The Mathematician

Jack is a Queenslander who has married his passion for the racing industry and the formulation of betting systems with his IT expertise to create a high turnover, low profit margin Betfair betting system which generates an income that allows himself to live very comfortably.

“On the basis of pure, raw turnover I find it hard to imagine there’s anyone bigger than me. There may be but I would be surprised,” Jack said when we caught up.

And that is a dramatic escalation from the initial $200 deposit he made into his Betfair account in 2004 – his one and only Betfair deposit.

Winning Without the Form

It would be fair to say that it was only a matter of time before Jack found Betfair. “I have never been a form punter. Long before Betfair, I was interested in developing betting systems with a view to winning mathematically without doing the form. That was always my objective,” he said.

Couple that with 20 working years as an Information Technology professional with a primary focus on developing mathematical applications for government and the energy sector and it was inevitable that he would embrace Betfair. Not that he’d heard of the exchange before 2004.

“That year, I applied for a job with a betting company who were preoccupied with the challenges presented by this new player in the marketplace, Betfair. That’s the first I’d heard of Betfair and when I failed to get the job, I began to investigate Betfair myself.

Starting Small

“After perhaps a night or two trading on Betfair, I remember having a conversation with my wife and mentioned that I had made a $10 profit by intuitively operating a bookmaking approach on the UK races to have a small margin in my favour. I had the audacity to tell my wife that that $10 profit had the potential to make me a good, decent living working from home,” Jack said.

It took just three to four months for Jack to build his initial $200 balance to the point where he could resign from his IT career and focus on punting for a living. “It was mentally taxing with all the bets placed manually along with the degree of concentration required for 7-8 hours until 2 am. It then offered a living which was barely satisfactory financially but the potential was there and it was adequate as I was working from home and the profits were tax free as I had gained a formal endorsement from the ATO (Tax Office) that my operation was, in fact, based on luck on a market by market basis,” he said.

Automation: The Next Step

Jack’s system demanded automation and that was his next task which he describes as interpreting in programming code the steps the human brain performed when betting. “Automation crystallises the profitability of a system. The brain is intolerant to accepting loss. Often markets evolve adversely so that small losses are expected for all outcomes. When the brain gets involved there is a tendency to take a silly risk in the hope of distorting the outcomes so that big losses are incurred,” he said.

The influence of the ‘brain’ was responsible for Jack’s worst loss. “Early on I was making a small profit laying runners over 100/1 and backing them back at higher prices. On one occasion, I applied this approach to a horse called Exponential who then firmed dramatically to under 10/1. I decided not to back him back, of course he won and I had a huge loss. If my strategy had been programmed, I’d have solved the problem of emotion and the brain choosing the wrong option.”

Full automation allowed Jack’s software to run overnight; to awake in the morning and discover the level of profit made overnight and allowed him to work on more volatile markets that he was previously incapable of operation on manually.

However, automation has not necessarily reduced his workload. Nothing comes for nothing! “I’d still work some 70 hours a week. Anything up to 20 hours per week on programming changes and 30 to 40 hours keeping on top of the reduction factor, with withdrawn horses, especially in the American markets. I’m up at 6 am, watching the USA races,” he said.

Jack says that automation overrides what your brain could break. “You do a hell of a lot better not watching results,” he says despite the fact that he does watch the American racing.

Jack believes the racing industry is facing serious issues, including insufficient revenue going into the system. “The key to maintaining revenue to the industry is wagering globalisation but there’s plenty of obstacles, from other operators, to that path,” he said.

Jack is happy to make his contribution to that revenue. “I have no issue with the Betfair premium charge. I believe I have to pay Betfair and the industry for the platform on which I make a living. It’s essential to have a model where sufficient revenue is extracted from every punter who trades successfully on Betfair,” he said.

Maximum Exposure, Minimum Risk

Jack says he bets on virtually every sport. “At any given time, I might have exposure to 10,000 markets each week. High turnover, marginal profit is my modus operandi,” he said.

He says the key, with Betfair, is for the punter to limit risk. “My betting depends significantly on paying low amounts of commission. Any aspiring mathematical punter needs to consider that earning 1% on turnover is a high expectation……but low risk with low commission is a win-win for a Betfair punter.”

“Bet placement is critical. You must develop an approach which determines where in the market and at which price a bet is placed. Bad bet placement will have a seriously negative impact on profitability and perhaps cost 5% on bet turnover. You need to consider the volumes available at all prices.”

Jack concedes somewhat surprisingly that it is ‘perfectly rational’ to bet for pleasure. “But, without stating the obvious, you have to bet within your means and you really should have a consistent staking plan if you want that pleasure to have a chance of being profitable as well,” he said.

Essential Steps to Punting for Profit

Any decision to punt exclusively for profit, rather than pleasure, demands a firm commitment and several essential steps according to Jack. They are as follows:

  1. Define your system by documenting it for your sole use. The simple but mandatory ingredient in successful punting is – the odds you obtain need to exceed the odds that reflect the probability of that runner winning.
  1. Test your trading strategy and persist with it until you prove it with small amounts of money.
  1. You must monitor and refine your system. Systems can work for some time and then fail, perhaps compromised by another competing automated trading strategy.
  1. The impact of reduction factors for runners not yet taken out needs to be an essential part of your strategy.
  1. The endorsement of family members to pursue your winning strategy and the commitment to hard work, responsibility and professionalism.
  1. Failure is considered a realistic outcome, embrace failure as a learning exercise. Limited losses will be associated with a refined education and a platform for possible future success.

Jack believes that the changing landscape presents the racing industry with funding challenges. “There’s a natural pari-mutuel decline with the more educated, modern punter aspiring to winning. The various charges palliated to Betfair customers’ needs to reach a happy equilibrium which takes into account the punter’s needs, profitability for Betfair and the racing industry’s sustainability.”

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