Top 10 Experts of igaming and affiliate marketing

Obviously, all the players want to win a trip to Dubia, so a news article goes a long way. Although. I don’t think that players read reviews really. I think it is more of what is on your Homepage. If you’re got a top 5 guys on your homepage, they are going to click on it.

They are not going to read through every review. Listening to what you’re saying about the casino, I think it is basically about the homepage. What you’re saying I think it is basically Homepage? No, we actually, We have copywriters that literally go into the casino sign up, sees how easy that is test out their call centre. So our reviews are pretty authentic.

We don’t give everyone 5 stars. Some will get 3. Some will get 4 and at the end, we’ll say”. Ok, it’s a really good New Zealand casino, but they don’t have 24 hours customer service, so we’ll rate them a 4. We kind of are pretty honest when it comes to our reviews in how we score the casino. A lot of reviews on the site, like we’ve, got 50+ casino reviews and then 50+ reviews on just their bonuses.

Our copywriters actually using those casinos when creating their interviews, obviously helps a lot. If you keep putting content into that site daily, You literally have to do it. Daily. Our copywriters would be excellent at answering that Mainly new promotions. When I sign up to an affiliate program, I would ask them: please send me promotions If you have a tournament, send it to me.

If you pump news articles of people’s promotions, then that is also fresh content. It doesn’t have to be reviews. No one wants to read through 1,000 casino reviews, so … We also do news articles and and anything that goes under the news category. I’M Coreen I’m with the affiliate casinouk.com.

The problem is that being an affiliate from the casino point of view you have to fight for them, You have to offer more and more for them. This is because the competition is much greater than it was just a few years ago. Now we are fighting for every customer every first time depositor AND for every affiliate, because the affiliate sector gives us at least 50 60 % of the depositing clients. So we really have to take care of our partners, ( EnergyCasinopPartners.com ), and these conferences, like we have here ( at the AAC, Amsterdam ). It is a really good way to get in touch more personally with them to find out what they need to find out.

What other techniques / tactics are used by the affiliates? What kind of new methods the offline is? Basically a tough business, because when you are doing it offline, you have to be prepared that you will be in direct contact with the customers.

You are in contact with them and you get much more information about them and it is much harder for you to run a smooth business. The biggest difference is this: When you are doing an online business, you don’t have to deal with trouble like you have to do in the offline, but when you are doing it offline, you get directly in your face everything every type of complaint or feedback, and everything Else which can help you develop a better business in that you can change or react to any type of problem or – and thanks to this, maybe you then have the potential to react much quicker than you can perhaps do in the online field. However, I still think in online that it is much easier for the providers to find “ The Golden Way” to run their service, So basically the biggest difference, So basically the biggest difference, So basically the biggest difference.

So basically, the biggest difference is this. You can manage to resolve anything from in-front of your PC without confronting directly with the customers. You know those clients who are losing or who are who want changes so online is much easier and faster.

The competition is really high. So, as the years have passed, we’ve seen much better techniques and much bigger competition. Everybody is investing, they’ve started to invest money in it. There are companies. -There is a big industry now in the affiliate sector, who are just investing money to acquire more and more customers for the casinos to get better and better deals and as an amateur or if you just started your first step in this business. It is really tough to get some kind of profit or some kind of success In offline.

The affiliate doesn’t exist right now. Everybody wants to be a millionaire after a night, which is quite impossible in the casino business right now. You cannot make revenue, you cannot make profits just because you have a website or just because you have 100,000 visitors on your website. You will not start to make money, you have to think about a strategy, a long-term one where you put enough effort in your website. You invest in your product and finding a way unique way, a different one which can make you different than the other partners, because there are 100’s of 1,000’s of affiliates who are just trying to get some small piece of the cake. But there are some who rule the whole industry who have the biggest shares in the affiliate industry and who can be millionaires after a night right ) and to never stop.

The key is to wait to invest, to learn and to never stop to be confident in you. Well “ Worker to Worker” means that we do everything together. You know each decision in a company is made by workers.

The initial idea comes from one worker and will be implemented by everyone. So that is the point and we don’t have any strict rules within the company. We don’t have working time. You can work as much as you want, but by the end of the month you have to show results because the company trusts in the workers and I’m very happy to be part of it. The final result is to have The final result is to have high quality products in terms of high quality products in terms of gaming, software and betting software. So we have high quality products for bookmakers and the betting industry and that all comes together from those workers From Bosnia & Herzegovina, where the economic situation is not so good and we are not proud of that.

But I’m very proud with a company that is changing. That in some different way employing people and giving them more opportunities to learn to work, to educate on a daily monthly basis. I’M very glad because we are here in Amsterdam, My name is Elvis Dzombic and I come from the nsoft company based in Bosnia & Herzegovina. For more information about us, you can find on nsoft.ba. Well, I would see micro-payments as the easy way towards trading or gambling at the end of the day, and it is a secure way because we avoid charge-backs or any other of those issues.

But you also increase retention, So Micro-payments is the frontiers of using new technology, because that mainly comes from mobile payments as well, and if you have a provider that is integrated with multiple solutions, it means that you get to have micro-payments through the connections that the PSP Will provide you, People come to us and the want to know how the payment systems work, how the charges are enforced and created, and also because they all operate on the frontiers of new technology, which is i-Gaming at the end of the day. They want to know what legal aspects are at issue for their industry, licensing, juristiction payment systems, APM what solutions are available and how do they get the solutions In order to get the solutions you need to have some pre-requisites associated with it. Those pre-requisites might be licensing. It might be staffing, it might be expertise and know-how. Then again, you have to take into mind the global market, taxation, economy and affiliates. All they need to know is that they can have retention pay in to pay-out and we’re here to advise them because we’re an FCA member at the end of the day we’re a member of the payment systems.

So we can provide solutions into having easy access to their money or to pay with their money, and that is what affiliates are concerned with, But the companies that support affiliates are the main customers that we serve. Casinos ensure that they have as many options as possible. First of all, by having licensing, They need to have a license where they operate. Secondly, they need to understand the jurisdictions and the origins that the customers come from.

Jumanji™ Video Slot Review

Hey slots fans, and welcome to our review of the Jumanji™ Video Slot – NetEnt’s big release of 2018! A total of four Random Features will help you journey through the jungle, while an authentic Jumanji-style Board Game houses four Free Spins No Deposit – and more rewards too! However, an unusual reel structure immediately catches the eye, plus a number of intriguing objects around the board – each evoking a different memory of the 1995 cult classic movie.

Right on cue, the Sticky Vines Feature can randomly burst from the cabinet in the top-right, to lock a round’s winning symbols into place for a Re-Spin. This means you’re guaranteed to receive an additional coin boost, but perhaps of greater value in the ideal icons arrive. When a thunderstorm starts, snapping crocodiles will swim around the board but unlike the movie they’re not out to cause you bother. Instead, either one or two reels will be turned into entire Stacks of Wilds by the leaping reptiles giving you the chance of winning a few extras, like we just did now. But perhaps the most famous Jumanji scene has been recreated perfectly by NetEnt too! As the reels begin to spin longer than usual, just watch the ensuing carnage unfold… Alongside leaving the bookcase in tatters, the rhinos will stomp a handful of Wilds across the board to make the destruction work in your favour.

And finally, those calm innocent monkeys in the bottom left? As anyone who’s ever watched Jumanji will know, these cheeky chaps aren’t in the mood to just sit around – and are, instead, intent on causing yet more havoc! They’ll suddenly come to life and summon a few friends to mix things up, and by that we mean rearrange the landing symbols to form a random scoring combination.

Yet these random four features are only the beginning… If you see a minimum of three Jumanji™ Video Slot Scatter Symbols appear on the reels, it’s time to roll the real odds dice on the innovative Board Game Feature that NetEnt have cooked up to match the movie’s suspense. And just like in the blockbuster, you’re able to choose your own token to play with! As you can see from the Board Game’s track, there are different etchings on each landing position – all donating some sort of reward. Landing on one of the two lit-up positions in each corner is the key to unlocking a Jumanji™ Video Slot Free Spins Round.

Here we managed to activate six Monkey Free Spins, whereby every spin sees the monkeys go behind the scenes to give those symbols a winning reshuffle – as you’ve just seen. Although we can’t show them all, each Free Spins Bonus Round on the Jumanji™ Video Slot mirrors the four Random Features we’ve previously shown. So, Sticky Vine Spins, Crocodile Wilds and Stampede Wilds. Also during the Board Game, there are four question mark symbols to potentially land on. When you do, a collection of rewards will be juggled in the centre eye and distributed to you randomly. Excited to start playing the Jumanji™ Video Slot?

Head to our free-to-play slot review link in the description below from release day, to try out this cracking NetEnt slot adventure!

Tiger’s Claw (Betsoft): Slot review

Tiger’s Claw is Betsoft’s later slots game, released in March 2018. It features wins from both directions, wilds, free spins and scatter payouts. The games return to player percentage is ninety five point sixteen percent.

The game features spiritual shaman symbols in the form of the snow white tiger, the eagle and more. Be sure to stick around and witness the biggest win we’ve ever had, during another case of “free spinception”, where we hit more free spins within the free spins round. As you can see, this slots game works both from left to right and from right to left, which means you can make win lines in both directions. The wild symbols replace all other normal symbols, so this will often grant you above-average wins, or even big wins.

Hitting three or more shamanic scatter symbols on any of the reels, grants you a scatter win. Depending on how many scatter symbols you hit, it’ll pay out to 2 to 50 times your wager. If the Tiger’s claw with the glowing orb appears at least once on every single reel, you’ll trigger the free spins. You’ll get rewarded eight free spins initially, if you hit one of these per reel.

