1 00:00:08,800 --> 00:00:13,720 Speaker 1: Hello, and welcome to a special Kentucky Derby themed horse 2 00:00:13,840 --> 00:00:19,000 Speaker 1: betting version of The Odd Lots Podcast. I'm Joe Wisenthal. 3 00:00:19,560 --> 00:00:22,840 Speaker 1: My co host Tracy Alloway is off today because she 4 00:00:22,960 --> 00:00:26,760 Speaker 1: is so tired of all the episodes we've done about gambling. 5 00:00:26,960 --> 00:00:29,680 Speaker 1: Just kidding, it didn't work with the schedule, but honestly, 6 00:00:30,440 --> 00:00:33,120 Speaker 1: she might be happy to have missed this one. I, 7 00:00:33,200 --> 00:00:35,400 Speaker 1: for one, I'm very excited about it because I love 8 00:00:35,560 --> 00:00:38,839 Speaker 1: every time we talked about gambling or poker or betting 9 00:00:38,920 --> 00:00:43,200 Speaker 1: or anything like that, which is probably too frequently. Nonetheless, 10 00:00:43,479 --> 00:00:47,280 Speaker 1: with this Marquee horse race coming up, we had to 11 00:00:47,320 --> 00:00:50,640 Speaker 1: talk about it and we have the perfect guest today. 12 00:00:50,720 --> 00:00:54,360 Speaker 1: He's actually a repeat guest on the Odd Lots Podcast. 13 00:00:54,360 --> 00:00:56,640 Speaker 1: He was one of the very early guests that we 14 00:00:56,720 --> 00:01:00,160 Speaker 1: had when we talked about a different aspect of the uh, 15 00:01:00,240 --> 00:01:04,200 Speaker 1: the horse racing industry. I'm going to bring him right in. 16 00:01:04,440 --> 00:01:07,520 Speaker 1: It is David Popadopoulos. He is an editor here at 17 00:01:07,520 --> 00:01:12,680 Speaker 1: Bloomberg a long time Well, David, thank you for joining us. 18 00:01:13,160 --> 00:01:15,680 Speaker 1: Is the word is there a word for people who 19 00:01:15,800 --> 00:01:20,560 Speaker 1: bet on horses? Well, in my case, to words degenerate gambler. 20 00:01:21,040 --> 00:01:23,880 Speaker 1: He's a long time degenerate gambler here in Bloomberg. So 21 00:01:23,959 --> 00:01:29,839 Speaker 1: his his bona fides are impeccable. I was my pedigree 22 00:01:30,480 --> 00:01:32,640 Speaker 1: as a gambler. Depending on how you like to see 23 00:01:32,680 --> 00:01:35,319 Speaker 1: it is either you know, I'm perfectly well bred or 24 00:01:35,319 --> 00:01:37,320 Speaker 1: horrifically well bred. But I've been doing it, yeah, for 25 00:01:37,319 --> 00:01:39,360 Speaker 1: a long time. Tell us more about that. You've been 26 00:01:39,360 --> 00:01:42,480 Speaker 1: doing it your whole life. And your father also bets 27 00:01:42,480 --> 00:01:46,920 Speaker 1: on Horte, like, what's yeah? So yeah, my father was 28 00:01:47,360 --> 00:01:50,760 Speaker 1: Um was hit with the bug, the gambling bug, the 29 00:01:50,840 --> 00:01:54,360 Speaker 1: horse racing bug, at a very young age. And actually 30 00:01:54,360 --> 00:01:58,240 Speaker 1: when he he was born and raised just outside of Providence, 31 00:01:58,240 --> 00:02:00,840 Speaker 1: Word Island, and when he was a stend simply going 32 00:02:00,880 --> 00:02:04,080 Speaker 1: to Brown University, he managed to somehow fight his way 33 00:02:04,160 --> 00:02:07,040 Speaker 1: to Brown. He actually was studying across the street at 34 00:02:07,080 --> 00:02:11,080 Speaker 1: Lincoln Down's race track, and he spent many an afternoon there. 35 00:02:11,760 --> 00:02:15,880 Speaker 1: Um and of years later, of the five kids, we 36 00:02:15,880 --> 00:02:19,160 Speaker 1: were five, pop It Appolis is pop it apple. I 37 00:02:19,160 --> 00:02:21,480 Speaker 1: I was the only one who struck with the with 38 00:02:21,520 --> 00:02:23,920 Speaker 1: the horse racing bug. And as a as a result 39 00:02:23,960 --> 00:02:25,520 Speaker 1: of the fact that of the five it was only 40 00:02:25,560 --> 00:02:27,400 Speaker 1: passed on to me, I think I get a very 41 00:02:28,000 --> 00:02:31,360 Speaker 1: powerful strand of it, and I've and I love it. 42 00:02:31,400 --> 00:02:33,960 Speaker 1: I think it's the greatest game. Many called the greatest game. 43 00:02:33,960 --> 00:02:36,400 Speaker 1: I'm a believer of that. It's certainly you know, you 44 00:02:36,440 --> 00:02:38,840 Speaker 1: have to be prepared to have many days where total 45 00:02:38,880 --> 00:02:41,280 Speaker 1: loss of capital is the is the end result. But 46 00:02:41,360 --> 00:02:44,920 Speaker 1: it's a it's a great game. The last time you 47 00:02:45,000 --> 00:02:47,639 Speaker 1: were on the show, we talked about pin hooking, which 48 00:02:47,720 --> 00:02:50,519 Speaker 1: is the part of buying a horse for profits, so 49 00:02:50,560 --> 00:02:52,440 Speaker 1: not betting on a horse per se, but going to 50 00:02:52,480 --> 00:02:54,839 Speaker 1: an auction and buying a young horse and hoping it's 51 00:02:55,240 --> 00:02:58,320 Speaker 1: there's worth more. Today we're actually going to be talking 52 00:02:58,360 --> 00:03:02,440 Speaker 1: about betting on horses, and you've brought with you some 53 00:03:02,639 --> 00:03:07,480 Speaker 1: great stories of gamblers. Yeah, so, I mean the game. 54 00:03:07,520 --> 00:03:09,800 Speaker 1: One of the reasons why the game is what it 55 00:03:09,880 --> 00:03:12,640 Speaker 