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The Hundred and Fifty Million Dollar Man

Alan Woods has used computer technology to become one of the world's most successful gamblers. but it isn't always a sure thing.
Michael Kaplan
From the Print Edition:
Gen. Tommy Franks, Nov/Dec 03

(continued from page 1)

But Woods didn't do much about it until 1979—after fathering two children, divorcing his first wife and having some success in the stock market—when he began to live the life of an itinerant gambler. He operated below casino radar, traveling around the world, backing other card counters, forming teams and playing solo; in his first six months, he earned what most people would consider an impressive income: $100,000.

During his time on the circuit, Woods learned to be emotionless about money. He secured five-figure loans from bare acquaintances, tolerated at least one blackjack partner with suspicious losses (he now figures that the "lost" money had been skimmed off by the dishonest player), and trusted strangers with inappropriately large sums.

"On the way home from a junket in Manila, I walked past airport security with $10,000 in each of my sneakers and another $10,000 down my underpants," remembers Woods, explaining that the Philippines had currency restrictions, which necessitated the subterfuge. "But I had another $20,000 that needed to get through. So I gave it to a guy to carry in his sneakers. I didn't really know the guy—we had just met on this trip—and the doors to the plane were ready to close when he had not yet materialized. I wasn't worried about him robbing me so much as I was concerned he'd miss the plane. It turned out that he had to go to the hotel to get his luggage, and he made the flight, with my money, but at the last possible second." Though Woods sounds pretty cool about the whole thing, you have to wonder what he'd have done if the guy failed to show up. "I would have tried to find him in Sydney. But I don't even know that I had his address."

This casual relationship with cash came in handy in 1984 when Woods and an Australian friend named Malcolm Sims discovered the potential riches of horse racing in Hong Kong. It was a place with huge amounts of money wagered (thus making it possible to lay down enormous bets without hurting your odds), small pools of jockeys and horses (easy to maintain stats), and enough superstitious bettors to make the city into a candy store for savvy gamblers with objectivity.

Ultimately, Sims opted out of the Hong Kong racing venture, but Woods teamed with a fellow card counter named Bill Benter and their Vegas friend Walter Simmons. Benter and Simmons believed that computer technology could be used to find an edge in horse racing. Woods wasn't so sure, but he put up most of the bankroll anyway and did much of the bet placing. Meanwhile, Simmons built the database and Benter wrote a software program designed to find overlays. Years later, this system turned all three of them into multimillionaires.

But it wasn't easy. "The beginning was nightmarish," says Woods, explaining that the software was full of kinks that needed to be worked out. "We started with a $150,000 bankroll and most of it went—on expenses and losses, including blackjack losses. I remember going to Korea on gambling trips and twice losing my bankroll of $10,000 very quickly, as a result of nothing but bad luck. Then I had to spend the rest of those trips not gambling."

Things were so bad that when Benter retreated to Las Vegas, where he hoped to raise additional funds from gambling pals, he was turned down, despite a willingness to give up as much as 70 percent of the group's racing profits. "People had so little faith in the system," says Woods, "that they would not have invested for 100 percent of the profits."

After a few years, however, once the system was up and running, there was plenty of cash to be made. Woods says he had his first winning season in 1986/1987, right around the time when he and Benter parted ways over money disputes. In the end, each wound up with his own number-crunching machine and put together teams.

Woods and Benter saw their profits rise in multiples that usually define bubble economies. Only this was no bubble. The margins kept getting bigger. And bigger. And bigger. "My third year in Hong Kong I won $100,000," remembers Woods. "I would have benefited by not telling anybody about this—thus not tipping off the several other computer teams that have since come in here and made their own millions. "But that is an extremely difficult thing to do. I just could not keep my mouth shut."

The most stunning thing about watching a computer team in action is how little actual handicapping seems to take place on race day. While some adjustments might be made for how a particular horse looks in the paddock and amounts wagered are dictated by monies that flow into particular pools, most of the hard work gets done long before the ponies are led to their starting gate.


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