Technology is making gambling more like stockbroking — and stockbroking more like gambling. Gamblers today often sound like City boys on steroids: they talk about ‘hedging’ their positions, going long and short on options, and so on. Meanwhile, the ease of access to a multiplicity of online stockbroking platforms now means that any mug — like me — can take a rash punt in an instant on a share of which he knows little or nothing. And spread betting on market futures is now massive business. The internet makes everything easier; most especially losing money.
Of course, gambling and investing have always been similar activities. The web just means we can admit it, and be a lot more serious about betting on something like a horse race.
Look at a new company called Equotion, based at Ilkley in West Yorkshire, which announces itself as a ‘Big Data Sports Betting Disrupter’ and claims to have developed a sophisticated automated system for picking winning nags. Equotion says it can create greater returns than any boring tracker fund.
It has, as the PR press release puts it, ‘developed the predictive technology to analyse vast amounts of race data to accurately select tips… Backers believe horse racing could become as reliable and consistent as the stock market and generate greater returns for private investors.’
Equotion’s software apparently ‘combs through 500 million pieces of information from seven years of past performance to single out the runners and riders most likely to win’. It promises at least 27 per cent accuracy, and that 60 per cent of its selections will be placed in their races. In this time of stagnant equity returns and global doubt, it’s a tempting idea.
Equotion’s Chief Executive James Waterhouse, a serial tech entrepreneur, liked the turf but didn’t have the time to study form properly. So he broke down horse racing into a series of mathematical challenges and presented them to Dr Tim Drye, an award-winning data scientist whose focus is on something called ‘non-linear clustering analytics’.
Equotion’s system can be applied to most sports, including football, tennis and golf as well as racing — or indeed to stock market performance. ‘We have built a prediction engine with artificial intelligence that can analyse any unstructured dataset,’ says Waterhouse. ‘We can expand our footprint into pretty much any area of performance analytics. In a world driven by big data and moving towards the internet of things, the opportunities and possibilities for this technology are endless.’
Dr Drye has been quoted as saying: ‘We have been able to achieve a level of accuracy that surprised even myself.’ Sounds good, doesn’t it? But is it all waffle?
‘Big data’ is one those trendy concepts that can cover up a lot of gibberish and cowboy operators. Whether or not Equotion is a real money-maker can only be judged on performance, and it’s too soon for that. But the company has been backed by the shrewd Yorkshire businessman Gordon Black — who made his fortune as a manufacturer supplying Marks & Spencer — and is chaired by Graham Martin, a third–generation bookmaker and pioneer of offshore internet gaming.
All this appliance of science and corporate knowhow is one more indication that online gambling is becoming far more professional, and more lucrative for smart providers. The fact that, since the advent of Betfair, anybody can buy and sell bets, means that anybody can trade in sports results. The last decade has seen the rise of so-called ‘cold-trading’ — that is, traders in gambling who do not study the sports they dabble in but make online odds through mathematical models, reading the betting markets and analysing betting trends.
The fact that most betting is still done by people who are devoted to their chosen sport rather than maths — and are therefore inclined to be irrational about how they bet on it — means that the cool-headed data analyst is always likely to have an edge.
That window is perhaps closing. Robots now dominate most online wagering. The enormous Asian betting markets are all dictated by clever algorithms, which set prices by evaluating an infinity of probabilities, thus making sure the bookie is always on top. To beat an algorithm, you need a better algorithm. Something like Equotion might be just what the outgunned but incorrigible punter needs.