1: isn't as great as as it is in my eyes, 56 00:03:12,800 --> 00:03:16,520 Speaker 1: is all all the the history of it and the 57 00:03:16,639 --> 00:03:20,840 Speaker 1: terrific characters, the Damon Runyan sort of characters that exists 58 00:03:20,880 --> 00:03:25,239 Speaker 1: and the stories that surround them. And as we lead 59 00:03:25,320 --> 00:03:28,359 Speaker 1: up to the derby here, I mean, you know, feels 60 00:03:28,360 --> 00:03:31,280 Speaker 1: like it's a good opportunity to sort of go over 61 00:03:31,400 --> 00:03:33,560 Speaker 1: some of those great old stories. But really with a 62 00:03:33,639 --> 00:03:38,640 Speaker 1: particular eye on gambling and gambling coups, and maybe some lessons, 63 00:03:38,640 --> 00:03:41,880 Speaker 1: some gambling lessons, some investing lessons that actually come out 64 00:03:41,880 --> 00:03:43,840 Speaker 1: of them. I'm glad you said investing lessons, so at 65 00:03:43,920 --> 00:03:47,400 Speaker 1: least we pretend to make it relavant to the Bloomberg audience. 66 00:03:47,600 --> 00:03:51,960 Speaker 1: The oder Well, I would even say that there are 67 00:03:52,040 --> 00:03:55,480 Speaker 1: a lot of principles that are very, very similar. I mean, 68 00:03:55,640 --> 00:03:58,560 Speaker 1: it's not for nothing that Warren Buffett started way back when, 69 00:03:59,040 --> 00:04:01,600 Speaker 1: uh gamblay on horses is one of the first things 70 00:04:01,600 --> 00:04:03,840 Speaker 1: he did. And and there are a great number. You know, 71 00:04:04,400 --> 00:04:08,800 Speaker 1: value investing shares a lot in common with with gambling. 72 00:04:08,840 --> 00:04:13,760 Speaker 1: With value betting, I mean, any self respecting horse racing 73 00:04:13,960 --> 00:04:17,080 Speaker 1: gambler is a value better. If you're not, you're a fool. 74 00:04:17,120 --> 00:04:19,400 Speaker 1: I mean if well, if you're not, you've got absolutely 75 00:04:19,440 --> 00:04:23,200 Speaker 1: no chance. So there are some similarities. In the show Billions, 76 00:04:23,480 --> 00:04:26,440 Speaker 1: the hedge fund manager Bobby actual Rod says, you got 77 00:04:26,440 --> 00:04:29,240 Speaker 1: to start at the tracks. It's and there's a part 78 00:04:29,320 --> 00:04:30,960 Speaker 1: where is describing his history and he's like, oh, and 79 00:04:30,960 --> 00:04:32,920 Speaker 1: I realized that the stock market was the same thing 80 00:04:33,000 --> 00:04:35,200 Speaker 1: or something it is and what I've learned and listen, 81 00:04:35,240 --> 00:04:37,280 Speaker 1: I'm not. I haven't made a fortune of the track. 82 00:04:37,360 --> 00:04:39,760 Speaker 1: But my r O I is consistently approved over the 83 00:04:39,839 --> 00:04:45,000 Speaker 1: years is you have to be mercilessly disciplined, unbelievably disciplined, 84 00:04:45,240 --> 00:04:48,359 Speaker 1: and only bet when you truly feel like you have 85 00:04:48,480 --> 00:04:51,479 Speaker 1: an axe or an edge. If not, you're just sort 86 00:04:51,480 --> 00:04:53,520 Speaker 1: of showing up and throwing up and betting with the 87 00:04:53,520 --> 00:04:54,960 Speaker 1: rest of the crowd and trying to figure out a 88 00:04:55,040 --> 00:04:57,279 Speaker 1: race on the fly. It's a road I've I learned 89 00:04:57,279 --> 00:04:59,840 Speaker 1: the hard way. It's a road to nowhere. And I 90 00:05:00,080 --> 00:05:02,040 Speaker 1: learned that by marking to market every single bet I 91 00:05:02,120 --> 00:05:04,680 Speaker 1: ever made and just sort of looking at returns and 92 00:05:04,680 --> 00:05:07,680 Speaker 1: sort of like realizing that unless you pick your spots 93 00:05:07,680 --> 00:05:10,600 Speaker 1: and are incredibly disciplined, you got no shot before we 94 00:05:10,680 --> 00:05:14,839 Speaker 1: get to the great coups of betting on horses. That 95 00:05:15,000 --> 00:05:16,880 Speaker 1: is a very the fact that you like keep track 96 00:05:16,920 --> 00:05:19,600 Speaker 1: of all this and have that discipline. Why didn't you 97 00:05:19,839 --> 00:05:23,520 Speaker 1: become like a trader or something? No, seriously, because it 98 00:05:23,560 --> 00:05:25,760 Speaker 1: sounds like what a lot of investors and traders say, 99 00:05:25,800 --> 00:05:28,680 Speaker 1: did you ever think about going and down that road? Well, 100 00:05:29,160 --> 00:05:32,000 Speaker 1: not too seriously, just because I when I got into 101 00:05:32,040 --> 00:05:33,560 Speaker 1: journalism at a young age, I just sort of fell 102 00:05:33,600 --> 00:05:36,320 Speaker 1: in love with journalism. That gave my primary passion. But 103 00:05:36,680 --> 00:05:40,040 Speaker 1: for me, I'm a very competitive sort where the pop 104 00:05:40,040 --> 00:05:42,040 Speaker 1: It opposites were a competitive group, and it's a way 105 00:05:42,080 --> 00:05:44,320 Speaker 1: of keeping track, keeping score. I don't want to have 106 00:05:44,400 --> 00:05:46,160 Speaker 1: just a vague sense of how I'm doing. I want 107 00:05:46,160 --> 00:05:48,480 Speaker 1: to know exactly how I'm doing. I know what the 108 00:05:48,560 --> 00:05:51,560 Speaker 1: average gambler does, what his his or her average return is, 109 00:05:51,800 --> 00:05:53,120 Speaker 1: and it means a lot to me. It's a little 110 00:05:53,120 --> 00:05:55,599 Speaker 1: bit like your handicapping golf. I want to make sure. 111 00:05:56,160 --> 00:05:58,240 Speaker 1: I want to do my darnes to try to beat them. 112 00:05:58,320 --> 00:06:01,839 Speaker 1: So did I ever consider going to trade? Not really. 