But for every additional one you’ll get extra free spins. Since we hit two additional ones here we’ve gotten 32 free spins in total. Not a bad start innit? But wait, there’s more. We’ll let you enjoy the first part in silence, but do stick around for the extra free spins and the biggest win you’ve possibly ever seen. So we hit the free spins round, but it doesn’t just stop there.

Also during the free spins round, you can receive additional free spins by hitting one or more golden claw symbols per reel. The principle works the same as during the main game: eight free spins are awarded per one claw symbol on each reel. Any additional claw symbols would obviously trigger extra free spins. We’re on a roll here, hitting free spins within the free spins round, and not just once, but twice!

Did you ever see such a big win on any slots game? Let us know in the comments below. Also be sure to LIKE the video and SUBSCRIBE to stay up to date on the latest slots games. Thanks very much see you at Johnslots.com . Johnslots.com. Visit us!

Poker Economics

The following content is provided under a Creative Commons license. Your support will help MIT OpenCourseWare continue to offer high quality educational resources for free.

PROFESSOR: OK, what we’re going to do, we’re going to start our story in what at the time would have been called the Northwest United States. We’re in the first part of the 1800s, and we’re really talking about this portion of it here.

Although later on in our story, we’ll actually cover this whole region here. This was a sparsely-populated, impoverished area. There were basically no roads or towns. There was lots of swamps, mountains, rivers, land transportation was very difficult. The area was more or less under constant warfare from 1800 till about 1880. I’m talking about large scale armies in what would be called the Indian Wars, but also smaller scale raids of dozens or half a dozen people, and individual murders.

It was among the poorest areas on earth. Who lived there? Anybody know? So early 1800s, 1810, 1820 in the Northwest United States?

AUDIENCE: No one? PROFESSOR: Anybody? No, people lived there. AUDIENCE: People looking for gold? PROFESSOR: Gold miners were a little bit later, but sure, they would come along. There were some Native Americans, many of them had been pushed from other places, right?

The east coast Native Americans had been pushed in there. There were some Native Americans that lived there who were resisting that. There were also Natives being pushed in from the South by the people in Mexico. So we’ve got people being in. How about Acadian Driftwood? Anybody here–?

So the Canadian rebels, who were French-speaking, are being pushed here by the English. Whiskey Rebellion, right? The rebellious people in the United States are being pushed out here, escaped slaves, debtors. There is an expression at the time, GTT.

If you didn’t want to pay your debts, you wrote GTT on your door. It meant “Gone To Texas,” and you headed over here. So we got this area full of losers, violence, very little in the way of economic resources. A few years ago, somebody did a list of the 100 wealthiest Americans of all time. And they compared it.

They tried to estimate the wealth of these people and they compared it to the total size of the economy at the time. 19 of the 100 wealthiest Americans of all time were in that Northwest area in 1850, and they made their money from about 1850 to 1880. So what happened? How did this poor economic place with no prospects for anything, the last place in the world you’d expect anybody to get rich, how did it generate such tremendous fortunes?

And it isn’t just money. I mean you say, OK, well, some of them struck gold or oil or something like that. But listen to the names. It wasn’t just robber barons like Rockefeller, Mellon, and Carnegie. It was great inventors like McCormick, Westinghouse, and Pullman.

Innovators in other fields, such as Swift, Pulitzer, Hearst, Armor, Marshall Field. These people are household names today. I challenge anybody in this room to name any other business innovator anywhere in the world in the entire 1900s.

OK, so we got 19 of them in this little area. And we know them today, right? None anywhere else. There were some innovations in other places, but here was clearly the place where modern business was being formed.

So what was it that they had? Was it something in the water? Something in the air?

What did this region have that nobody else had? AUDIENCE: Labor? PROFESSOR: No, it was very sparsely populated. Labor was extremely expensive. And your laborers had to spend most of their time eking out subsistence living, right?

It would be very expensive to bring in food or supplies for them. No, labor was extremely expensive. Well, I’ll tell you one thing they had was they had a game called poker. [LAUGHTER IN AUDIENCE] All right, you’re laughing. I hope you won’t be laughing at the end of this.

Let’s go back. The first written records we have from outside this region about poker come to us from about the late 1820s and the early 1830s. It’s a lot more interesting what they don’t say than what they say. One thing they don’t say is, people in this region played this game called poker, and here’s how it works. None of them explain the game at all. That’s kind of strange, right?

Somebody comes and tells you, hey, there’s this game people are playing here, but they don’t tell you the rules. They didn’t even describe it as a game. The one thing they were very clear about is it involved transferring large amounts of money.

They also– nobody said, oh, it’s a variant of this game or that game somebody plays somewhere else. Nobody said, this is some game you might be interested in. Everybody already knew. I mean, it was– you can read these things. It was common knowledge that people in this area played a game called poker. It was a very serious game played for very large amounts of money.

It was played nowhere else. Nobody mentioned any antecedents. Nobody said it was brought in by the French or by the Indians or by the Persians or by any other group. It was just there. It was there in the area. A couple other interesting things about this game.

First of all, what we know that, far more popular than poker at any period of time, and certainly in this period as well, were standard gambling games that are played– variants of which are played all over the world by people of all classes. Dice games, faro was very popular at the time, wheel-based chance games. We also know though, the other kind of game people were familiar with is played by aristocrats– things like whist or chess– that don’t necessarily involve gambling, although they can, and involve a lot of skill. Poker was neither of the above.

OK, so let’s start asking, what is there about poker that was different from any game that came before it? This might give us some clue as to why this was different. What was going on here? Ace beats king. OK, that doesn’t seem like much today. That was pretty revolutionary, right?

You’d go to get executed in most countries in the world in those days for saying that. And an ace was, by the way, in early poker, ace was always high. There was no such thing as a low/high ace. So that tells you something. OK, the people who made this game, they weren’t monarchists, right? They were thinking a different way.

Here’s another thing, though. The hand rankings are in order of rarity. The rarer the hand, the higher it ranks. And in early poker, we didn’t have straights and flushes, so it’s even more straightforward. But here’s something kind of interesting.

Here’s something that changed in the game. So in the early poker up until about the 1830s, this principle that the rarer the hand, the more valuable it was was actually employed much more consistently. So today when you compare two hands that are of the same time– so two people each have two pair, two people each have a pair, two people each have a nothing hand.

You decide the winner starting from the highest cards on down. Right, so if I have two pair and you have two pair, we first look at who has the higher highest pair. Then we look at who has the higher lowest pair if that’s a tie. But in early poker, it was reversed.

And you can see if you rank it the way we do today, we’ve inverted our principle. Now, the more common the hand– like ace high hands, there are 500,000 out of the 1.3 million. These are hands with no straight, no flush, no pair, no match. The ace high hands are the most common, but they rank the highest.

In poker up till about, like I say, the 1830s, we ranked it by the lowest card in the hand. So you first compared your lowest card, then your second lowest. And there you see we are true to the principle that the rarer the hand, the higher it ranks.

Can anybody see the strategic difference this makes? Why is this important? Is it just completely arbitrary? What difference does it make? Let’s say we did things this way in poker. What difference would it make to the play?

What it means is aces are much less valuable. It’s a lot like– anybody here every play lowball poker? Lowball poker, your best cards don’t help you. The question is, what’s your worst card?

You talk about a lowball hand, you talk about the highest card in my hand that makes it. You can have four great cards, and a fifth card can completely ruin it. You can ace, king, queen, jack and then a two, and you’ve got a two low hand, and you lose to everybody else. In the modern poker, if you have an ace– let’s say we both have hands and neither one of us has any matches or straight or flush. If I have an ace, I have an 83% chance that I beat you.

But if we rank them by low card, an ace only gives you a 56% chance of winning. An ace is much less valuable because really the difference between ace, king, queen, and jack is very little, because it’s your lowest card that’s going to determine how strong your hand is. Now, the biggest point I want to make about this isn’t the subtleties of a strategy when you rank hands this way. This is a game that was designed. This is a game that somebody thought about, articulated a rational principle, and did what was at the time some pretty clever mathematics to figure out the ranking.

This is not a game that evolved by long tradition. This is not a game where somebody in a court sat down and wrote the rules. This is a game that somebody designed, and they designed it for a reason. But actually, the card playing poker is pretty trivially simple, and especially straight poker. It was called straight poker at the time. The way the game was played was you were dealt a card, you had a betting round, you were dealt a second card, you had a betting around.

You were dealt a third card, you had a betting round, and then that was the last round. The last two cards– at the time, they were called the turn and the river, just like in hold ’em today– were dealt together, and there was no betting after the final card. I’ll tell you why that’s important in a bit.

Another thing about the way the betting was done is there was no ante. There was no blind in the sense we know it today. The way the betting worked– and again, this shows some very careful design on somebody’s part– the dealer dealt the cards. The person to the dealer’s left was known as the age. The age posted a stake, and they could post any, before they saw their card, their first card. They could post a stake, any amount they wanted, including zero.

They didn’t have to post anything. But the rules were a little different. On the first– and this is only on the first round. All the subsequent rounds, the betting is exactly the same as modern poker. But on the first round, you were not allowed to call the age’s bet. So let’s say the age bets $1.

You cannot call that. You can fold, or you can raise. And the minimum raises the amount to the minimum bet would be $2.

So this gives a lot more advantage to the age compared to somebody who posts a blind today, a blind that can be called. In a way, you can see the analogy between what the age does and what the small blind does in poker, that somebody has to double the bet in order to play. Although in modern poker, with a small blind and a big blind, someone is forced to come in and double. The poker players at the time were very insistent.

They said poker is not gambling. And the difference between poker and gambling is no one is ever forced to make a bet. You look at your cards, you voluntarily make a bet that you think has– they wouldn’t use the word at the time, but we would say now is that you think has positive expected value. The first, the blind bet, was empirically known to be a winning. It was an advantage people posted.

