Chance News 23

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Quotation

Forsooth

A Challenge

The mathematics department at Dartmouth has just moved to a new building and the previous math building is being demolished. The students called this building "Shower Towers" suggest by this picture of one wall of the building.

http://www.dartmouth.edu/~chance/forwiki/bradley2.jpg

For at least 30 years we walked by this wall assuming that the tiles were randomly placed. One day, as we were walking by it, our colleaugue John Finn said "I see they are not randomly placed." What did he see?

Submitted by Laurie Snell

Statz 4 life

Statz 4 life, homies!, Da Statz Krew, Google video.

This is an hilarious 5-minute hip-hop video on an introductory statistics course for phychology at the University of Oregon, last Summer. Graduate student Chuck Tate enlisted the help of other psychology graduate students to get students to enjoy statistics as much as they enjoy hip-hop. From anova to correlation, from Peason to Fisher, the whole syllabus is mentioned. Let's hope Da Statz Krew enjoy their real stats courses as much as they seemed to enjoy making the video.

(Note: This video was previously mentioned briefly in Chance News 18.)

Submitted by John Gavin.

Hot streaks rarely last

The Man Who Shook Up Vegas, by Sam Walker, January 5, 2007; Page W1.

Since last fall (Autumn), Las Vegas has had a problem each Thursday morning at precisely 10 a.m. Nevada time. Casino sports betting operations around the world were being simultaneously pounded by thousands of bettors wagering millions of dollars on the same few college football games. Odder still, most of these lock step bets were turning out to be winners, costing the casinos a fortune. The global business of sports betting was being jolted every week by an obscure 41-year-old statistician from San Francisco, using the alias Dr. Bob.

The article explains the background

Gamblers wagering against a point spread must win more than half their bets (about 53%) to make a profit and must be closer to 55% to make a comfortable living. This is no small feat. Experts say there may be fewer than 100 people who can sustain these rates over time. Most of them belong to professional betting syndicates that hire teams of statisticians, wager millions every week and keep their operations secret.

Since 1999, Bob Stoll has recommended 658 bets on college football, or about 81 per season. Here are his results. (For comparison, when betting against a point spread in Las Vegas, bettors must win 52.4% of their wagers to make a profit.)

YEAR  WIN/LOSS/TIE  %  
1999  49-31-1  61  
2000  47-25-0  65  
2001  35-28-0  56  
2002  49-44-3  53  
2003  46-55-2  46  
2004  55-34-1  62  
2005  51-21-2  71  
2006  45-34-3  57  

The article claims that in the last three months, Mr. Stoll has emerged to become one of the world's most influential sports handicappers. And when it comes to predicting the outcomes of college football games, he is peerless.

What separates Mr. Stoll from other professionals, and makes him so frightening to bookmakers, is that he distributes his bets to the public, for a fee. All that pandemonium on Thursdays was no coincidence: that's the day Mr. Stoll sends an email to his subscribers telling them which college football teams to bet on the following weekend. This makes it very difficult for bookmakers to maintain a balanced book.

His website discusses the tools he uses to analyze football games: a mathematical model to project how many points each team was likely to score in a coming matchup. He makes unapologetic use of terms like variances, square roots, binomials and standard distributions. Much of his time is spent making tiny adjustments. If a team lost 12 yards on a running play, he checks the game summary to make sure it wasn't a botched punt. He compensates for the strength of every team's opponents. It takes him eight hours just to calculate a rating he invented to measure special teams. Trivial as this seems, Mr. Stoll says the extra work makes his predictions 4% better.

He does not follow the standard business model. He has no employees and he declines to advertise or swap links with other handicapping sites. In online essays, Dr. Bob says

I have a very realistic approach to handicapping and consider sports betting an investment rather than a gamble. In case you haven't figured it out by now, there is no such thing as a sure thing and I don't respect anyone who does. But, in the long run, if you follow my Best Bet advice and use a disciplined money management strategy you will win.

Bob Stoll's handicapping career began at Berkeley when he entered a $2 NFL pool and, after doing a few minutes of simple math, won $100. From then on, his statistics classes became excuses to feed football data through campus mainframes. After winning 63% of his bets in three years, he quit school to become a tout.

Hot streaks rarely last. One handicapper says

He (Bob Stoll) needs to enjoy this while it's going on right now.

In 2005, Mr. Stoll noticed that a few minutes after he sent his advice, the lines on those games would shift slightly. By the beginning of the 2006 college football season, within 30 seconds of the moment he pressed "send" on his Thursday picks, every major casino in the world would fall into line.

The bookmakers had clearly subscribed, and were trying to change the lines before his clients could make bets. When a stock analyst moves the market with a recommendation, investors who get in early can make money on it regardless of its merits. It's just the opposite in my business. When he makes picks, it's as if brokers and traders collude to drive down the price.

It's a story Mr. Stoll says he's heard thousands of times from clients who don't look at the long term.

Even good bets lose 40% of the time but some clients don't grasp that. They think I'm either hot or I'm cold.

As for what motivates him, Stoll says:

I'm not flashy by nature. I don't need three houses and a boat. I just like to handicap. For me, it's about problem solving.

Questions

  • How likely is it that his past performance table could have happened by chance?
  • Dr. Bob advises clients to bet in a disciplined pattern that leaves less than a 1% chance of exhausting their bankrolls. Is this an acceptable performance statistic? What other information would you like to know about how much you might lose?

Further reading

Submitted by John Gavin.

Amazon's Statistically Improbable Phrases