Wednesday, April 23, 2008

Kentucky Derby?

Was reminded today that the Kentucky Derby is 10 days away. So what? Other than it reminds me of a time at the track with my father and his horse-crazy friend. And the fact that few things are more compactly fun than betting on horses, particularly betting on the Kentucky Derby.

So here's the story about a night at the track:

Evidently my dad's buddy, Alan, is well-versed in all things equine, from breeding, to tendencies, etc. A real track-rat, or whatever they call it. He knows horses, period. My dad, a numbers wizard, had me meet them in the Meadowlands to watch the horses run one night. It's typically quiet midweek, so as we settled in to watch the races, a strange thing started happening.

Alan starts by calling off the horses and how he sees them finishing. This is not anything new if you've ever been to a track, but he has raised and trained and owned horses, so he's got the skill to do this. It'd be like watching a ballgame with a professional scout, telling/pointing out things you'd never see or notice. My dad is calling off the odds and he starts matching odds with the horses, getting rather exotic with the bets. This is no simple "$5 on the #3 horse to win" sorta thing. This is multiple exactas and trifectas, designed, on the fly, without paper, to create arbitrage situations where, so long as the picks of the horses are right, they cannot lose money. Now, the horses aren't always right but that happens. I'm watching this develop and seeing how they have developed this system over a decade or so and I am speechless. They created as complex a trading system as they have on Wall Street, except it's for horses, not financial instruments.

This goes on, all night, race after race. And they are winning. Big. Expect here's the rub: The never place a bet with the house. They have a 3rd buddy who never goes with them who acts as the house and they settle up at the end of each season, over dinner. The bets are a few bucks each, up to $20 per race, depending on how many and how complex the bets get. If they actually walked to the window and made these bets, they'd have paid for college for all the kids, and then some. But for them, it's not about the money (and this is my dad, mind you. Go figure, right?), but rather the challenge to pick the horse and design the perfect bets. As the years have gone by, they have honed their separate skills into a finely-tuned gambling machine.

My parents moved out West a few years back so this has faded into the ether, but it jumped into my head this afternoon, so there ya go.

More baseball tomorrow/tonite.

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