Now mathematically, you can show that can’t be true. But psychologically and empirically, it was true, that posting the blind with other people being forced to either double or fold was empirically an advantage. Anyone else betting, they could bet if they thought they would win.

They didn’t have to bet if they didn’t. So let’s talk about the betting in poker. There are a couple of things about it that are different from any other game that comes before. The first one is that at the end of every betting round, everyone remaining in the hand has bet exactly the same amount of money.

The hand is mark-to-market after every round. So ultimately, you’re betting on who has the best hand at showdown, or who has the best surviving hand at showdown of people who haven’t folded. But in between the way, at the end of every round, the game cannot continue until everyone remaining in the hand has bet the same amount. This didn’t last all that long.

So by the 1840s, 1850s, we’re saying there’s a lot of fight against these very strict rules. People started adding antes. People started adding straights and flushes. People started adding betting after the final round of cards. People started adding all kinds of more complicated games– draw poker, stud poker with some cards revealed.

They started adding new kinds of hands. So the game starts to change a little bit. And R.F.

Foster, who was probably one of the first people to really write a comprehensive history of poker– and this was 100 years later, really– explained what happened. So there is this conservative, old game, scientific based on very rigid principles, that eventually evolved into the modern game. The modern game, a lot more fun to play. The modern game allows gambling, clearly. The modern game is really for a somewhat different purpose. But so far, we’ve talked about the cards and we’ve talked about the betting.

We actually haven’t talked about the most revolutionary thing in poker that, again, is like no other game that came before it. Most gambling games throughout history– and remember, gambling goes back to human prehistory. Virtually every culture has forms of gambling. But gambling is almost always done for either goods or cash. When credit was used, credit was provided by a trusted central counterparty. So somebody who organized the game might organize credit.

Poker was never played for cash, never played for goods. Poker was played for what were called at the time “poker checks.” And this is a distinction that goes all the way up to about the 1980s before it finally got erased.

Even as late as the 1980s when I was playing poker, there was a distinction, and people understood it. There were two similar things that were often confused. There were checks, and there were chips.

And they looked kind of similar. A check had intrinsic value. Checks were used for cash. Casino checks were used for cash in Las Vegas. Nobody ever used cash. You just used casino chips for all your transactions.

But they were also used for all different kinds of games. Chips are just markers. Chips are things you buy at the table, and you’re supposed to cash them in when you leave the table. You’re not even supposed to take them from the roulette table over to the craps table or something like that.

So chips are just markers. They have no intrinsic value. There is a complicated story which I’d be happy to talk to you people about sometime. The IRS came down. And some casinos, when they pushed organized crime out, they got rid of checks. So right now, there’s no such thing as, a least a legal, chip with a real, intrinsic value.

They’re just markers. If you show up to a casino with a $5,000 chip and you want to cash it in, they’re going to ask you where you got it, prove that you bought it at a Casino or won it at a casino. If you can’t, they won’t give you any money for it. But let’s go back to the early 1800s. The way poker was played was with poker checks. Poker checks were markers.

Often, they were made out of clay. People would make little disks out of clay, and they would put a thumb print in it. They would put some identifiable marker. The key thing is that they were identifiable to an individual. You were playing poker with money you created yourself.

And if you lost, other people would have these markers, and these markers would be claims on you. If you won, you had other people’s markers. At the end of the game, people did something called ring clearing, which means, oh, OK. You played a game for a while. You’ve got a bunch of checks in front of you.

You’re going to take the checks you have from other people, you’re going to trade them for your own checks back. You’re going to end up with, if you were a winner, you’re going to end up with a bunch of other people’s checks, and suddenly a bunch of people owe you money. Or if you were a loser, other people are going to end up with yours. But it’s a winners responsibility to collect from the losers. There’s no central counterparty.

There’s no trusting. You play. If you don’t like a guy’s checks, too bad. You got some things that aren’t– maybe you can find somebody else to trade you something for them. Now what you’ve done is you’ve created a form of money. It’s this credit creation that is a really essential element of early poker.

And let’s talk about another financial institution from this period– the soft money bank, otherwise called a wildcat bank. People created banks. And the way they created banks is somebody said, I have a bank, and I’m going to make loans. And I’ll either print up some bank notes, some of which were extremely crude. People even used markers, twigs, old tally sticks, things like that.

They used anything they could find as bank notes. Or they just kept an accounting system. If you want to spend the money, somebody has to deposit it into the bank. If it worked, this generated a lot of economic activity. Everything was successful.

The loans paid off. Deposits were honored. Everything was fine. If it didn’t work, everything was worthless. If you add one feature to this, it comes what most people think of as a bank. The one feature we’re missing from this bank is what?

Actual money, gold. Right. Now, this is kind of an interesting dichotomy in economics. To me, a classic bank is a soft money back. Capital, to me, is an additional feature that gives it some credibility, right? It means two things.

It means the person creating the bank is going to have some skin in the game, is going to take a loss if the whole bank collapses, if nobody ever pays back their loans. So that shows– it’s a signal to show they have some confidence. Also, the cash they put in, the capital they put in, in theory is going to help people if the bank fails. It’ll pay off some portion of the losses. In practice, it never does.

In practice, the people who run the banks always get their capital out before anybody else. But a lot of the legislation on banks, a lot of the way people think about banks, is the opposite. They think about it as a classic bank is something that has 100% capital, and that fractional reserve is some kind of like little extra thing you do to a bank. But we see, if you look again, human prehistory cultures, you see almost all cultures have some form of this self credit equation, all kinds of things– susus, tontines, [INAUDIBLE].

All over the world, we have these kinds of things, and they were useful in the American West. Well, poker was one of them. Poker was a way you could create a form of money, your own money.

You could play a game. If you won, you picked up a lot of credit from other people, and you could use that to generate some economic activity. If you lost, other people had to employ you, right? They had to get their money back somehow.

You didn’t have any money. They had to find things for you to do to work in their businesses. And this is how a lot of business was created in the old west. Now we’re going to move a little forward to around the 1840s. Anyone know what this is? It is the Chicago Board of Trade.

This is actually around 1900, so it wouldn’t be quite so fancy back in 1840. Futures exchanges, again, appeared in exactly the same geographic area as the game of poker about 20 years later. Nobody invented it. Suddenly, these things started popping up all over the place. A financial institution no one had ever seen before, completely unlike anything in the past, none of them outside the region, ubiquitous inside the region, and nobody said they invented it. There was something in the culture, in the way people thought, the way people did business that made this a very natural thing to do, even though it had never been done before.

And the analogies with poker are pretty obvious, right? Mark-to-market. Every day, you’re betting on the price of wheat in three months, but every day you settle up so that you got the same amount of money at stake. Clearing– again, the initial exchanges in the early days, they used ring clearing, exactly the same as poker. Later on, they went to a full clearinghouse that was a little more sophisticated and allowed people to do it. But what’s the purpose of these exchanges?

What does this futures exchange do for people? AUDIENCE: To lock in the price. PROFESSOR: Like who?

Who would want to lock in a price? AUDIENCE: The farmers. PROFESSOR: OK. Well, let’s think about this. I’m a farmer in 1840. I’m about a two-week journey from Chicago over bad roads. Normally, I do what farmers have done since the beginning of private agriculture.

They would sell to a crop buyer. I would go to the place where I buy my supplies, and there’s a crop buyer who has an agent there, or that agent also comes by my farm every month or so to check out how the crops are going, because he wants to keep tabs on the crops. And also, I can lock in a price with him. He will buy exactly my crop.

He will buy whatever quantity I happen to produce. He’ll agree on a price now, or he’ll set the price later. Whatever I want. I deliver it. I can deliver it to him, or for a slightly lower price, he’ll come and pick it up at my farm. Now let’s compare that with this futures exchange, a brand new innovation that’s going to make my life better.

I can take a two-week journey into Chicago. I can promise to delivery set quantity of a set grade of wheat that I don’t produce that I can’t be sure I will have on time. I don’t know the quantity I’m going to produce, but I have to specify that. I have to put down initial margin.

I don’t have any cash. All my cash is tied up in my crop. Farmers only have cash after harvest.

And I have to stay in Chicago every day to make mark-to-market payments, since who’s growing my wheat? OK, so this makes absolutely no sense. Anytime you read a textbook and it talks about farmers using futures exchanges, you know they haven’t spent half a second thinking about this.

There were no farmers involved in setting up the futures exchanges. In fact, farmers were suspicious and have often tried to have them shut down. When farmers do use futures exchanges, they almost always buy the product. They don’t sell it. So let’s talk about what people really use these things for. Here is the canonical trade that you can think about, what you want to understand futures markets.

I’m a processor. All the people who set these things up– and by the why, all the people who set these things up were poker players. I’m not kidding. Look it up, you find the name, you find all these people were poker players. I grind wheat, OK? I’m not going to use this for hedging.

I can’t use it for hedging, right? I buy wheat, that’s true. But is my exposure to wheat going up in price or going down in price? One going up. OK, let me tell you two stories. Story number one, there’s a sudden increase in demand for wheat.

There’s a big war in Europe, other crops fail in other regions. The price of wheat goes way up. What happens to my business? I’m making lots of money, right?

They’ve got to grind lots of wheat. They’re bringing all the wheat in from all the [INAUDIBLE]. Everybody grinds it, there’s a shortage of grinding capacity, I can raise my prices. I’m rich.

So it that way, I’m long wheat, right? Price of wheat goes up, my business goes up. Let’s say– sorry? AUDIENCE: So you’re assuming that the price of grounded wheat is directly correlated to the price of wheat?

PROFESSOR: Yes. I’m saying the price of ground wheat is what went up. And because the price of ground wheat went up, my business is more valuable. And you’re exactly– you hit the point exactly, if that’s the stuff I’m selling.