113 00:06:01,920 --> 00:06:03,800 Speaker 1: I guess this is this is my This is where 114 00:06:03,800 --> 00:06:06,640 Speaker 1: I get by trading fix all right, I like that 115 00:06:06,720 --> 00:06:09,760 Speaker 1: a lot. So let's talk about some great uh, some 116 00:06:09,839 --> 00:06:13,880 Speaker 1: great moments in the game, the greatest game ever. Let's 117 00:06:13,880 --> 00:06:16,640 Speaker 1: start with something a lesson, a story that you say 118 00:06:16,680 --> 00:06:19,800 Speaker 1: is a good lesson in game theory. Yeah, it's It's 119 00:06:19,839 --> 00:06:23,520 Speaker 1: a great story that goes back about five or six years, 120 00:06:23,960 --> 00:06:27,360 Speaker 1: and it takes place in Miami, Florida. The racetrack there, 121 00:06:27,400 --> 00:06:30,680 Speaker 1: Gulf Stream Park, which is controlled by the stronic groups 122 00:06:30,720 --> 00:06:33,600 Speaker 1: sort of Frank Stronick a big magnet, and and he's 123 00:06:33,640 --> 00:06:36,000 Speaker 1: got Frank Strink has got a lot of creative ideas 124 00:06:36,000 --> 00:06:38,840 Speaker 1: on how to bring more gamblers in. And one thing 125 00:06:38,880 --> 00:06:41,799 Speaker 1: he did is he created what's called the rainbow six. 126 00:06:42,320 --> 00:06:45,000 Speaker 1: The rainbow six is is a riff on the pick six. 127 00:06:45,040 --> 00:06:48,359 Speaker 1: Pick sixes existed forever. You have to pick the winner 128 00:06:48,400 --> 00:06:51,800 Speaker 1: in six straight races, very hard, but you can put 129 00:06:51,880 --> 00:06:55,200 Speaker 1: as many different horses in. You can place bets on 130 00:06:55,240 --> 00:06:57,800 Speaker 1: as many different horses as you want in any given race. 131 00:06:58,120 --> 00:07:00,440 Speaker 1: You can bet five horses in the fur than three 132 00:07:00,480 --> 00:07:02,320 Speaker 1: in the second, and two in the third and three 133 00:07:02,320 --> 00:07:05,200 Speaker 1: in the fourth. Obviously, the more horses you add, the 134 00:07:05,240 --> 00:07:08,200 Speaker 1: more expensive it gets. You could alternatively go one horse, 135 00:07:08,240 --> 00:07:11,040 Speaker 1: one horse, one horse winners, and it's very cheap. And 136 00:07:11,240 --> 00:07:13,160 Speaker 1: if you get all six right, you get a very 137 00:07:13,200 --> 00:07:15,720 Speaker 1: big payout. You may be the only person who gets 138 00:07:15,760 --> 00:07:18,000 Speaker 1: the whole pattern. You may share it with the handful people. 139 00:07:18,040 --> 00:07:20,240 Speaker 1: If no one gets six or six, then those who 140 00:07:20,240 --> 00:07:22,760 Speaker 1: get five of six get a consolation and there's a 141 00:07:22,840 --> 00:07:25,240 Speaker 1: carry over in the normal pick six to the next day, 142 00:07:25,320 --> 00:07:27,960 Speaker 1: and the pot grows. The rainbow six is kind of 143 00:07:28,000 --> 00:07:30,680 Speaker 1: what's kind of a brilliant marketing tool, what he said, 144 00:07:30,840 --> 00:07:33,960 Speaker 1: is the only way the picks the Rainbow six pays 145 00:07:33,960 --> 00:07:38,720 Speaker 1: out is if there's only one single person who nails 146 00:07:38,760 --> 00:07:43,000 Speaker 1: all six. If Joe and David and tofor we all 147 00:07:43,120 --> 00:07:45,760 Speaker 1: hit it, and you know, there are twenty five of 148 00:07:45,800 --> 00:07:48,920 Speaker 1: us who hit the pick six, the pool rolls over, 149 00:07:48,920 --> 00:07:51,040 Speaker 1: it carries over, and it continues to grow. We get 150 00:07:51,160 --> 00:07:54,400 Speaker 1: some consolation prize, a few thousand bucks, or it could be, 151 00:07:54,440 --> 00:07:56,720 Speaker 1: you know, a decent prize, but it essentially grows and 152 00:07:56,760 --> 00:07:58,520 Speaker 1: grows and grows. Is a great way of building drama 153 00:07:58,520 --> 00:08:01,440 Speaker 1: and excitement in variably, what it leads to is in 154 00:08:01,560 --> 00:08:03,800 Speaker 1: the last day of the racing meat, the thing is 155 00:08:03,920 --> 00:08:05,920 Speaker 1: carried over and growing and growing and growing. Now I'm 156 00:08:05,920 --> 00:08:10,200 Speaker 1: not talking like a lot of you know whatever, crazy numbers, 157 00:08:10,240 --> 00:08:14,560 Speaker 1: but real money. You know, it'll grow and grow, and 158 00:08:15,080 --> 00:08:17,560 Speaker 1: the last day of the meat they mandatory have to 159 00:08:17,600 --> 00:08:20,480 Speaker 1: pay out to everybody who hits it because there's no 160 00:08:20,560 --> 00:08:25,560 Speaker 1: more racing after the season's over. So what invariably happens 161 00:08:25,600 --> 00:08:28,800 Speaker 1: is it'll grow. Say it's six million, it's grown to 162 00:08:28,920 --> 00:08:32,640 Speaker 1: six million on the eve of of the final day 163 00:08:32,880 --> 00:08:36,400 Speaker 1: and everybody. Joe puts together a syndicate with a hundred 164 00:08:36,440 --> 00:08:38,840 Speaker 1: people and David puts together a syndicate entreprepe. We we 165 00:08:38,880 --> 00:08:41,959 Speaker 1: put together real money and we're gonna bet on all 166 00:08:42,000 --> 00:08:45,240 Speaker 1: sorts of crazy combinations to ensure that we get a 167 00:08:45,280 --> 00:08:47,920 Speaker 1: piece of this big pool. Now, let's say there are 168 00:08:47,960 --> 00:08:50,600 Speaker 1: six million dollars of dead money that carried over. People 169 00:08:50,600 --> 00:08:52,839 Speaker 1: will come in to throw an additional fifteen sixteen million 170 00:08:52,880 --> 00:08:55,600 Speaker 1: at it for a shot at that that dead money. 