Friday, January 21, 2011

Billy Walters and the Computer Group

The Computer Group is like a hedge fund who specialized in exploiting ineffiencies within the sports betting scene. Again, they started with a few math and computer guys, and this story ends with both success and grief.

...It was almost as if they had invented junk bonds. Every season the cash arrived by the millions, all because their computer told them which teams should be favored to win everything from the mammoth Ohio State-Michigan football game to the basket-ball game pitting Monmouth against Fairleigh Dickinson. The Computer Group did not fix games. It simply understood them.

The group began to assert its mastery of sports betting in 1980, when the computer as an everyday machine had no firm place in sports. Most of the big Las Vegas players of 1980 were still relying on their own good sense and whatever trends they could pick up. A computer seemed to them a gimmick from the future, a big blinking queen-bee serviced by men in white coats. There were relatively few of these "personal computers" that are everywhere today. As a matter of fact, the Computer Group didn't even own its own computer. Until 1983. the group settled for renting time on a computer 2,400 miles away in Rockville, Md. As for the group's invaluable program, it was maintained on thousands of clumsy old "batch" cards, kept in shoeboxes, then fed to the computer like hay into a thrasher.

I've looked at NFL statistics in the past and have found some interesting numbers, still opportunity cost remains high as my specialty remains in quantitative finance. It is nice to see that with a good understanding of math and stats, money isn't so hard to make today.

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