Now let’s do a different story. There’s a crop failure in the area. Price of wheat goes way up, right? Wheat is scarce. Who wants my grinding facilities? Nobody.

There’s an excess of grinding facilities. I can’t charge a penny. OK, so I have no natural wheat exposure.

I can’t hedge my wheat exposure in this futures market. Also, for the same reasons I mentioned of a farmer, it’s not a convenient place to do it. It’s a type and grade of wheat I don’t want at a place I don’t want. Also, the price of wheat has very little do with my business. What I care about is my machinery operating properly, what’s the price of fuel, what’s the price of labor, what are the regulations on the stuff, what’s the equality of the stuff I’m getting. I can lock in prices with suppliers and either buyers or the flour or sellers of the wheat anytime I want.

That’s not the point of the futures market. What you want to think about is I’m growing wheat. I’m going to go to a silo, a grain silo. A grain silo is a guy, he buys wheat from all over the place and he sells it to people like me. I’m going to say, OK, I want these wheat deliveries over the next three months, so much and so on these various times. I want it delivered to my grinding facility.

I want exactly this type and kind of wheat. And he’ll agree, and we’ll settle a deal. Now I’m going to go to the futures exchange. I’ve just bought a quarter’s worth of wheat from the wheat silo.

I’m going to go to the futures exchange, I’m going to sell a quarter’s worth of wheat forward. What have I done? Well, now I have no price risk, right?

Now if the price of wheat goes up or down, I don’t care, because I bought we today, and I sold it three months from now. I have borrowed wheat. Now, what could I do instead? I could borrow money.

I could borrow money and buy the wheat. But then I take two price risks– I take the price risk of the money, and remember, this is an area where there’s very little money around. These futures exchanges were invented in a place where there was very little gold and silver. There wasn’t a good banking system. Bank notes weren’t very trustworthy. So taking the risk of money was a big risk.

And also, price of wheat going up and down. The simplest thing is just to borrow wheat, which is what I want to do. And like any business loan, I never intend to repay this. If I’m doing a business loan, say to buy machinery, I make the loan. And when the loan comes due, I borrow again to run the business.

The only time I pay back my business loans is when I shut down the business and liquidate everything and pay off the creditors. Same thing with this. I’m going to roll these futures contracts forward forever. I’m never going to take delivery. But what I’ve done is I’ve perpetually borrowed wheat.

I’ve taken part of my business input and I borrowed it instead of buying it. So one thing is the futures exchanges create a tremendous amount of credit. But they do something else too that’s kind of interesting. Anybody here know how to take flour and turn it back into wheat? Anybody here know how to take August wheat and move it back in time to May? All right, I have something very surprising to tell you.

For 175 years, the Chicago Board of Trade here has been quoting prices on both of those services. A futures exchange quotes prices on services nobody’s ever thought of. It opens tremendous scope for innovation. Let’s say I want to build a bridge. And when I build this bridge, it’s going to divert wheat that was going to Saint Louis.

It’s going to get diverted to Chicago, because now it’s going to be cheaper to move it into Chicago. I can hedge that. I can sell those transportation services on the futures market by buying Chicago wheat and selling Saint Louis wheat. I can do calendar spreads.

I can do grade spreads, cleaning spreads, all of these things are a way of buying and selling all the services involved in an agricultural processing business. And this turns out to be a far more efficient way to organize things. It’s got its internally generated credit. It’s got far better information flows. And this is what touches off a tremendous explosion of business activity and business innovation that goes throughout the world.

Now, one of the things that’s kind of strange about futures markets is they were only used for agricultural commodities. Now, granted, that was a much bigger part of the economy than it is today, but in the global economy, this was not a big deal. There were much, much more valuable commodities that never went to futures exchanges.

And there were things– commodities weren’t even the most valuable things. When things really took off is in the 1970s when people took the same idea and moved it to financial. But my story is about poker. One of the things people sometimes say is that futures evolved from to arrive contracts. Now, to arrive contracts have been around longer than we have written records.

In ancient Mesopotamia in the early days, we see in the earliest writings that we can still read today, we find that these to arrive contracts were common. A to arrive contract says, essentially, I will sell you 10,000 bushels of wheat at $0.50 a bushel as soon as wheat comes to the market, wheat come to the city market. OK, it’s a price guarantee. It’s not a delivery guarantee. I don’t tell you when you’re going to get it.

I don’t even guarantee you will get it. I’m just saying, when it comes, this is what I will sell it you at. The largest to arrive market in the United States was in Buffalo.

OK, everybody remember all those stories about the fortunes won and lost on the Buffalo to arrive exchange, the fistfights, the corners? We had people who made their fortunes there, never went on do anything else? Exactly. To arrive contracts are run by quiet commission clerks. Futures exchanges are populated by tough, brawling innovators who often make fortunes or lose fortunes and go on to do dramatic business activity. There’s no connection between the two.

Now, can anybody tell me which ones of these are poker games? AUDIENCE: Omaha. PROFESSOR: Sorry? AUDIENCE: Omaha. PROFESSOR: Omaha, Texas. Yep.

AUDIENCE: Chicago. PROFESSOR: Chicago, yes. This one you guys might not have heard of so much, but there is a Cincinnati. It isn’t played much anymore. There is no poker game called Buffalo.

There is no poker game named after any place except places where, if you lose all your money in the game, drown your servers by jumping in a river, you float down to New Orleans. Even today, poker is very, very strongly regionally– it’s a regional attitude. It’s an extraordinarily explosive innovative economic attitude, and it has never really seeped out except the place it was born. Now, that may no longer be true with internet poker. The question is, is the soul of poker alive?

Internet poker has this economic innovation and freedom and self credit creation. Is this something’s that’s going to spread to the whole world, or has somehow poker been neutralized and, when it comes to a computer and becomes virtual, it’s no longer got that soul? It’s something we’re going to find out in the next few years. Now we’re going to jump forward to me. I was born in the 1950s.

I was raised in Seattle. And one thing you have to understand is two people can be raised in exactly the same time, exactly the same environment, and have totally different ideas of what it was like. I think most people would say, if a movie was made of my childhood, they would say, hey, that was an idyllic childhood. Your dad was a professor.

You didn’t have so much money that you had affluenza and were wrecking cars or things like that. But you were never embarrassed that you didn’t have clothes for school, you were never hungry, anything like that. You were treated well. It was a suburban neighborhood.

It was a pretty place. You had lots of stimulation, all of that stuff. But I hated it.

I was oppressed by lots of things. I believed, I sincerely believed, that the world was going to end in nuclear war before I was in college. It just seemed like it clearly was likely to happen.

I was interested in math and science, but all the math and science was defense related. Only big government projects to kill people were the only way you could get funding for things. More than half the world was in the grip of brutal totalitarian dictatorships, and no country had ever emerged from communism to freedom and prosperity. It seemed like the entire, world even the free world, even the relative democracies, were run by paranoids and total incompetents.

The economy was terrible. Seattle was a few years ahead of the rest of the country and we had sort of slipped into that ’70s malaise back in the ’60s. A friend of the family who was an aerospace engineer who was the world expert– in fact, he went to MIT. He was the world expert in materials for supersonic wing design.

He was fired because nobody wanted to build supersonic planes, and he was driving a cab. Another thing about this is this is, again, Seattle was kind of forward looking in terms of economics. We were getting economic malaise before the rest of the country. In another way, we were kind of a throwback. It was more like the ’50s than other parts of the country.

And it was this really weird social dynamic. OK, I don’t want to tell you the neighborhood I grew up in was any worse or weirder than any other neighborhood. But there was a certain percentage of alcoholics, or child molesters, of wife beaters, of drug addicts, all the stuff. And in the ’50s and in Seattle by the time I was growing up, nobody cared about it. Nobody would ever talk about any of that stuff.

If a man cut his grass and brought home a paycheck, he was a good guy. He could do anything else and nobody would talk about it. But if you didn’t– and we would have this. It would happen.

Like a neighbor, the guy would lose this job. They would quietly move away, and nobody would ever talk about them. It was just weird. And you got the message, OK, the economy was very insecure. If you could earn money, everything was fine. You didn’t have to worry about anything else.

But if you couldn’t earn money, it was unspeakably bad. Well, I was a shy kid. I was introverted, awkward. But I liked looking in the back of a newspaper at the numbers. The patterns in the numbers really fascinated me. And I worked out ways, and I would bet money on horses, I would bet money on other sports.

And I found out I could win doing this. I also found out– and this was true throughout the American West at the time. I couldn’t really find a good picture of this.

This is just something I found on the internet that’s roughly equivalent. Taverns, in the back room of the taverns or the basement of the taverns, there were these poker games. And I’d go in and I’d play, and I’d win. And more important than that I would win, I could walk in. I could collect the money. I could walk out, and this was enormously liberating to me.

It said to me, OK. You don’t have to get a job. You don’t have to go to college. Anywhere you go in the world, you can find a poker game. You can win money. And when you’re a good player and people know it, even if you run out of money, people lend you money.

People stake you. You also start getting into this network. And this was something I had not expected at all. I had gone there, I thought, OK. I’m going to win some money, and I’m going to prove that I can get this monkey off my back and I don’t have to worry about this anymore. These people– the people I was playing with didn’t look like this.

One or two of them might have looked like this. But there were policemen, there were sailors, there were clerks. You know, people. And they end up owing you money. Right, if you’re good player, these people end up owing you money.

And I later kind of figured, I sort of had a half idea of what was going on at the time. But I’ve later figured it out a little better, and later in life as I’ve played more places, I’ve figured out the system a little better. I had a purpose for these people. I had two purposes. One is because I was a good player I protected their game.