171 00:08:56,920 --> 00:09:00,559 Speaker 1: So what this clever fellow did, by the name of 172 00:09:00,640 --> 00:09:03,120 Speaker 1: Dan boris Law, who is also an investor, he was 173 00:09:03,400 --> 00:09:07,280 Speaker 1: He was the founder of Magic Jack and Jack and 174 00:09:07,280 --> 00:09:11,040 Speaker 1: and boris Law, who's since passed away, was a big uh. 175 00:09:11,160 --> 00:09:13,440 Speaker 1: He owned some horses in to love to gamble, and 176 00:09:13,520 --> 00:09:18,440 Speaker 1: he came up with this great idea which was, rather 177 00:09:18,480 --> 00:09:20,640 Speaker 1: than waiting for the last day of the meat where 178 00:09:20,679 --> 00:09:24,160 Speaker 1: everyone's gonna pile in, what if I hit try to 179 00:09:24,200 --> 00:09:27,000 Speaker 1: hit the rainbow six the day before, His thinking being 180 00:09:27,040 --> 00:09:30,440 Speaker 1: the following. Everybody is focused and geared up, and there's 181 00:09:30,480 --> 00:09:33,160 Speaker 1: all this buzz and everyone's putting their time, effort, energy 182 00:09:33,240 --> 00:09:35,920 Speaker 1: and money into the last day of the meat because 183 00:09:36,240 --> 00:09:40,160 Speaker 1: mandatory payout. So what if maybe it's possible that the 184 00:09:40,200 --> 00:09:42,960 Speaker 1: pool is going to be really thin? The day before, 185 00:09:43,520 --> 00:09:46,120 Speaker 1: And what if I just throw myself at this pool 186 00:09:46,320 --> 00:09:47,800 Speaker 1: and throw a big number at it, and it turns 187 00:09:47,800 --> 00:09:51,440 Speaker 1: out he invested and his tickets fifteen thousand dollars, so 188 00:09:51,559 --> 00:09:54,640 Speaker 1: not an insignificant amount of money. And maybe if if 189 00:09:54,640 --> 00:09:57,400 Speaker 1: the if, the sequence gets a little funky, and it's 190 00:09:57,400 --> 00:09:59,120 Speaker 1: in other word, it's not like the favorite, the Favorite, 191 00:09:59,160 --> 00:10:00,840 Speaker 1: the Favorite Favorite was up. You get a couple of 192 00:10:00,840 --> 00:10:03,280 Speaker 1: long shots here and there, and I'm the only fool 193 00:10:03,320 --> 00:10:05,920 Speaker 1: who's got him. Maybe I take this whole thing down 194 00:10:06,440 --> 00:10:10,240 Speaker 1: and lo and behold, that's exactly what happened. He took 195 00:10:10,320 --> 00:10:14,320 Speaker 1: down on the eve of the last day to meet. 196 00:10:14,360 --> 00:10:17,960 Speaker 1: He took down six point seven million dollars thousand dollar 197 00:10:18,160 --> 00:10:21,520 Speaker 1: fifteen dollar bed. And again, what I love about it 198 00:10:21,559 --> 00:10:24,960 Speaker 1: is there's a great contrarian thought to it. And now, 199 00:10:24,960 --> 00:10:27,320 Speaker 1: of course it's distinctly possible he still wasn't gonna hit it, 200 00:10:27,400 --> 00:10:29,320 Speaker 1: or he was going to hit something that was very 201 00:10:29,360 --> 00:10:30,880 Speaker 1: favorite heavy, and he would have shared it with a 202 00:10:30,920 --> 00:10:32,959 Speaker 1: lot of people. Of course didn't have to work out, 203 00:10:33,480 --> 00:10:36,960 Speaker 1: but you know it did, and it highlights, you know, 204 00:10:37,160 --> 00:10:41,640 Speaker 1: him exploiting essentially a bit of a of a weakness 205 00:10:41,679 --> 00:10:43,559 Speaker 1: in the market there where everybody was geared up on 206 00:10:43,600 --> 00:10:46,640 Speaker 1: that last day. Well, it sounds like exactly you said. 207 00:10:46,800 --> 00:10:49,880 Speaker 1: All good bettors are value investors, and he saw value 208 00:10:49,920 --> 00:10:53,360 Speaker 1: in the penultimate day when everybody said they had their 209 00:10:53,360 --> 00:10:55,960 Speaker 1: eyes on the prize of the last day. He realized 210 00:10:56,040 --> 00:10:59,040 Speaker 1: essentially that that day was under price or under bed 211 00:10:59,280 --> 00:11:01,640 Speaker 1: and he and he essentially and he snuck one over 212 00:11:01,679 --> 00:11:04,520 Speaker 1: on everybody. Now, the funny thing about Upset were the 213 00:11:04,520 --> 00:11:07,400 Speaker 1: people who had these big syndicate. I don't know, but 214 00:11:07,440 --> 00:11:09,080 Speaker 1: I will say this because as I was brushing up 215 00:11:09,080 --> 00:11:10,880 Speaker 1: on the I was remembering the episode and I was 216 00:11:10,920 --> 00:11:13,560 Speaker 1: going through some old clips. The Gulf Stream Park released 217 00:11:13,559 --> 00:11:16,040 