Fascinating piece on Aussie rebate churner..
 

This is quite a story. Rebates to the tune of $44 million and the Australian government's tax bill.. And remember Capital Play who tried to get involved in the NYRA franchise bid?

Long read: http://www.afr.com/p/national/the_ga...XaVFjmpyYXNu9J

Pretty compelling story of how rebates ruin racing.

So his game is to simply lose less than the rebate. How would he do that? Would he dutch and toss out a couple horses per race ? It would seem like he would have to eliminate some entries or his losses would equal the takeout. Seems like the problem is the amount of rebate not just the rebate itself that put the book in trouble. Rebates arent the problem controls such as limits are needed. Vegas has table limits to avoid getting ruined.

I'm pretty sure they toss out many of the horses in a race. They want to bet a lot, but there's no point in making a bet that has a mathematical expected loss that's greater than the rebate. Even better would be to win.

Here is one of the most informative parts of the article: "This modest description does no justice to the scale of his enterprise. The syndicate employs about 300 people at its offices in Hobart and Sydney and it runs a global gambling operation that places bets on races in Japan, Hong Kong, England, Australia and the US.

The betting system relies on computer models driven by complex algorithms that place thousands of bets, worth millions of dollars, in the final minutes before the horses jump.

In Australia the syndicate is known to win in its own right, while in the US the operation relied on rebates."

A lot of that sounds like Bill Benter's huge successes in Hong Kong. Benter was a former blackjack card counter who used a combination of computer analysis and cross-pool overlays to win millions, some say billions. He is now a philanthropist to an extent that a Hong Kong university has named a "Prize" in Applied Mathematics after him:

http://www6.cityu.edu.hk/rcms/WBP/about_us.html

When I first heard about Benter's success (early 90's, I think), I also heard that two groups from Australia had also set up shop in Hong Kong.

--Dunbar