Let’s say somebody showed up, a really good player wanted to take all their money, show up and– well, they had somebody there who was good. And by the way, being a good poker player in those days didn’t just mean good card play. In fact, it would be trivially– and I’m sure anybody here what have no trouble cleaning up in terms of pure card play in this game. But you had to be able to spot cheating.

You had to be able to figure out who might risk of arrest. You had to figure out who might get violent. I mean, there’s a lot of social skills involved in this.

So by being a good player, you protected the game, but you also connected them with a bigger network. So remember, a lot of this is about credit equation. A tremendous amount of economic activity goes on here. There’s doctors, lawyers, police, mechanics, whatever– people exchanging services, underground economy, people who couldn’t make it in the normal economy.

Like let’s say you’re a lawyer, and you’re a really bad lawyer. And you can’t get any business. You hang [? out a shingle, ?] nobody’s going to hire you.

Your resume isn’t very good. There’s too many lawyers around. But you know, you owe somebody money at a poker game and they want you to write a letter and do some for them, whenever, you can do a little legal business on this stuff. And by connecting into the broader network in the city, you connect these people in. Some of these people had really dropped out of normal life, or they weren’t getting paychecks.

They were subsisting entirely on the underground economy. And this was a very important organizational tool. Other people like to keep one foot in that world– maybe a little side income, maybe a little fallback. We weren’t doing like big organized crime, but there’d be a sailor in the game who could bring in Cuban cigars.

There was a guy who was maybe a bathroom attendant at a fancy restaurant who could sell them, and this kind of stuff could get organized in a game like this. The poker was very important because you actually spend a lot of time with these people. You learned a lot about them. You couldn’t fake it in a way.

An undercover cop could show up for two days or act something this, but they aren’t going to be playing poker every day for years. So I’m kind of moving up in the Seattle poker network, and I come to Boston. I went to Harvard. And again, remember, I’m shy. I’m awkward.

I’m from the west, a little overwhelmed by all this stuff. But I walked in with a network. It shocked me when I got here that this network was seamlessly translated across the country, that I knew police, I knew poker people of all different ranks and stations of life. I got into poker games at Harvard itself.

People talk about going to college to get contacts. Let me tell you about that. I had three roommates. I love my roommates.

These are great guys. I’m not saying anything bad about them. But in terms of like useful contacts for me in life, well, one of them’s a corporate lawyer, one of them’s a TV producer, one of them’s a law professor– all great things, that’s nice. Never really a lot of use to me in terms of advancing my business interests or whatever, and not exactly hard things to break into, right?

You want to know a corporate lawyer? Well, it’s pretty easy to know a corporate lawyer. Poker games at Harvard, I played with George W. Bush, who went on to be president. I played with Bill Gates, Steve Ballmer, Scott Turow, people who are celebrities, politicians, rich people.

Those are the poker connections. And a poker connection is very different. You’re not playing poker with your friends.

A poker connection is, there is a business relationship in there that can be extremely useful. My whole life, my whole career, has been informed by poker networks. Now I’m going to zip through a few things. I’m playing in Boston, a guy shows up. He actually managed a card room near Stanford University. He was, again, it’s this network thing.

So I’m playing now in a pretty senior game in Boston, some the best card players in Boston are here, pretty high stakes. And they invite visiting pros from other parts of the country to keep the network connected throughout the country. And this guy said to me, he said, well, I was good. I played well that night. But it wasn’t just that. He said, you know, you’re a kind of strange guy.

You’ve got this sort of mathematical poker sense. You think about it in theoretical terms, whatever. There are a lot of guys like you out in Gardena, California. So that’s where the best poker in the world is being played.

He said, I’m a good player. I’m a national pro. I go around from city to city sitting in end games with the best players in the city.

And I win in those games, but I can’t turn a profit in Gardena. You should go the Gardena and see if you can match yourself up with the best. So I go there. How many people have heard of Gardena, California? Yeah. If you’re interested, there’s a movie called California Split that’s got some good scenes.

It’s stupid poker movie for the most part, but it has some actual scenes shot in Gardena at that time. That was the best poker in the world. And it was the network theory I was talking about on steroids because of a few things.

First of all, this is in the late ’70s. Marginal tax rates have gotten really high, regulation has gotten crazy, the tax code is incredibly complicated and corrupt. Community property, big thing– a lot of these guys were wiped out in a divorce.

I mean, that was something that just didn’t happen 10 years earlier. A lot of them had tax liens. So you have this whole group of people, they tend be– they were much better educated than the guys I was playing with in Seattle or even really the guys in Boston. They were smart. Not only were they broke, they were financially toxic.

Any money they put in a bank was getting whisked away by somebody. If they were walking down the street with $1 in their pocket, somebody could grab it. Poker chip, not so much, right? Poker debt, they lent some money to somebody in the poker room, nobody could collect that.

Tremendous about of very active underground economy going on. I go there, and first day I’m there, guy comes up to me. He manages a motel.

He used to own it, went bankrupt. Now the bank pays him to manage it. If you’re a poker player, he’ll give you a room to stay in.

You have to pay. You slip him a little bit of money, much less than the rent would be. It’s kind of furnished with broken down stuff other tenants have left. But poker players don’t care, right? Poker players are there, they go, they sleep on the broken couch, and then they leave. Maybe take a shower if it’s the first of the month or something.

And you’d stay there for three or four months, and eventually the owners would kick you out. And he’d just say, oh, well, the guy never paid any rent, and he would cover all this for you and do it. And then you just move to the next motel down the line, and he moves somebody else in. You wanted to get your car fixed, you wanted to get a lawsuit filed, you wanted to get your operation done, whatever, there were people in the room to do it, all for under the table, you could borrow the money. And all of the people who can invented the modern poker, if you talk about the David Sklansky’s, Mason Malmuth, Mike Harrow. I don’t know if these names mean anything to you, but these were the first people who actually sat down and wrote poker theory books.

This was the only place where people were really thinking about it. Las Vegas, they hated poker. Casinos hate poker. The reason casinos hated poker is somebody in the building was losing money and the Casino wasn’t getting it. And they would stick it– they either wouldn’t have poker, or they’d stick it next to the layout of slot machines under the stairs. They’d open and close the room at random intervals.

The one thing they did was the World Series of Poker. It was a pure Casino publicity stunt. It had nothing to do with poker in those days. Only in like the late ’90s, early 2000s with lots of people being brought in by internet, with the poker boom, with television did casinos really come to terms with it and start liking poker.

But Gardena was pure poker, and that’s where the good stuff was done. Now, I’m making my living by poker. But I have broader interests.

I’m thinking– I was really, when I came to Boston for four years, I was shocked at how shoddy I felt that most quantitative analysis was. I thought, people are doing this work. They’re teaching this stuff. They’re advising the government. They’re running the government.

They’re writing these papers, this and that. They have terrible data. They have really stupid analysis. And the biggest thing, the way I kind of encapsulated all of this is, none of them would bet a nickel on their own results. Every single one of them, if they were buying a car, they would spend a lot more serious commonsense analysis to get the right car than they do recommending a plan for the government to take over the steel industry, or something like that.

And a lot of other people felt the same way. And we had both some philosophical and some empirical ideas that we were sold on the idea of quantitative analysis. We were confident in our ability to make bets and win. One of the things about hanging around with gamblers, there’s a lot of bets. Gamblers are really nasty people, a lot of really bad stuff.

One of the flip sides of that is you don’t have to be nice, which takes a lot of pressure off. But they do take things seriously, right? Anything you say, somebody can say, put some money on it. If you won’t, you’re just an idiot loser chattering. You’d start really thinking about things if you actually have to bet money on anything, any opinion you get.

A lot of silly chattering conversation never happens if people have to bet on everything they say. Anyway though, the natural thing to do is to say, OK, I want to go to a place. I want to prove that my methods work. And the way I’m going to prove my methods work is I’m going to go to places where people gamble, and I’m going to prove that I can win. Now, all of us had read Ed Thorpe’s Beat the Dealer. Do people here know Ed Thorpe?

OK, you should. You should read his books. You should meet him.

He’s still alive. He was a mathematics professor. He invented blackjack card counting.

He managed to beat virtually every other Casino game. And he’s also either invented or perfected almost all of the quantitative hedge fund strategies that people use today. He was one of the most successful hedge fund managers for many years. So one thing we did is we wanted to go and beat casino games. And then what I’d like to talk about, I’m just going to mention this very briefly.

But roulette, to me, was the one that really changed the way I think about a lot of stuff. It’s a very, very important lesson for people who have academic statistics backgrounds. How do you beat roulette? OK, well this Ed Thorpe’s. Ed Thorpe was thinking about this.

And he was hearing this debate, and some people said, you should [INAUDIBLE] You should just record the patterns of the wheels and see if you can notice patterns, like the wheel’s a little weighted, what number comes up a little more than the others. But other people said no, that’s impossible. The wheels are too good. And Ed had a really remarkable insight that not enough people know about. He said, you can win money either way.

If the wheel’s broken and 13 comes up a little more than it should, you can bet on 13. That’s easy. But if the wheel is so perfect that every number comes up equally often, it must be machined to perfection, then you can use a little physics. We had some mechanics up on the board when I came here. Use Newtonian physics, and you can figure out where the ball is going to end up.

So it’s a lot of work. He did it with Claude Shannon. Again, we’re back to MIT, one of the fathers of information theory. And they sat down, and they worked on roulette. And if you study this problem for a bit, you pretty quickly find out, here’s how things work.

The way roulette works, they spin a wheel in one direction, and they spin a ball around the outside of a bowl the other way. OK, everything is very Newtonian until the ball goes away from the edge. It is very easy with a little bit of electronic aids– which at the time were legal, and are now illegal. But with electronic aids, it’s very easy to tell what number will be under the ball when the ball leaves the edge. Now, there’s a lot of bouncing and banging around between that and when the ball comes to rest. And that’s pretty chaotic, essentially impossible to predict.