Speaker 1: a statement that after you hit it, it sounded like 218 00:11:16,080 --> 00:11:18,000 Speaker 1: somebody had died in the family. Their statement was we 219 00:11:18,120 --> 00:11:21,800 Speaker 1: were all disheartened. It something like, we're all heartbroken that 220 00:11:22,760 --> 00:11:25,280 Speaker 1: this guy stole our pool and we didn't get the huge, 221 00:11:25,360 --> 00:11:27,920 Speaker 1: crazy last day of the meat. The funniest part about it, 222 00:11:27,960 --> 00:11:30,520 Speaker 1: thoways I heard him interview. This is back five years 223 00:11:30,520 --> 00:11:32,800 Speaker 1: ago and it happened after he hit it, and somebody 224 00:11:32,840 --> 00:11:35,280 Speaker 1: said to them, so, well, how you doing now as 225 00:11:35,320 --> 00:11:37,320 Speaker 1: a gambler for life you don't want and he said, 226 00:11:38,280 --> 00:11:42,400 Speaker 1: maybe maybe I'm about even and so no, so he 227 00:11:42,480 --> 00:11:44,200 Speaker 1: must have been done an awful lot of money before 228 00:11:44,200 --> 00:11:46,720 Speaker 1: you hit that. I love that one, all right. What 229 00:11:46,920 --> 00:11:50,440 Speaker 1: is past posting? So past posting is any time you 230 00:11:51,040 --> 00:11:55,959 Speaker 1: managed to get off a bat illegally after the race 231 00:11:56,080 --> 00:11:58,840 Speaker 1: has been run. There of course, the movie The Sting 232 00:11:59,320 --> 00:12:02,440 Speaker 1: Right was largely based on this. And then there are 233 00:12:02,440 --> 00:12:05,440 Speaker 1: many different past posting schemes, most of which have been 234 00:12:06,559 --> 00:12:11,800 Speaker 1: squelched over time by the authorities. Some probably do or 235 00:12:11,880 --> 00:12:13,959 Speaker 1: could perhaps exist here and there, but I think for 236 00:12:14,000 --> 00:12:17,840 Speaker 1: the most part, as technologies advanced, they've gone away. But 237 00:12:17,960 --> 00:12:21,280 Speaker 1: here's the case back in the Breeders Cup in two 238 00:12:21,320 --> 00:12:25,160 Speaker 1: thousand two. Now, the Breeders Cup isn't quite the Kentucky Derby, 239 00:12:25,240 --> 00:12:28,840 Speaker 1: it's running the fall, it's not quite ash as high profile, 240 00:12:28,880 --> 00:12:31,240 Speaker 1: but it is the biggest racing event in the second 241 00:12:31,280 --> 00:12:33,360 Speaker 1: half of the year, and it's it's sort of championship 242 00:12:33,440 --> 00:12:38,520 Speaker 1: Dave Racing. And there was this elaborate past posting scheme 243 00:12:38,600 --> 00:12:42,640 Speaker 1: that became a big scandal, and these guys didn't get 244 00:12:42,640 --> 00:12:45,520 Speaker 1: away with it. They've initially walked away with three million dollars, 245 00:12:45,520 --> 00:12:47,439 Speaker 1: but they got nailed. And here was the past posting 246 00:12:47,440 --> 00:12:51,040 Speaker 1: scheme they had an insider at Auto Tote, which is 247 00:12:51,080 --> 00:12:54,920 Speaker 1: the firm that handles all the betting, who was ape. 248 00:12:55,040 --> 00:12:57,640 Speaker 1: It was also involved of picks. It was the pick 249 00:12:57,760 --> 00:13:01,320 Speaker 1: six um and it was Reader's Cup day. And what 250 00:13:01,360 --> 00:13:04,800 Speaker 1: they managed to do with this insider was after the 251 00:13:04,840 --> 00:13:08,560 Speaker 1: first four legs of the pick six were run, their 252 00:13:08,640 --> 00:13:12,600 Speaker 1: insider was able to go back in and tweak their 253 00:13:12,640 --> 00:13:15,440 Speaker 1: bats and so he makes it. It sounds I would 254 00:13:15,440 --> 00:13:17,760 Speaker 1: make it pretty easy to win. So yeah, what But 255 00:13:17,840 --> 00:13:19,680 Speaker 1: here's the thing. They could only do it after the 256 00:13:19,679 --> 00:13:22,640 Speaker 1: first four. You couldn't the way the system was software 257 00:13:22,679 --> 00:13:25,480 Speaker 1: was set up, you couldn't go in after six or six. 258 00:13:25,920 --> 00:13:27,760 Speaker 1: You were able to go in after four or six. 259 00:13:27,800 --> 00:13:31,320 Speaker 1: So they he goes in and he tweaks Race one 260 00:13:31,400 --> 00:13:33,960 Speaker 1: to get it right, tweaks Race two, tweaks Raise three, 261 00:13:34,000 --> 00:13:36,880 Speaker 1: tweaks Race four, and they've got one horse now selected 262 00:13:36,880 --> 00:13:39,719 Speaker 1: in each of those four races. And then when they 263 00:13:39,760 --> 00:13:41,839 Speaker 1: couldn't touch the last two, what do they do in 264 00:13:41,880 --> 00:13:44,400 Speaker 1: the last two races? They bet on every horse and 265 00:13:44,480 --> 00:13:48,880 Speaker 1: every horse so the ticket obviously looks a little suspicious. 