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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

It's just two hours before post time at Sha Tin Race Course, a big, modern-looking gambling mecca in the Hong Kong suburbs. Sleek Jaguars pull up to a members-only entrance, elite horseplayers show off custom-tailored finery, and Moët & Chandon flows as the Hong Kong Jockey Club (horse racing's ruling body here) prepares to host one of its richest days of the year.

It would seem to be the ideal place to encounter the world's most successful gamblers. But Australian Alan Woods and his team of high-flying horse bettors are nowhere in sight, even though they'll put millions of dollars into today's betting pools. This discreet bunch shun the track and are scattered across six countries, connected to the action via fiber optics and Instant Messages.

At Sha Tin, thousands of horse-obsessed gamblers crowd the stands and rush the betting windows to make wagers that are primarily based on half-baked hunches and illogical systems. Woods will have no part of that. Inside a small, neat home office, on the second floor of his duplex apartment some 1,500 miles away in a Manila high-rise, Woods is connected via computer to nearly $3 million worth of wagers that will be placed over the course of today's nine races.

These bets are all mathematically sound, divined from modeling software similar to what Wall Street's sophisticated hedge-fund analysts employ. And like the best stock market plays, Woods's wagers are rooted in a computer program that uses past performances and current conditions to find overlays—good-value bets where the odds being offered are longer than those calculated by the software. It's an approach that has revolutionized horse betting and transformed Hong Kong into a lightning rod for professional gamblers.

The 58-year-old Woods has used computer technology to win more than $150 million in Hong Kong racing during the last 16 years. But even Woods, who is well established among the world's top equine gamblers and more than a little jaded, is excited about today's most alluring wager: a Triple Trio. This requires bettors to pick the first three finishers in each of the fourth, fifth and sixth races, with a prize pool of $26 million.

Woods and his team—which include technicians, racing analysts, accountants and money movers—are so intent on snagging this pot of gold that they pursue it in a gargantuan way: betting on 1.77 million combinations, at a cost of $1.88 million. Around 14 percent of the $13 million in new money being wagered on today's Triple Trio will originate with them. Judging by the exclamation-pointed IMs flying between Hong Kong and Manila, however, this is a bigger percentage than would be desirable, coming as a result of overly optimistic expectations in regard to how much money would finally flow into the Triple Trio pool. "Ideally," says Woods, sounding slightly bummed, "we should have a fraction below 10 percent."

Wearing a pair of beaten-up gym shorts and a faded golf shirt, the barefoot and white-haired Woods sits in front of three screens and groans that Hong Kong racing is not what it used to be. "After 56 months of deflation in Hong Kong, the public's no longer so enthusiastic about jumping into these things." The subtext here is that as long as amateur gamblers are more conservative with their betting budgets, there is less for the professionals to win.

Woods sips a banana smoothie from a thermos as his pretty Filipino girlfriend enters the office with sandwiches. He grabs a crab salad croissant and matter of factly says, "Since 1995, the amount of money we bet has been limited only by the size of the pools." (In other words, he and his team are so confident of winning that they will wager as much as they possibly can without betting so much that it tilts the odds against them.)

Heady stuff for a small-town boy who failed to finish college and couldn't hold a job (Woods half-seriously blames the latter on a sleeping disorder, which, he says, made it impossible for him to reach the office by 9 a.m.). What young Woods could do, long before he made it as a horse bettor, was bluff his way around a poker table and play bridge brilliantly.

In 1972, while working at an actuarial firm, Woods became aware of the financial possibilities of card counting from a buddy on the bridge scene. Initially he doubted the viability of card counting because another friend had recently analyzed the house advantage at blackjack for a new casino in the Australian state of Tasmania, and he confirmed that, long term, players did not stand a chance. Nevertheless, Woods found himself intrigued and spent a weekend counting cards in the Wrest Point Casino in Hobart, which was then Tasmania's only legal gambling venue. By Sunday afternoon, he doubled his $500 bankroll and became a believer.

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