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Alan Aitken, SCMP:
The announcement from the Jockey Club on Monday regarding its "strategic technology services agreement" with American firm Longitude was brief, prosaic and gave little away – but it has the potential to change racehorse wagering as we know it.
This agreement will involve a move towards single pool wagering, if and when it becomes a reality – and the suggested introduction was for the final quarter of 2013.
Pari-mutuel betting’s first principle is that weight of money wagered on a horse to fill a certain placing in a race, no matter what type of bet, is what determines the payout.
And professional horseplayers betting on Hong Kong have long used different bet types to reverse engineer, for example, quinella pools to get a better read of likely win payouts.
All bet types are a win bet, or series of them. A tierce, for example, can be explained as a three-horse all-up.
There are formulae for calculating exotic odds based on the win odds, and the professionals can do it the other way too and derive win odds from exotic odds.
The bigger, or more liquid, a betting pool, the more accurate should be its reflection of demand or support, so the quinella pool should be a stronger read of demand since it is much larger than the win pool.
As the reader can see, this all gets pretty complicated – far too much for our primary school maths, but we’ll give it a go.
What single pool wagering does is combine all the betting pools on a race into one much larger pool, then reverse engineer the total market support to determine the payout across all types of bets.
It was devised for particular derivatives markets which lack liquidity, and could be very useful in racing the same way – aggregate small, illiquid pools like First Fours and Trios with other, larger pools and the result is more muscle, more stability for anyone betting into them.
The Jockey Club’s average hold on a race is better than HK$100 million [GBP 8 million] – with single pool wagering, that would become the same pool used to calculate dividends for your Trio bet or First Four bet, as well as your Win or Quinella, etc.
…..The guys from Longitude suggested in Istanbul last year at the Asian Racing Federation conference that punters may be able to place bets of their own devising – like ‘hey, I want to bet the favourite runs second and Whyte’s horse runs fourth’.
Single pool wagering, apparently, can come up with a payout figure for that – although we aren’t sure where that would take us as far as printing betting tickets is concerned. That one might only be available online.
Interesting Wit. Do you have a link to a more thorough explanation of the settling process?
Hi Glenn
Longitude have US Patent No. 7,742,972:
http://patft.uspto.gov/netacgi/nph-Pars … PN/7742972
Looks like they also have Greg Nichols – ex of the BHB and Big Blue – as Senior Adviser:
http://www.longitude.com/team_bios.html
wit
Wit,
Patent law in most countries says that computer algorithms aren’t patentable.
As we have been writing algorithms that reverse engineer exotics for years in UK and Hong Kong, do China / Hong Kong recognise such USA "patents"?
If the odds become truer across the board won’t that scare away the big professional investment money that tries to exploit pricing errors in exotics. I can’t see why HK would want to kill the golden goose. There does not seem to be any upside for them.
Thanks Wit. Bedtime reading!
I can’t see how they do this without throwing up, erm, opportunities.
If my preliminary scan of your link is correct those making more complex bets (in an intelligent way) would be at a decided advantage against the cavemen betting on single selections.
Hi Robert
In principle you’re right but in practice the position is not so clear-cut when it comes to patenting mathematical algorithms.
This month’s Yale Law Journal has an article in point:
http://www.yalelawjournal.org/the-yale- … lgorithms/
and in the words of the Supreme Court as quoted by the US Patent Office:
‘‘while an abstract idea, law of nature, or mathematical formula could not be patented, an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection.’’
http://www.uspto.gov/web/offices/pac/mpep/s2106.html
For every patent troll targeted by the likes of the EFF, there is an actual productive innovator trying to get his product on the protected side of the line. Muddying the waters can work for the white hat as well as the black.
It is true that there are issues to safeguarding even stone-cold-valid US patents in China:
http://www.uspto.gov/ip/global/enforcem … _China.jsp
but under the ‘one country, two systems’ principle HK is a separate jurisdiction, and HK intellectual property law and protection is quite separate to that of mainland China.
HK does give the same preferential re-registration treatment to patents registered in the UK and at the European Patent Office (provided the EPO patent is channelled through the UK) as it does to patents registered in China, but that special treatment does not extend to US (or other country) patents.
A short-term (four year) HK patent might be sought for a US (or other country) patent, but in practice such US (or other country) patent holder might be better-off applying in the UK for a UK or EPO patent, and then use the preferential UK arrangement to re-register in HK.
The EPO has said that ‘even if the idea underlying an invention may be considered to reside in a mathematical method, a claim directed to a technical process in which the method is used does not seek protection for the mathematical method as such.’:
http://www.epo.org/law-practice/legal-t … _2_2_2.htm
For its HKJC project though, my guess is that, in the short term at least, Longitude may be relying more on its contract terms than on its patent filings.