266 00:13:49,120 --> 00:13:51,600 Speaker 1: So in the first they have a single and the 267 00:13:51,679 --> 00:13:54,360 Speaker 1: second they go single, Third they go single, Fourth they 268 00:13:54,360 --> 00:13:57,040 Speaker 1: go single in the last two, they go all and 269 00:13:57,160 --> 00:14:01,040 Speaker 1: all it looks a little fishy. They their cover was 270 00:14:01,120 --> 00:14:04,440 Speaker 1: totally blown when in the in the last race, the 271 00:14:04,559 --> 00:14:09,560 Speaker 1: sixth race, a forty three to one shot Vulpony wins. 272 00:14:10,320 --> 00:14:12,440 Speaker 1: And it turns out, low and behold that they are 273 00:14:12,559 --> 00:14:17,320 Speaker 1: the only fools or geniuses, cheating geniuses who have up 274 00:14:17,320 --> 00:14:22,000 Speaker 1: to pick six tickets. So now so the sixth so 275 00:14:22,200 --> 00:14:26,720 Speaker 1: the final one. So what it did was, there's like, hey, 276 00:14:26,800 --> 00:14:29,600 Speaker 1: Joe wisin'tal is the lone winner of the Breeders Cup 277 00:14:29,640 --> 00:14:32,120 Speaker 1: Pick six. He just won three million dollars. And then 278 00:14:32,160 --> 00:14:35,200 Speaker 1: that in other words, if Joe Wisntal had been he 279 00:14:35,240 --> 00:14:37,040 Speaker 1: had been part of the crowd, he'd been one of 280 00:14:37,480 --> 00:14:41,200 Speaker 1: seventy five people, he wouldn't have people wouldn't have gone 281 00:14:41,200 --> 00:14:42,800 Speaker 1: back and looked at the ticket. And so when it 282 00:14:42,800 --> 00:14:47,120 Speaker 1: turns out Joe is the lone winner, got screwed by 283 00:14:47,280 --> 00:14:51,760 Speaker 1: virtue of the fact that that was so unusual for 284 00:14:51,840 --> 00:14:53,960 Speaker 1: there to be a soul winner, because in the traditional 285 00:14:54,040 --> 00:14:58,240 Speaker 1: pick six, unlike the Rainbow six, multiple people could have won. 286 00:14:58,840 --> 00:15:00,920 Speaker 1: But the fact that three million into our check to 287 00:15:01,000 --> 00:15:02,800 Speaker 1: one winner is like, let's at least look at what 288 00:15:02,840 --> 00:15:06,360 Speaker 1: they and and and the uniqueness or the fact that 289 00:15:06,360 --> 00:15:08,320 Speaker 1: they were a lone winner led the ticket to be 290 00:15:08,400 --> 00:15:11,000 Speaker 1: examined and then the ticket again. And I refer to 291 00:15:11,080 --> 00:15:13,280 Speaker 1: this as a three million dollar heist with that left 292 00:15:13,320 --> 00:15:18,640 Speaker 1: fingerprints everywhere, because it's a little it's a little aesthetically 293 00:15:19,000 --> 00:15:24,240 Speaker 1: odd to go single, single, single, single all all, Like 294 00:15:24,320 --> 00:15:27,120 Speaker 1: no one ever would do that, right, it's pretty weird. Uh, 295 00:15:27,160 --> 00:15:29,840 Speaker 1: you know. I like the contrast between the first example, 296 00:15:29,880 --> 00:15:32,840 Speaker 1: which is just a really clever value bet, and this 297 00:15:32,880 --> 00:15:34,840 Speaker 1: one is just let's just go back and change the 298 00:15:35,160 --> 00:15:37,560 Speaker 1: which is about the opposite of clever and very crude. 299 00:15:37,640 --> 00:15:40,600 Speaker 1: So they all did jail time. Uh, justice was served. 300 00:15:40,800 --> 00:15:44,400 Speaker 1: The people who had five of six winners got their money, 301 00:15:45,080 --> 00:15:49,760 Speaker 1: so it all sort of ended happily enough. Alright, what's 302 00:15:49,800 --> 00:15:53,600 Speaker 1: another past posting story. Well, there's another past posting story 303 00:15:53,680 --> 00:15:58,760 Speaker 1: from my father's youth. And this may be slightly apocryphal, 304 00:15:59,160 --> 00:16:01,680 Speaker 1: but this is, um this is one of sort of 305 00:16:01,720 --> 00:16:04,800 Speaker 1: like a classic pass posting scheme that used to exist, 306 00:16:05,400 --> 00:16:07,680 Speaker 1: you know, before the technology got up to speed. And 307 00:16:07,720 --> 00:16:10,840 Speaker 1: it was one that you know, took place in Lincoln 308 00:16:10,880 --> 00:16:13,760 Speaker 1: Down's race track, my father's home track. As he understood it, 309 00:16:13,760 --> 00:16:17,080 Speaker 1: it's just outside of Providence or or no longer exists. 310 00:16:17,560 --> 00:16:20,040 Speaker 1: It was a horse track, and then it was a 311 00:16:20,080 --> 00:16:22,160 Speaker 1: dog track and out I don't even know what it is. 312 00:16:22,200 --> 00:16:24,600 Speaker 1: I think it's nothing now. And it was a tiny 313 00:16:24,640 --> 00:16:26,240 Speaker 1: little track where they used to run a lot of 314 00:16:26,280 --> 00:16:30,640 Speaker 1: sprint races, short races. So in a short race, uh, 315 00:16:30,720 --> 00:16:34,080 Speaker 1: the initial break out of the gate is very got everything. 316 00:16:34,680 --> 00:16:37,560 Speaker 1: It's you know, it's the break is always important in 317 00:16:37,600 --> 00:16:39,760 Speaker 1: every race, but in a sprint race, where you know 318 00:16:39,760 --> 00:16:41,640 Speaker 1: the race is going to be over in a minute, 319 00:16:42,280 --> 00:16:44,080 Speaker 1: it's a lot more important than a race that's two 320 00:16:44,120 --> 00:16:45,680 Speaker 1: minutes long, where you know, if you get off a 321 00:16:45,720 --> 00:16:47,840 Speaker 1: little bit slow, you know you can you can make 322 00:16:47,840 --> 00:16:51,160 Speaker 1: it up. So this pass posting scheme took advantage of 323 00:16:51,960 --> 00:16:54,560 Speaker 1: the fact that the track out of glitch where they 324 00:16:54,640 --> 00:16:58,200 Speaker 1: allowed some bets to go in for a second or 325 00:16:58,200 --> 00:17:01,080 