Book Reviews

The following are books that I own and that I fully recommend to anyone wishing to learn more about sports trading. Yes, they are extremely mathematical but they have to be because you are not going to turn a profit without the necessary skills. You can be sure that a symptom of a lack of success at sports betting is a reluctance to read the required literature. There are no shortcuts.

I have made a selection of 6 Books to Start You in Sports Trading that will help the aspiring trader make a headstart.
For all books reviewed on this site, click here.

Efficiency of Racetrack Betting Markets

Betting markets have long been used by students and researchers in the field of economics. Now with peer-to-peer betting markets there is little difference between investing on a sports exchange and a financial market. Sections include; market efficiency, exotic bets, football and horse racing. Don't try to second-guess the price of a race horse, it's all been done for you by the wisdom of the crowd, not to mention the editorships of Hausch, Lo and Ziemba; names that are well known to students of betting markets. The mathematics is complicated but winning was never easy.

Secrets of Successful Betting
I never fully understood how bookmakers plied their trade until I read this book. Published in 2002, when Betfair was in its infancy, the book represents the transition from bookmakers to peer-to-peer betting. This is the only book to offer a comprehensible account of bookmakers, their history and the mathematics of bookmaking. The book includes an explanation of the on-course betting market, staking methods and Kelly criterion, the multiple bet, hedging, coupling prices and making a backer's book.

Full review of Secrets of Successful Betting

The Compleat Horseplayer

I enjoy reading books by economists dipping their toes into the horserace betting market. Although quite thin the book is a distillation of the best fundamental and technical analysis methods. There is no waffle. The book includes a list of red herrings that novices get hung-up on in fundamental analysis. For example, trainers and jockeys are not as important as you think they are. This book carefully guides the beginner away from these red herrings. The technical analysis section includes an understandable review of place pricing and the author's own "Edelman Formula" to go alongside the Harville, Henery and Stern formulae. Also, there is a Sharpe Ratio for bettors to evaluate their systems with.

Full review of The Compleat Horseplayer

The Punter's Revenge

The Punter's Revenge is now out of print but can still be picked up from the second hand market. The early chapters give you a good grounding in probability theory; classical probability, Bayes Theorem etc. You then go on to code systems for playing the horse racing and football markets. There is also some discussion of casino games and a rudimentary AI system called BEAGLE. Although this book was written long before Betfair existed the beginner will glean a lot of useful information.

Full review of The Punter's Revenge

Taking Chances: Winning with Probability

Probably the most complete book on gaming and probability that you could wish to own. Written by Dr John Haigh from the University of Sussex the book takes the reader through the required amount of probability theory to understand the topics in the rest of the book. Topics covered include football, horse racing casino games and other game of chance where people may be tempted to back their opinion with cash. Also included is a thorough working of Kelly Criterion for both single and multiple bets. This book remains on my desk and never gets put on the shelf.

Bioenergetics and Racehorse Ratings

Published in 2010, this book has many a horse racing forum chattering. Starting from human athletics through veterinary science and biomechanics, the book builds a model to rate a horse's ability. In the case of human athletes, determining who is the fastest is a fairly simple task. As of 2012, Usain Bolt is the fastest man alive and barring injury or a false start he will win the gold medal at the coming Olympics.

The task of determining the fastest horse is not so easy. Humans run on standard tracks and comparing times from different athletics meetings is a simple task. Horses do not run on standard courses and each run is hard to compare with other runs. This book sets out to classify horses scientifically with ratings created via a model for metabolic power and considerations for the differences between race courses.

I am in agreement with the author, in that this book won't make you rich. Horse racing is very much a dynamic system and precisely predicting outcomes in a chaotic environment is an impossible task. Still, I enjoy reading good science and mathematical applications in horse racing and this book didn't disappoint. I don't think the book will provide you with ratings that are any better than say Beyer or Mordin speed figures. Essentially, you are just re-framing the speed problem as one of metabolic power and whichever rating system you use, the top rated horse will be the same for all systems. The same problem, which all speed rating systems suffer from, will be encountered, namely the need for subjective decision making.

Information Efficiency in Financial and Betting Markets

Edited by the prolific Professor Leighton Vaughan Williams of Trent University. The book contains papers from other academics on market efficiency, arbitrage, market bias, insider trading, spread betting and price modelling. Although the number of papers does not equal that in Efficiency of Racetrack Betting Markets, the papers are new and will add to your knowledge. A thoroughly useful book for those wishing to understand betting markets and modelling.

Calculated Bets: Computers, Gambling, and Mathematical Modeling to Win

For some reason or other this book has not become a favourite amongst sports traders. Personally, I rate it rather highly. I have not read any other books that explain in detail a person's love for a sport, his desire to model it and then to bet on it. Steven Skiena of Stony Brook University has had a lifelong passion for the sport of Jai Alai, a ball game akin to squash from the Basque region of Spain, played with baskets attached to the hand. This book details Steven's building of a model for the game of Jai Alai. We are taken through Monte Carlo simulations of games and finally to building a trading platform.

If you want to know what it takes to model a sport and build a bot to place bets then you need this book at hand. You won't learn how to program specifically for your requirements and this book was written before Betfair took off. However, you will learn what it takes to dedicate yourself to a task.

Full review of Calculated Bets: Computers, Gambling, and Mathematical Modeling to Win

Useful Finance Books

There is no doubt that sports betting markets can be traded like financial markets. For small investors trading the numbers offers many advantages. Not least that you know you are getting a fairer price than on the financial markets with front running high-frequency trading rife in most trading pools. With sports exchanges no different from financial markets there is much to be learned from the financial world. Here are a few books that I have found fascinating and helpful in my work.

Books by Michael Lewis and Scott Patterson are very imformative. Not so much tehnical but they do give the reader a good impresison of the psychology required to be a good algorithmic trader looking for an angle to exploit. I also inlcude, in my recommendations, more technical books on exploiting market efficiencies (or lack of), high-frequency trading and quantitative analysis.