this in Chapter 4. There is also historical precedent for poorly mixed-up balls. During the Vietnam War, the United States military draft selected soldiers by lottery according to birthday. Each of the 365 birthdays for the year were stamped on a ball and tossed into a jar, and unlucky 19 year olds mustered into the army if their birth date was selected. In 1970, several newspapers observed that December's children had a startlingly high chance of being drafted, and indeed, the lottery selection procedure turned out to be flawed. It was fixed for the next year, presumably small consolation to those left marching in the rice paddies.
Although each lottery combination is just as likely to come in as any other, there is one formally justifiable criterion you can use in picking lottery numbers. It makes a great deal of sense to try to pick a set of numbers which nobody else has selected, since if your ticket is a winner you won't have to share the prize with anybody else who is a winner. For this reason, playing any ticket with a simple pattern of numbers is likely a mistake, since someone else might stumble across the same simple pattern. I would avoid such patterns as 2-4-6-8-10-12, and even such numerical sequences as the primes 2-3-5-7-11-13 and the Fibonacci numbers 1-2-3-5-8-13, because there are just too many mathematicians out there for you to keep the prize to yourself.
There are probably too many of whatever-you-are-interested-in as well, so stick to truly random sequences of numbers unless you like to share. Indeed, my favorite idea for a movie would be to have one of the very simple and popular patterns of lottery numbers come up a winner; say, the numbers resulting from filling in the entire top row on the ticket form. As a result, several hundred people will honestly think they won the big prize, only later to learn it is not really so big (say only $5,000 or so). This will not be enough to get members of the star-studded, ensemble cast out of the trouble they got into the instant they thought they became millionaires.
On the other hand, there are well-founded betting systems available for certain games, if you know what your are doing:
If you know nothing about the cards which you are to be dealt, then the dealer's strategy is sufficient to guarantee the house a nice advantage. However, a sufficiently clever player does know something about the hand which she will be dealt. Why? Suppose in the previous hand she saw that all four aces had been dealt out. If the cards have not been reshuffled, all of those aces are now sitting in the discard pile. Assuming that only one deck of cards is being dealt from, there is no possibility of seeing an ace in the next hand, and a clever player can bet accordingly. By keeping track of what she has seen (card counting) and properly interpreting the results, she knows the true odds of each possible card showing up and thus adjusts her strategy accordingly. Card counters theoretically have a inherent advantage of up to 1.5% against the casino, depending upon which system they use.
Edward Thorp's book Beat the Dealer started the card-counting craze in 1962. Equipped with computer-generated counting charts and a fair amount of chutzpah, Thorp took on the casinos. Once it became clear (1) that he was winning, and (2) it wasn't just luck, the casinos became quite unfriendly. Most states permit casinos to expel any player they want, and it is usually fairly easy for a casino to detect and expel a successful card counter. Even without expulsion, casinos have made things more difficult for card counters by increasing the number of decks in play at one time. If there are ten decks in play, seeing four aces means that there are still 36 aces to go, greatly decreasing the potential advantage of counting.
For these reasons, the most successful card counters are the ones who write books which less successful players buy. Thorp himself was driven out of casino gambling in Wall Street, where he was reduced to running a hedge fund worth hundreds of millions of dollars. Still almost every mathematically-oriented gambler has been intrigued by card counting at one point or another. Gene Stark, a colleague of mine who you'll read more about later, devised his own card counting system, and used it successfully a few times in Atlantic City. However, he discovered that making significant money off a 1.5% advantage over the house requires a large investment of either time or money. It isn't any more fun making $5.50 an hour counting cards than it is tending a cash register.
But another group of physicists did once develop a sound way to beat the game of roulette. A roulette wheel consists of two parts, a moving inner-wheel and a stationary outer-wheel. To determine the next ``random'' number, the inner wheel is set spinning, and then the ball sent rolling along the rim of the outer wheel. Things rattle around for several seconds before the ball drops down into its slot, and people are allowed to bet over this interval. However, in theory, the winning number is preordained from the speed of the ball, the speed of the wheel, and the starting position of each. All you have to do is measure these quantities to sufficient accuracy and work through the physics.
As reported in Thomas Bass's entertaining book The Eudaemonic Pie, this team built a computer small enough to fit in the heel of a shoe, and programmed in the necessary equations. Finger or toe presses at reference points on the wheel were used to enter the observed speed of the ball. It was necessary to carefully conceal this computer because otherwise casinos would be certain to ban the players to moment they started winning.
Did it work? Yes, although they never quite made the big score in roulette. Like Thorp, the principals behind this scheme were eventually driven to Wall Street, building systems to bet on stocks and commodities instead of following the bouncing ball. Their latter adventures are reported in the sequel, The Predictors.
The interesting aspect of large pools is that any wager, no matter how small the probability of success, can yield positive expected returns given a sufficiently high payoff. Most state lotteries are obligated to pay some fraction (say 50%) of all betting receipts back to the bettors. If nobody guesses right for a sufficiently long time, the potential payoff for a winning ticket can overcome the vanishingly small odds of winning. For any lottery, there exists a pool size sufficient to ensure a positive expected return assuming a given number of tickets sold.
But once it pays to buy one lottery ticket, then it pays to buy all of them. This has not escaped the attention of large syndicates which place bets totaling millions of dollars on all possible combinations, thus ensuring themselves of a winning ticket.
State lottery agents frown on such betting syndicates, not because they lose money (the cost of the large pool has been paid by the lack of winners over the previous few week) but because printing millions of tickets ties up agents throughout the state and discourages the rest of the betting public. Still, these syndicates like a discouraged public. The only danger they face are other bettors who also pick the winning numbers, since the pool must be shared with these other parties. Given an estimate of how many tickets will be bought by the public, this risk can be accurately measured by the syndicate to determine whether to go for it.
Syndicate betting has also occurred in jai-alai, in a big way. Palm Beach Jai-Alai ran an accumulated Pick-6 pool, which paid off only if a bettor correctly picked the winners of six designated matches. This was quite a challenge, since each two dollar bet was a 86 = 262,144-to-one shot for the jackpot.
On March 1, 1983, the pool stood at $551,332, after accumulating over 147 nights. This amount was more than it would cost to buy one of every possible ticket. That day an anonymous syndicate invested an additional $524,288 to guarantee itself a large profit, but only if it didn't have to share. Only $21,956 was wagered on Pick 6 that night by other bettors, giving the syndicate an almost 96% chance of keeping the entire pot to itself, terrific odds in its favor. Indeed, only the syndicate held the winning combo of 4-7-7-6-2-1, a ticket worth $790,662.20.
I hope you have enjoyed this excerpt from
Calculated Bets: Computers, Gambling, and Mathematical Modeling to
Win!, by Steven Skiena,
Cambridge University Press
Mathematical Association of America.
This is a book about a gambling system that works. It tells the story of how the author used computer simulation and mathematical modeling techniques to predict the outcome of jai-alai matches and bet on them successfully -- increasing his initial stake by over 500% in one year! His method can work for anyone: at the end of the book he tells the best way to watch jai-alai, and how to bet on it. With humor and enthusiasm, Skiena details a life-long fascination with the computer prediction of sporting events. Along the way, he discusses other gambling systems, both successful and unsuccessful, for such games as lotto, roulette, blackjack, and the stock market. Indeed, he shows how his jai-alai system functions just like a miniature stock trading system.
Do you want to learn about program trading systems, the future of Internet gambling, and the real reason brokerage houses don't offer mutual funds that invest at racetracks and frontons? How mathematical models are used in political polling? The difference between correlation and causation? If you are curious about gambling and mathematics, odds are this is the book for you!