So you have this perfectly predictable section, and then you have this chaotic section. But here’s the insight. The predictable section, you can calculate. You can know, OK. You say, when the ball goes under the edge, number 17 will be directly underneath it. The chaotic part cannot be uniform on the wheel. You can say, if 17 is under it when the ball comes down, here is the distribution of places the ball is going to end up on the wheel, and it’s nowhere near random, nowhere near uniform.

So you can make good bets. Now if you actually want to do this, you have to get several layers. You have to keep refining this notion. But I just want to focus on the big picture. A lot of statistical theory, the basic theory of statistics, was based on dice.

That’s what Nassim Taleb calls the ludic fallacy– people trying to create randomness. The real world is nowhere near so random. Even when people try to create randomness, even in a Casino, they can’t do it. And the reason they can’t do it is if you build things really, really precisely, they’re predictable. If you build things kind of loose and sloppy, they have non-uniform patterns. What you can’t do is build a device that’s both.

It exceeds human capabilities. And when we’re talking about the practical randomness you see in the world– in the stock market, in politics, and in war, anything you want to talk about– people are way too sloppy in modeling things as random. Whenever somebody says this thing is random, you say, I’m going to take a hard block.

And I’m going to find little pockets of predictability that I can calculate. And in between those pockets of predictability, I’m going to find patterns that are non-uniform. And what I’m going to end up with is I’m going to end up with a system where people are saying, you know, you’re obsessing about data and data quality for things that don’t really matter very much.

Nobody else thinks these statistics are important. Why are you spending all your time cleaning data for something that’s far removed from the essential economics of this problem? And they’re also going to say, and here are the really important things. And you’re just waving your hands.

You’re not paying attention. You’re making criminally reckless or crude assumptions about those things. But what they don’t understand is that’s exactly how you beat it. That is what you do. When you figure this stuff out, you really come up with this thing that will understand and make a profit, it will look like that to outsiders, that you’re focused on stuff that doesn’t matter and you’re ignoring the stuff that does matter.

Put another way, the stuff you think that matters doesn’t, and the stuff you don’t think that matters does. And when you do enough work on this kind of stuff, that’s how you win. Now, the thing about the people who did blackjack card counting and roulette and baccarat and craps worked on all those other games, what happens when people find out that’s what they’re doing? AUDIENCE: [INAUDIBLE] PROFESSOR: Yeah, it depends on the time and the place, whether you’re buried in the desert or just warned off or whatever. But basically, you have to fool the casino.

You’re taking money from the Casino. The people who stuck with this hate casinos a lot more than they like money. They tend to be antisocial people.

You don’t need any social skills, right? All you need is– I mean, if you’ve seen some of the movies, the MIT blackjack team, Bring Down the House, whatever, you see some wildly over the top play acting to get things. That isn’t what most of these guys were. Most of these guys were quiet. They went in, the casino gets a game.

The casino takes care of stuff. You just go in and play, but you have to stay under the radar. You can’t let the casino notice. Now, people also looked at another field, sports betting. Now, sports betting, this is frequent of stuff. This is Bayesian stuff.

It is a lot easier to predict how people are going to bet than how a game is going to come out. If you wanted to predictive a game from first principles and figure out what the proper point spread was, well, you’ve got a big job ahead of you. It can be done.

People have done it and made some successful results, but that’s a big job. Here’s an easy observation that was enough. In the 1970s, this was enough to make money. Los Angeles Lakers are a glamorous team. They were at the time. Los Angeles is a big betting city.

When the Lakers play at home, there’s a lot of money coming in and betting on them. The point spread is going to be too favorable. Bet against the Lakers at home, right? Don’t need a genius, don’t need a math PhD, don’t need a computer.

You can just figure this out. And patterns like this are very easy to catch, but they’re based on understanding people. So the malcontents, the introverts, the autistic people, they all went here. The people who like people went into sports betting. Now what happens if you’re sports betting and you’re successful?

What happens? Well certainly in those days, they hire you. Right?

They want you. Great, hey, you’re winning? We want to take advantage of that. We’ll pay you a salary. You bet for us.

And then the way they would pay you, by the way, is they would let you make bigger bets. And so you become part of the organization. And pretty soon, you’re running your own bookmaking operation and so on. So these are social people. These are Bayesian people.

These people are betting on frequencies. These people are betting on people. Both of them are learning skills and techniques that nobody taught in a classroom, that were totally generations ahead of what statisticians were doing in academics, what people were doing in econometrics, anything like that.

These people were because these people had to. It only worked if you’re right. You’re betting every day. Smartest people in the world are spending every waking moment trying to find a way to beat it. I did some of both of these.

I also did some poker. I was mostly a poker player. Poker is kind of in between. OK, you’ve got some cardplay kind of thing, shuffle reading, things like that. But you’ve also got to know something about people.

Not as much as a guy doing sports betting. You don’t have to predict actions of thousands of people. But you do got to be able to look around the people at the table and figure some stuff out. You’ve got to be able to get invited to games.

You’ve got to be able to collect from losers. You’ve got to be able to avoid arrest or getting cheated or beaten up and stuff like that. So we were kind of in between. So a lot of people I know from those days– this was the ’70s, ’80s, early ’80s– a lot of people stayed at it. But a lot of us, having honed our skills and figured, OK, now we think we know something.

I’ve been playing poker since I’m 14. I’ve had moderate success in beating casino games and sports betting. I’ve had some really strong success at poker. I have some confidence, right?

I don’t just think I know something. I know something. And the reason I believe it is I’ve went to the places where you test that stuff and walked away with people’s money. So a lot of us went into finance.

So this is really now we’re talking about the early ’80s. The people who like casino games, they like secretive little hedge funds. They wanted to invest their own money.

There are only a few wealthy investors. As soon as they could, they wanted to pay off their investors and just be by themselves. And some of this really brilliant stuff [INAUDIBLE] fairly narrow focused. They had to like pick some narrow niche kind of thing and do it. Bayesians, these people were naturals.

These people went into big bank stuff. They knew people. They knew businesses. They were bank executive types. And by the way, in these days I’m talking about, you left math off your resume if you wanted to apply for a Wall Street job.

I’m not kidding. People thought if you knew math, it’d be like you want to go to the NFL. You know, the NFL, they don’t want you if you’ve got a PhD in math. It’s like they don’t want smart people.

Wall Street did not want people who knew math. Some of them understood that smart people would be dangerous. Others just thought that anybody in math had to be ivory tower and couldn’t possibly know anything.

But still, once you got there, these skills were incredibly useful. If you’d been five, six years betting sports successfully, you know a lot of stuff about markets and businesses and how to run things with people that some of these other people would never learn their whole lives. These people didn’t have to get a job, but they’re problem was, could they find somebody to trade with?

Could they get people to broker for them, to trade with them, and so on? So they had a lot problems with that. Me, poker players, people like me, we could get jobs. We didn’t want high level executive jobs though. We wanted to run some little department under the radar screen.

We’d run a quant trading team. We do some pairs trading. We do some quant stuff. We do structured products.

We did a lot of that kind of stuff. We were used to networking– we were good at that– but under the screen. We weren’t good at like showing up in a suit and tie and being nice to bosses and things like that. We weren’t good at raising money, which is why we had to go hook up with a big firm. We liked the fact that a firm would give us trading capital, the firm would give us setup relationships, so we didn’t have any problem opening up trading lines and things like that.

But we basically got to keep what we made, or we got to keep a portion of what we made, which is a way we like to do it. This is what really revolutionized Wall Street. The thing I tell people is, having lived through this from the early ’80s to now, it’s people don’t understand how much finance has changed. An awful lot of finance is written as if there’s some continuous history, some minor technical innovations, electronic trading is just a little bit faster way of people yelling at each other in a pit. Well, it’s not true.

The entire fundamental technological basis of finance has changed, has completely been redone. I use the analogy of a digital camera versus a chemical camera. They kind of look the same– or they used, now they’re in your phone. But a few years ago, a digital camera looked kind of the same.

It runs on battery. It’s got a flash. It’s got a lens. It’s got a shutter button.

People use it for the same thing. They take pictures of their friends, their vacations, their parties, things like that. But the technology inside is entirely, totally different. If you want to make a camera, you hire completely different people, use completely different processes, the theory is completely different. Well, that’s the difference in finance. And the people of my generation, the quants in my generation, are the ones that built that.

And most of it has a lot more of its genetics come from sports betting and betting casino games and poker than it does from economic theory of the 1970s and 1980s era vintage. For those of you who are interested in this stuff, I put a few books here. I did these in alphabetical order of title. I do have couple of my own books here, but Beat the Market by Ed Thorpe. Just read anything you can by Ed Thorpe. A lot of it’s available free online.

You’ve just got to. That’s a guy who understands stuff. James McManus, a friend of mine, wrote Cowboys Full. Some of you may remember James. He made the final table at the main event of the World Series of Poker and wrote a best selling book about it, which is a lot of fun, too– Positively 5th Street. But this is a history of poker if that’s what you’re interested in.

It’s really the only good history of poker. This is a really interesting book, The Economic Function of Futures Markets. For about 100 years, people wrote nothing but nonsense about futures markets. And then this guy came along. He had a PhD, came along, and wrote a thin book about 1990 that absolutely explained it.

And it’s funny, because after reading nonsense– just transparent nonsense about futures markets all the time– this guy wrote a book. And the thing about this book is it’s logical. It makes sense.

He’s got a story. It makes sense. He’s got empirical evidence for it. He nailed it.

He explained what futures markets are. And nobody ever paid any attention. I mean, nobody ever cites it.

Nobody ever reads it. Whatever. But if you want to know futures markets, this is the guy who explains it.

Fischer Black– by the way, this is the hardback which has a blue cover. If you buy the paperback with a black cover, it has a foreward by me. So I go for the paperback.