Speaker 1: two after the gates were opened. And this and the 326 00:17:01,120 --> 00:17:03,440 Speaker 1: way that you know this group ran it was they 327 00:17:03,480 --> 00:17:05,639 Speaker 1: had a guy right at the time, two guys right 328 00:17:05,680 --> 00:17:07,159 Speaker 1: at the starting gate, and two guys up at a 329 00:17:07,200 --> 00:17:10,120 Speaker 1: bedding window. And if when the gates open, if one 330 00:17:10,160 --> 00:17:13,200 Speaker 1: of the horses broke clearly ahead of the rest of 331 00:17:13,240 --> 00:17:17,280 Speaker 1: the field, one guy would shout the number to his 332 00:17:17,320 --> 00:17:19,560 Speaker 1: buddy right next to him, who would flash with hand 333 00:17:19,640 --> 00:17:22,560 Speaker 1: signals up to the guys up at the betting window. 334 00:17:22,640 --> 00:17:24,520 Speaker 1: One guy the betting window had a pair of binoculars 335 00:17:24,520 --> 00:17:26,840 Speaker 1: who could see the numbers being flashed by hand. The 336 00:17:26,880 --> 00:17:30,719 Speaker 1: other guy was at the window and telling the teller 337 00:17:31,000 --> 00:17:33,520 Speaker 1: he already had a series of fifty dollar bets lined up, 338 00:17:33,560 --> 00:17:35,520 Speaker 1: I think fifty dollars with a maximum bet at the time, 339 00:17:35,800 --> 00:17:37,800 Speaker 1: and he would just tell the teller to punch that 340 00:17:37,880 --> 00:17:41,280 Speaker 1: fifty dollar ticket the two horse, and just punch it 341 00:17:41,320 --> 00:17:45,880 Speaker 1: as many times as he could, would it automatically that 342 00:17:45,880 --> 00:17:49,080 Speaker 1: that sounds tough. It seems like there's very little time 343 00:17:49,520 --> 00:17:54,720 Speaker 1: there the teller to right, so you know, and I'm 344 00:17:54,720 --> 00:17:56,200 Speaker 1: saying it was a second or two. I don't know 345 00:17:56,280 --> 00:17:59,119 Speaker 1: the exact amount of time. But again, in the break, 346 00:17:59,480 --> 00:18:04,040 Speaker 1: you can discern from that absolute first jump out, you 347 00:18:04,080 --> 00:18:07,240 Speaker 1: can you can typically get a very good sense some 348 00:18:07,320 --> 00:18:10,840 Speaker 1: horses will catch a flyer, uh, some horses will will 349 00:18:10,920 --> 00:18:14,000 Speaker 1: rear up, some horses will will will walk out of there, 350 00:18:14,119 --> 00:18:15,639 Speaker 1: so you can get a pretty good sense. Maybe it 351 00:18:15,680 --> 00:18:17,439 Speaker 1: was more than a second or two. I mean, it 352 00:18:17,440 --> 00:18:19,679 Speaker 1: could have been a bit more, but they as the 353 00:18:19,720 --> 00:18:22,000 Speaker 1: story goes, were managed to ride this for as long 354 00:18:22,040 --> 00:18:24,639 Speaker 1: as they could until the authorities managed to snuff it out. 355 00:18:24,680 --> 00:18:27,720 Speaker 1: At this point, you cannot bet after the gates open anymore. 356 00:18:28,480 --> 00:18:32,879 Speaker 1: The market will settle nowadays after the gates open, But 357 00:18:33,240 --> 00:18:36,560 Speaker 1: once that buzzer sounds and the gate opens, uh, the 358 00:18:36,720 --> 00:18:39,600 Speaker 1: betting windows are closed. You use the words settle there 359 00:18:39,720 --> 00:18:44,199 Speaker 1: in your last answer, which of course calls to mind markets, 360 00:18:44,280 --> 00:18:47,080 Speaker 1: and of course, and prices and horse racing. The odds 361 00:18:47,119 --> 00:18:49,960 Speaker 1: are fluctuating to the last second. Is there any sort 362 00:18:50,000 --> 00:18:53,639 Speaker 1: of opportunity for like high frequency trading, Shenanigan stuff like that. Yeah, Well, 363 00:18:53,640 --> 00:18:56,000 Speaker 1: what happens, what has happened of late is as you've 364 00:18:56,040 --> 00:19:01,320 Speaker 1: gotten more and more quant driven gamblers, professional quad driven 365 00:19:01,320 --> 00:19:05,119 Speaker 1: gamblers with big payrolls in the game, who come in 366 00:19:05,160 --> 00:19:07,960 Speaker 1: and try to seize on what they determined to be 367 00:19:08,000 --> 00:19:12,159 Speaker 1: market distortions and marketing inefficiencies late in late in the bedding, 368 00:19:12,200 --> 00:19:15,159 Speaker 1: with a minute or so before the race starts, you 369 00:19:15,200 --> 00:19:17,919 Speaker 1: will get and I've seen this of late in the 370 00:19:17,960 --> 00:19:21,920 Speaker 1: last few years, massive swings and prices in the last 371 00:19:21,960 --> 00:19:23,800 Speaker 1: minute or so, which can be as a as a 372 00:19:23,800 --> 00:19:25,560 Speaker 1: as a small time gambler like me, which is be 373 00:19:25,560 --> 00:19:28,160 Speaker 1: incredibly frustrating. I may bet on a horse with two 374 00:19:28,160 --> 00:19:30,240 Speaker 1: minutes ago, and I myself always tried to wait until 375 00:19:30,240 --> 00:19:31,960 Speaker 1: the last few minutes to beat. But I may bet 376 00:19:31,960 --> 00:19:33,679 Speaker 1: on a horse with two minutes to go at five 377 00:19:33,840 --> 00:19:37,520 Speaker 1: to one, and then one of these quants comes in 378 00:19:37,640 --> 00:19:42,639 Speaker 1: and puts down a dollar bat which in our pools 379 00:19:42,880 --> 