[ ADDED: actually they seem well on top of things at the European Patent Office:
http://worldwide.espacenet.com/searchRe … =Longitude
]
As regards scaring away big professional investment money, historically the HKJC has not been that keen on the big professional betting syndicates, thinking that they hold an unfair advantage over casual gamblers and that unless kept in check may discourage the multitude. Although (as best I know) no pros have been banned entirely, the accounts of some have been closed as "not in the best interest of the general public", and access hurdles have been used on others.
With the HKJC the notion of providing a service in various ways to the community has always overridden maximising the money-making. This includes constantly trying to make itself more attractive than the illegal bookies, and I would be inclined to measure HKJC motivation more in that direction than in the direction of the Benters or the Woods:
http://corporate.hkjc.com/corporate/rgp … index.aspx
While the ‘money-making’ influences within the Club constantly make proposals – currently notably to position it among the foremost attractions for when the obstacles are removed to international co-mingling into its pools -, it is very firmly the ‘social effect on HK’ influences both inside and outside the Club that ultimately make the decisions.
Glenn
At the end of each HK raceday the amount bet into each pool in each race shows up in the Current Odds section here:
http://bet.hkjc.com/default.aspx?url=/r … shortcut_e
Across today’s 10 races for example the mean amount bet per race into each pool was (in HKD):
Win – 21.7m
Place – 17.4m
Quinella – 33.6m
Quinella Place – 27.2m
Tierce – 6.8m
Trio – 3.2m
First Four – 2.2mBet into the Six-Up was 6.1m, and into the Triple Trio 6.3m.
At the moment the quinella pools are routinely bigger than the win/place pools, with the other pools (even the famed TT) comparatively small.
Alan Aitken, SCMP:
… and the suggested introduction was for the final quarter of 2013.
wit, is it in place yet? If so, hows it going? Any news welcome.
no news yet.
the most recent reference was at season start in September, after which silence so far:
=====
The Club will also take a softly-softly approach with the single-pool wagering system, which will be introduced some time this season, but its effects will be kept separate from the major dividend pools.
Most likely a new bet type, requiring the first four placegetters in order, will be added and used for real data testing.
=====
Not long now boys…
The army of liberation is at the gates.
The win-single spot-betting reign of tyranny is surely living on borrowed time.
Not long now boys…
The army of liberation is at the gates.
The win-single spot-betting reign of tyranny is surely living on borrowed time.
Well as anti-toter even I am interested so that shows its promise. But for me the interest is not as an aggregator of exotic pools.
In the limit, it offers entirely bespoke betting. Namely, getting paid for exactly the opinion you hold, not some derivative like how we all bet now.
The economic necessity of ‘monpolised’ punters to bet into exotics in order to reduce their effective takeout rate will hopefully no longer exist if they can bet on what they wish, instead of what’s served up to them.
Not holding my breath though.
softly, softly intro adopted.
Alan Aitken in today’s SCMP:
http://www.scmp.com/sport/racing/articl … exotic-bet
The Jockey Club will launch a new bet type on January 19, the Quartet, in the world’s first implementation of the Longitude single-pool wagering technology with its immense potential to change the future of betting.
The club confirmed persistent rumours of the Quartet’s return to its suite of betting pools – it had been discontinued in 1988…
…will allow the Jockey Club to lead the world in using single-pool wagering, and president and chief executive offer of New York-based company Longitude, Tom Ascher, was on hand for the announcement.
The new Quartet will require bettors to select the first four finishers in a race, in correct order, and will be available on two races each meeting….
….said executive director of customer and marketing Richard Cheung Che-kit:
“The relaunched Quartet will use the latest odds calculation computing technology provided by our partner, Longitude, which allows very rapid computation and real-time indicative dividends for such a challenging product.
“It lays the foundation for future technological developments for the club’s betting system as a whole,”.
HKJC’s own release plays down the test-bed aspect:
Alan Aitken, SCMP:
http://racing.scmp.com/freeservice/news … 40508a.asp
The Jockey Club hopes to roll out new bet types next year tailored to increase its user friendliness and flexibility, and to take advantage of the world-first Longitude engine behind the success of the Quartet.
The "Connecting with the customer" session at the 35th Asian Racing Conference at the Hong Kong Convention and Exhibition Centre heard from the club’s executive director, customer and marketing, Richard Cheung Che-kit.
Cheung said the club had not yet touched the potential of the single-pool technology from US-based firm Longitude.
"We need to go through the approval process with the Home Affairs Bureau, so there is nothing to announce yet," said Cheung.
"But if we are able to overcome those regulatory requirements, we hope that we can take a first step to using more of the capabilities of Longitude in 2015.
"That would most likely start with merging the turnover of some of the exotic pools to use the single pool wagering concept."
Beyond that, the club is looking at "composite" bets, which would have real flexibility for the betting customer, and Cheung outlined an example.