But this is really interesting. If you’re interested in the time when I was at Harvard and hanging around MIT and talking to people who were arguing about this kind of stuff, Fischer Black was a very important part of that. I knew him pretty well in those days.

 

Roulette Systems – Combination Bets – Divide & Conquer System

Hi guys welcome to another video this system, I’m gon na show you is one I’ve designed. I won’t work all the time like any system. It’S not flawless, but it’s a good idea that I had and it can be quite effective.

It shouldn’t ly need a large bankroll and the trick, I guess is, is to you get your profit the earlier. You can get your profit in this system, the better the longer it drags out, the more chance you may not win, but there’s different ways to play. This, but I play it as as soon as you’re in profit, you restart the system. I call this system divide and conquer and I’ll show you why I label that huh, that name in a minute now with this system and the best way to explain this system is to show you so what we do here. We do a spin okay. So the spin landed in the first dozen, so we’re looking at dozen first of all, dozens that was a three.

So what we’re doing we’re actually betting on the opposite, dozens, but the double streets in those dozens. So, in this case here here here here, so I’m using one unit bits now we do a spin if it wins, we won and we restart the system. I’Ll show you what happens if we get deeper into the system and how you bet by this stage and we’re just going to be work at sale, we’re getting profit every time now we really do the spin another spin for so again we’re betting, putting the fun Get it on the middle, be the coordination is required, and this time of day, okay, quick, okay, I didn’t win so here’s a good example. So we’d actually do the same bit. Now we’ve lost two dollars or actually four dollars.

So remember it was starting at five. Five thousand euro. Now we do the same spin.

Now, okay, we won, but we’re still not in profit. So what we do now we look at the same same units we put on, but we divide we actually take off and we put it on the opposite street. This time in this double street, so that was 14, so we actually put one here so basically covering the unhip.

He is now it’s been again. It didn’t win if it doesn’t land on where you’re placing bets you just race in so it’s hitting the the first dozens. So obviously the floor could be if it keeps hitting in that doesn’t consecutively, but it shouldn’t do it too often.

You know, but again again that same doesn’t go again: okay, we won, but we’re still down technically 12 units, so it hit in the 25. So again we take off this one here and we put it to a street. Now, that’s Street in that double street list.

Again hit so, as you can see, we’re narrowing in and how our bets are becoming more defined, hopefully hitting these areas, zero doesn’t help us be one there. So again we divide this double street in just into a street now the unhip, so it was 23. So we put it here: let’s see how good this is, let’s see if it can catch up. That was a Miss, so we just read in that was a hit. So now they hit that street so now we’re hitting in the unhip numbers so we’re putting it here and here on the straight up bits. So as you can see, if we can try and get these that’s going to be a bigger win in the straight ups.

Okay, we’re not going too bad, considering it’s narrowing right down 17, so putting us 16 and 8 there and we’re down basically five units we hit again so I’ll just show you here. This is what we were left with it hit here. So if we kept going, we would have done 34 and 35 there and that’s that’s the one hit. So it’s the opposites in that Street so actually in profit, a dollar there.

So I would stop you. Can your tank can take a bit of a high risk and hope that one of these single ones will actually come out which it could happen, but again that’s two: four: six: six plus the street yeah. It could at least six out of 37 that that percentage is still quite low, but you can take that risk, but I, but I just stop when it’s in profit, so it’s a dollar profit, not much, but in this case I’d take it because it’s getting it’s Getting harder to actually win, okay, I’ll show you a scenario where you keep going. I would as a target win. I would stop at about 40 units in this case we’re using one unit per bet, so I would suggest you can get in a bit of a hole, so you need a bit of a bankroll, so I’d suggest at least at least a hundred 100 units to Get any success, but obviously the more you have the better it’s going to be to take a loss.

Now when you actually stop well, that’s your call I’ll show you example where it goes deeper and deeper into the system where we worked, we won’t take the profit. We’Ll just keep going, but it ends up to a stage where you, actually you work out and well. How much do I need to get in profit and, in some cases, you’ll be actually doubling up on those straight ups deep into the system, and you could get a quite a big win or you might decide to hang on.

We’Ve got to stop here. We’Re going to create a stop loss and amount, and don’t go past that so that’s important too, with this system. So, let’s start again, we’ve got that second, dozen again, sorry first doesn’t still behind so take that off there 26 so put it on the opposite street. No in there so where five, a five thousand three with five thousand five near so again, I would restart the system. Okay.

Now I’m going to show you you so as you can see, you can see there that deep you go to the system. You can actually get quite a good profit, so I can very they’re just going to keep playing, even though I’m in profit, which is an option higher reward, but higher risk, of course. So let’s just keep going so the third dozen. So here we go. We put on the double streets in the opposite: dozens never cover a zero.

It’S not that important we’re in profits. So technically we won that too, but we’re gon na keep going in this case, we’re going to define it right down to the bone. Okay, so we’re going to go, there was a four, so we go in this street opposite, let’s see how far we can go and see how good this system is.

That’S a Miss when you miss just repeat bit until you’re out of profit are quite a bit. Then you’d probably double your units and we’re down about four still down a bit, but again what taking more of a risk oops we want to take that off and what am i doing? That’S that and seventeen. So here it’s a miss. So now the street turns into two singles, which is the opposites one again, so it’s actually working quite nicely, but it won’t in all cases, that’s a if you’re a higher risk person you can just keep going. I guess it’s a mess.

Slim profit, though. That’S a profit: let’s refine this down again, it’s 23 back to what was it this one? That was a big win that was on the single. So, as you can see there, the profit was quite that was that was worth the while.

But I guess the more you have on the singles, the more chance you’re gon na have of this is winning. But again you know a higher risk if there’s not as many numbers on the single. So in that case it worked out. Let’S just do one more.

I’M going down to the bone because we’re in quite quite high profit, so let’s just take a bit of a risk, so that was a second dozen. So now we’re gon na go here here here here, there’s a six, so I put on opposite street. It’S a loss like we started. Thirty eight didn’t we same bet take that off, replace twenty nine put it in the opposite street.

Okay quite nicely, but again, but again, but again, but again, if the stage now where it’s a bit riskier 1 & 3, now probably back up to close to where profit was we’re getting more singles now toward this again, so we had 31. So it’s back to here that Street to miss it’s a hit 36. So we’re getting 35 34!

Miss it’s! Yes! Yes! So, as you can see, I’m taking extreme risk. So I wouldn’t really do this, but I’m just showing you how I can go see that one actually was a single, but it wasn’t as much as our profit, which was 38 5,000 38 there. So but let’s just keep going so we can get down to one number same bit tense.

I go 1112 hoping for a single single hit near it’s was 38, so if we actually hit a single which we still wouldn’t be in profit, so I would in this case double up so you’re going to still be in profit in one of those numbers hits And one of those numbers did hit so we’re well in profit now by what’s at 13. Yet so again, I would stop there, but let’s keep going. Let’S take the system to the extreme in this case. Also, then, I’d start I’d, take off these and put them back as a single because you’re in profit, you don’t need to lose more money.

If the spins don’t go your way. Okay, it’s 11! There. It’S the best one to try and get the like to the original units. Okay, so it actually time the out there, because I’m in the the demo version.

So it’s not real money but, like I say I do use a system, but I mix it up with other systems. I don’t use it continually. That’S one of the my tips. Obviously, just keep using different systems, don’t keep using the same system over and over especially online, because the software can predict.

I think in a way, what how you can a bit like if you’re, always betting, to say dozen, the first dozen eventually you’ll get a string of hits on that on the first dozen and you can lose a lot of money if you keep doubling up etc. So it’s timed out there, but I just like using a demo account when I explain how the system works, so they’re not gon na concentrate on explaining the system to you, because when I actually better, I like to concentrate fully because obviously you’re using your own money. Then – and it gets a lot more serious – that’s not to say I don’t use a system. I do use this one combined with many other systems, thanks for watching and feel free to leave a comment. There, people that get nasty and say this system doesn’t work. Well, I’m not I’m not suggesting this system is going to work all the time or any system here all the systems I’m reviewing just from other people.

What they’ve designed it’s up to you to try them and, and you decide the best system to use so any abusive type comments that people are going to send. That’S why I get them reviewed first, there’s no point because I’m not I’m not trying to say you a system. That’S you in floor. The system that’s flawless so, but at your own discretion it just gives you some ideas, some tips ways you can perhaps create your own systems but suspect with caution and don’t use your money that that you need for living general living treated as a hobby. I guess to start with: if you get more serious, then you can start to really analyze your systems further and go okay. What’S working, let’s do a lot of trials of this system and see how it over time.

But again I didn’t a great many systems and not just rely on the one one system, no matter, if you’re a professional or not, I don’t. I don’t believe that there’s one definitive system so thanks for watching, remember, to subscribe, to keep updated on newer systems that we do videos about and review with our own systems, so we’ll be releasing a system where you’ll be able to purchase it, and the only reason Why we’re going to put a cost on this system? Is it’s quite effective? It’S a combination of systems and it is a good, definitive system over time that can make you profit.

If you stick by the the rules are such and that the guidelines we put in there and you’ll be getting a PDF copy of that, as well as as well as instructional videos and links to the the YouTube for those that are paid for the system. It’S not going to be a great amount, it’ll be a less than $ 100 us at this stage and we’ll like we will let you know further about the details of that system.

Horse Racing History Part 2

In the early 1900s, however, racing in the United States was almost wiped out by antigambling sentiment that led almost all states to ban bookmaking. By 1908 the number of tracks had plummeted to just 25. That same year, however, the introduction of pari-mutuel betting for the Kentucky Derby signaled a turnaround for the sport. More tracks opened as many state legislatures agreed to legalize pari-mutuel betting in exchange for a share of the money wagered.