00:19:45,560 Speaker 1: would be a lot of money typically, and that five 380 00:19:45,600 --> 00:19:47,440 Speaker 1: to one by the time the gates open is now 381 00:19:48,359 --> 00:19:51,160 Speaker 1: maybe three to one, maybe two to one. Huge swings 382 00:19:51,560 --> 00:19:54,960 Speaker 1: and the last couple of minutes that make it, to 383 00:19:55,080 --> 00:19:57,560 Speaker 1: quote Brad Kotsu Yama and Flash Boys a little bit, 384 00:19:57,600 --> 00:19:59,280 Speaker 1: makes it hard to sort of trust what you're seeing 385 00:19:59,320 --> 00:20:03,080 Speaker 1: on the screen. Very frustrating. It's a growing, absolutely a 386 00:20:03,080 --> 00:20:06,720 Speaker 1: growing phenomena in the game. Alright, final moments here on 387 00:20:06,760 --> 00:20:10,160 Speaker 1: the episode, Kentucky Derby coming up, give me your sort 388 00:20:10,160 --> 00:20:13,560 Speaker 1: of sixty second read on the race. Well, there's one 389 00:20:13,720 --> 00:20:17,240 Speaker 1: real freak that everybody is super high on, a horse 390 00:20:17,320 --> 00:20:21,960 Speaker 1: name Justify that's trained by the the horse freak, whisper 391 00:20:22,000 --> 00:20:25,520 Speaker 1: Bob Bafford, who trained American Pharaoh uh to the Triple 392 00:20:25,560 --> 00:20:27,679 Speaker 1: Crown a few years ago. He's going to be heavily 393 00:20:27,720 --> 00:20:30,879 Speaker 1: bet heavily hyped. He is absolutely the real deal and legit. 394 00:20:31,000 --> 00:20:34,320 Speaker 1: I'm not knocking him. I'm just gonna take a real 395 00:20:34,480 --> 00:20:38,280 Speaker 1: stand against him. I think he's very green and inexperienced, 396 00:20:38,640 --> 00:20:42,119 Speaker 1: and I suspect that unless he comes storming out of 397 00:20:42,160 --> 00:20:44,960 Speaker 1: the gate perfectly, he's going to get himself in trouble 398 00:20:45,080 --> 00:20:47,119 Speaker 1: and be in a situation he doesn't want to be in. 399 00:20:47,280 --> 00:20:49,679 Speaker 1: And I have a hand, my eye and a handful 400 00:20:49,720 --> 00:20:52,720 Speaker 1: of horses in the ten to fifteen to twenty to 401 00:20:52,840 --> 00:20:55,119 Speaker 1: one range, and I think our good candidates up set him. 402 00:20:55,200 --> 00:20:58,640 Speaker 1: So you're you're spreading your value bets around rather than 403 00:20:59,160 --> 00:21:01,760 Speaker 1: betting on the favor that's correct. I believe this is 404 00:21:01,800 --> 00:21:04,919 Speaker 1: a vulnerable favorite. And anytime you think you have a 405 00:21:04,960 --> 00:21:07,399 Speaker 1: vulnerable favorite you want to take a stand against. Is 406 00:21:07,440 --> 00:21:10,720 Speaker 1: the Kentucky Derby for an experience better like yourself, a 407 00:21:10,920 --> 00:21:14,120 Speaker 1: higher expected value race or lower with all the people 408 00:21:14,160 --> 00:21:16,520 Speaker 1: who don't normally bet coming into it. Right, the fact 409 00:21:16,520 --> 00:21:19,760 Speaker 1: that there's all the dumb money in there is helpful. 410 00:21:19,920 --> 00:21:23,600 Speaker 1: The problem is, because it's a twenty horse field, there's 411 00:21:23,600 --> 00:21:28,560 Speaker 1: a random skew to it that makes it not very formful, 412 00:21:29,359 --> 00:21:32,000 Speaker 1: and as a result, it sometimes it's hard to accept 413 00:21:32,080 --> 00:21:34,840 Speaker 1: the results as again because someone who likes to try 414 00:21:34,880 --> 00:21:37,240 Speaker 1: to always control as many variables as possible, it's really 415 00:21:37,240 --> 00:21:39,439 Speaker 1: hard to control the variables. A twenty horse field is 416 00:21:39,440 --> 00:21:42,480 Speaker 1: a stampede of horses. A typical field would have eight horses. 417 00:21:42,880 --> 00:21:46,399 Speaker 1: So well, and unfortunately, even if you're really smart and 418 00:21:46,400 --> 00:21:48,960 Speaker 1: do lots of good value bets, you can't eat positive 419 00:21:49,000 --> 00:21:52,680 Speaker 1: expected value if you don't win. This is David Popadoppolos. 420 00:21:52,880 --> 00:21:55,679 Speaker 1: I wanna just talk with you for the next few hours, 421 00:21:55,720 --> 00:21:57,399 Speaker 1: but we have to wrap it up there. We'll do 422 00:21:57,440 --> 00:22:01,919 Speaker 1: another horse episode next year for next year's Kentucky Derby. 423 00:22:01,960 --> 00:22:04,239 Speaker 1: Thank you for joining the Odd Lots podcast. This has 424 00:22:04,280 --> 00:22:07,919 Speaker 1: been another episode of Odd Lots. I'm Joe Wisnthal. You 425 00:22:07,960 --> 00:22:10,320 Speaker 1: can follow me on Twitter at the Star Wart. You 426 00:22:10,359 --> 00:22:14,119 Speaker 1: can follow David Papadopoulos on Twitter at David el Greco. 427 00:22:14,520 --> 00:22:17,160 Speaker 1: You can follow my co host Tracy Ellaway, who wasn't 428 00:22:17,200 --> 00:22:20,439 Speaker 1: here this week, at Tracy Elloway. And you should also 429 00:22:20,560 --> 00:22:24,359 Speaker 1: please follow our producer Top for Forehead at Foreheads T, 430 00:22:24,720 --> 00:22:28,399 Speaker 1: as well as the Bloomberg head of podcast, Francesco Levie 431 00:22:28,640 --> 00:22:30,960 Speaker 1: at Francesca Today. Thanks for listening.