"Anyone who has been racing in Hong Kong will have seen the green light and brown lights on the odds, identifying the horses getting significant betting support.
"And we know customers are concerned about the horses which have the last-minute odds movement," Cheung said.
"They like to ‘catch the movement’. This is still in development but we call it a composite win bet – a different way to let our customers bet."
The example for the conference was a punter wanting to cover all but three runners in a 10-horse race, with a single $10 bet.
"The Longitude engine can split that bet across all the horses and the payout is adjusted so it is the same if any of them wins. And the customer doesn’t have to worry about which horse has the last-minute odds change," Cheung explained.
Cheung later said that the same concept could be applied to any sub-group of runners in a race.
"The customer might want the ‘John Moore combo’ – to include all of his runners in one $10 bet. The underlying technology will do the weighting for them in real time as the odds change. Taken to its ultimate, the customer will be able to choose any bet of his or her imagination," he said.
The relaunch of the Quartet in January has been an unqualified success, although it has been kept relatively simple.
The only part of it making use of the Longitude engine’s capabilities is real-time display of Quartet odds for any combination, but Longitude’s chief executive Tom Ascher gave an inkling of what computing power that required for the 24,024 combinations in a 14-horse field.
"Ten years ago, that would have taken a day to calculate – now we do it in a fraction of a second," he said.
next step to be taken this Sunday:
The Hong Kong Jockey Club announced today (12 January) that the Quartet and First 4 racing bet types will be combined to form the “Quartet & First 4 Merged Pool”, effective from the race meeting on Sunday 18 January. Quartet and First 4 will now be offered for every local race with six or more starters and a new jackpot feature will be added to the Merged Pool.
Merged Pool adopts a “one pool wagering" concept with real-time odds and dividends calculated by combining wagers on the two bet types into one pool. The Quartet & First 4 Merged Pool still functions as two separate bet types, as it is only a change in the mechanics of back-end odds calculation.
“The Merged Pool is a remarkable enhancement to the current pari-mutuel framework. It brings significant benefits to our customers with a seamless change in the user experience,” says the Club’s Executive Director of Customer and Marketing Richard Cheung.
From the customer end, the way of betting, such as the betting ticket and user interface on different devices will remain unchanged, as will betting information displays such as odds display for each combination, and other betting arrangements including minimum dividends and Flexi Bet offerings.
The enhanced liquidity of the Merged Pool should make the odds more robust, as the degree of odds fluctuation induced by a single bet will be reduced. It will take a larger wager to move the odds significantly. Information transparency will also be increased as the new Longitude technology deployed can calculate the odds very rapidly on every possible outcome.
For each Quartet & First 4 Merged Pool, a 0.5 percentage of the turnover will be deducted and credited to a Jackpot Reserve Pool for jackpot allocation to offer higher return on specific racedays.
“The Club always places high importance on technology developments and we will continue applying this new technology to enhance our betting services and offerings," Mr Cheung explains. "This not only enables us to meet our customers’ needs, but also helps the Government combat illegal gambling in Hong Kong.”
The Club first deployed Longitude technology in the relaunch of Quartet in January 2014 and is now expanding its use to the Quartet & First 4 Merged Pool, which will be the first of its kind in the racing organisation globally.
http://www.hkjc.com/english/corporate/r … 01119.html
Alan Aitken, SCMP:
"World first is an expression that is often overused to achieve impact but this is, quite literally, the first time in the world for this," said Tom Ascher, Longitude’s managing director, as the Jockey Club unveiled the new process yesterday.
"This is the foundation for innovation, the ability to do more with bet types. Getting this new phase with merging pools up and running really goes to the heart of what the Longitude engine can do."
Wit
Could you explain the Quartet bet please , is it backing 4 horses to win , where the software calculates the amounts staked to give the same return for each ??
cheers
Ricky
Hi Ricky
First Four pool = 1st, 2nd, 3rd and 4th in any order in a race
Quartet pool = 1st, 2nd, 3rd and 4th in correct order in a racethese are not huge pools, but in its step-by-step live-trial-approach HKJC will now use Longitude, behind the curtain, to work out the dividends for each possible outcome in each of those two pools as if bets going into the two pools in fact were going into one pool.
eg if in the First Four pool I bet the first four across the line, in any order, will be horses A, B, C and D, then what Longitude will do is work out what that bet implies for dividends for the various possible outcomes in the Quartet (correct order) pool, viz:
ABCD
ACBD
ADBC
BACD, etcand vice versa
so it will aggregate the money going into the two pools to return dividends that reflect how much in fact is being bet on horse A to finish first, how much on horse A finishing second, how much on it finishing third, and how much on it finishing fourth.
all in real time and without the punter having to do anything different in placing the bet.
the point being that a lumpy bet now placed into the one pool will not produce a skewed dividend compared to the other pool.
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