At the end of World War I, prosperity and great horses like Man o’ War brought spectators flocking to racetracks. The sport prospered until World War II, declined in popularity during the 1950s and 1960s, then enjoyed a resurgence in the 1970s triggered by the immense popularity of great horses such as Secretariat, Seattle Slew, and Affirmed, each winners of the American Triple Crown–the KENTUCKY DERBY, the Preakness, and the Belmont Stakes. During the late 1980s, another significant decline occurred, however. Thoroughbred tracks exist in about half the states. Public interest in the sport focuses primarily on major Thoroughbred races such as the American Triple Crown and the Breeder’s Cup races (begun in 1984), which offer purses of up to about $1,000,000. State racing commissions have sole authority to license participants and grant racing dates, while sharing the appointment of racing officials and the supervision of racing rules with the Jockey Club. The Jockey Club retains authority over the breeding of Thoroughbreds.

Although science has been unable to come up with any breeding system that guarantees the birth of a champion, breeders over the centuries have produced an increasingly higher percentage of Thoroughbreds who are successful on the racetrack by following two basic principles. The first is that Thoroughbreds with superior racingability are more likely to produce offspring with superior racing ability. The second is that horses with certain pedigrees are more likely to pass along their racing ability to their offspring. Male Thoroughbreds (stallions) have the highest breeding value because they can mate with about 40 mares a year. The worth of champions, especially winners of Triple Crown races, is so high that groups of investors called breeding syndicates may be formed. Each of the approximately 40 shares of the syndicate entitles its owner to breed one mare to the stallion each year. One share, for a great horse, may cost several million dollars. A share’s owner may resell that share at any time.

Farms that produce foals for sale at auction are called commercial breeders. The most successful are E. J. Taylor, Spendthrift Farms, Claiborne Farms, Gainsworthy Farm, and Bluegrass Farm, all in Kentucky. Farms that produce foals to race themselves are called home breeders, and these include such famous stables as Calumet Farms, Elmendorf Farm, and Green-tree Stable in Kentucky and Harbor View Farm in Florida.

Betting on the outcome of horse races has been an integral part of the appeal of the sport since prehistory and today is the sole reason horse racing has survived as a major professional sport. All wagering at American tracks today is done under the pari-mutuel wagering system, which was developed by a Frenchman named Pierre Oller in the late 19th century. Under this system, a fixed percentage (14 percent-25 percent) of the total amount wagered is taken out for track operating expenses, racing purses, and state and local taxes. The remaining sum is divided by the number of individual wagers to determine the payoff, or return on each bet. The projected payoff, or “odds,” are continuously calculated by the track’s computers and posted on the track odds board during the betting period before each race. Odds of “2-1,” for example, mean that the bettor will receive $2 profit for every $1 wagered if his or her horse wins.

At all tracks, bettors may bet on a horse to win (finish first), place (finish first or second), or show (finish first, second, or third). Other popular wagers are the daily double (picking the winners of two consecutive races), exactas (picking the first and second horses in order), quinellas (picking the first and second horses in either order), and the pick six (picking the winners of six consecutive races).

The difficult art of predicting the winner of a horse race is calledhandicapping.

The process of handicapping involves evaluating the demonstrated abilities of a horse in light of the conditions under which it will be racing on a given day. To gauge these abilities, handicappers use past performances, detailed published records of preceding races. These past performances indicate the horse’s speed, its ability to win, and whether the performances tend to be getting better or worse. The conditions under which the horse will be racing include the quality of the competition in the race, the distance of the race, the type of racing surface (dirt or grass), and the current state of that surface (fast, sloppy, and so on).

The term handicapping also has a related but somewhat different meaning: in some races, varying amounts of extra weight are assigned to horses based on age or ability in order to equalize the field.

Harness Racing dates back to ancient times, but the sport virtually disappeared with the fall of the Roman Empire. The history of modern HARNESS RACING begins in America, where racing trotting horses over country roads became a popular rural pastime by the end of the 18th century. The first tracks for harness racing were constructed in the first decade of the 19th century, and by 1825 harness racing was an institution at hundreds of country fairs across the nation.

With the popularity of harness racing came the development of the STANDARDBRED, a horse bred specifically for racing under harness. The founding sire of all Standardbreds is an English Thoroughbred named Messenger, who was brought to the United States in 1788. Messenger was bred to both pure Thoroughbred and mixed breed mares, and his descendants were rebred until these matings produced a new breed with endurance, temperament, and anatomy uniquely suited to racing under harness. This new breed was called the Standardbred, after the practice of basing all harness-racing speed records on the “standard” distance of one mile.

Harness racing reached the early zenith of its popularity in the late 1800s, with the establishment of a Grand Circuit of major fairs. The sport sharply declined in popularity after 1900, as the automobile replaced the horse and the United States became
more urbanized. In 1940, however, Roosevelt Raceway in New York introduced harness racing under the lights with pari-mutuel betting. This innovation sparked a rebirth of harness racing, and today its number of tracks and number of annual races exceed those of Thoroughbred racing. The sport is also popular in most European countries, Canada, New Zealand, and Australia.

Steeplechase, Hurdle, and Point-To-Point Racing are some other forms of horse racing. Steeplechases are races over a
2- to 4-mi (3.2- to 6.4-km) course that includes such obstacles
as brush fences, stone walls, timber rails, and water jumps.
The sport developed from the English and Irish pastime of fox hunting, when hunters would test the speed of their mounts during the cross-country chase. Organized steeplechase racing began about 1830, and has continued to be a popular sport in England to this day. The most famous steeplechase race in the world is England’s Grand National, held every year since 1839 at Aintree. Steeplechase racing is occasionally conducted at several U.S. Thoroughbred race tracks. The most significant race in the history of Steeplechasing is the U.S. Grand National Steeplechase held yearly at Belmont Park.

Hurdling is a form of steeplechasing that is less physically demanding of the horses. The obstacles consist solely of hurdles 1 to 2 ft (0.3 to 0.6 m) lower than the obstacles on a steeplechase course, and the races are normally less than 2 mi in length. Hurdling races are often used for training horses that will later compete in steeplechases. Horses chosen for steeplechase training are usually Thoroughbreds selected for their endurance, calm temperament, and larger-than-normal size. And finally, Point-to-point races are held for amateurs on about 120 courses throughout the British Isles. Originally run straight across country (hence the name), these races are now conducted on oval tracks with built-in fences, often on farmland.

The history of horse racing is rich in royalty, respect and the art of gambling. It is recognised as a multi-classed sport that has evolved from the sport of kings to a diversely entertaining hobby.

Horse Racing History Part 1

The competitive racing of horses is one of humankind’s most ancient sports, having its origins among the prehistoric nomadic tribesmen of Central Asia who first domesticated the horse about 4500 BC. For thousands of years, horse racing flourished as the sport of kings and the nobility. Modern horse racing, however, exists primarily because it is a major venue for legalized gambling [Sports Betting]. Horse racing is the second most widely attended U.S. spectator sport, after baseball. In 1989, 56,194,565 people attended 8,004 days of racing, wagering $9.14 billion.

Horse racing is also a major professional sport in Canada, Great Britain, Ireland, Western Europe, Australia, New Zealand, South Africa, and South America. By far the most popular form of the sport is the racing of mounted Thoroughbred horses over flat courses at distances from three-quarters of a mile to two miles. Other major forms of horseracing are harness racing, steeplechase racing, and Quarter Horse Racing.

Horse Racing History demonstrates that by the time humans began to keep written records, horse racing was an organized sport in all major civilizations from Central Asia to the Mediterranean. Both chariot and mounted horse racing were events in the ancient Greek Olympics by 638 BC, and the sport became a public obsession in the Roman Empire. The origins of modern racing lie in the 12th century, when English knights returned from the Crusades with swift Arab horses. Over the next 400 years, an increasing number of Arab stallions were imported and bred to English mares to produce horses that combined speed and endurance. Matching the fastest of these animals in two-horse races for a private wager became a popular diversion of the nobility.

Horse racing began to become a professional sport during the reign (1702-14) of Queen Anne, when match racing gave way to races involving several horses on which the spectators wagered. Racecourses sprang up all over England, offering increasingly large purses to attract the best horses. These purses in turn made breeding and owning horses for racing profitable. With the rapid expansion of the sport came the need for a central governing authority. In 1750 racing’s elite met at Newmarket to form the Jockey Club, which to this day exercises complete control over English racing. The Jockey Clubwrote complete rules of racing and sanctioned racecourses to conduct meetings under those rules. Standards defining the quality of races soon led to the designation of certain races as the ultimate tests of excellence. Since 1814, five races for three-year-old horses have been designated as “classics.” Three races, open to male horses (colts) and female horses (fillies), make up the English Triple Crown: the 2,000 Guineas, the Epsom Derby (see DERBY, THE), and the St. Leger Stakes. Two races, open to fillies only, are the 1,000 Guineas and the Epsom Oaks. The Jockey Club also took steps to regulate the breeding of racehorses.

James Weatherby, whose family served as accountants to the members of the Jockey Club, was assigned the task of tracing the pedigree, or complete family history, of every horse racing in England. In 1791 the results of his research were published as the Introduction to the General Stud Book. From 1793 to the present, members of the Weatherby family have meticulously recorded the pedigree of every foal born to those racehorses in subsequent volumes of the General Stud Book.

By the early 1800s the only horses that could be called “Thoroughbreds” and allowed to race were those descended from horses listed in the General Stud Book. Thoroughbreds are so inbred that the pedigree of every single animal can be traced back father-to-father to one of three stallions, called the “foundation sires.” These stallions were the Byerley Turk, foaled c.1679; the Darley Arabian, foaled c.1700; and the Godolphin Arabian, foaled c.1724.

The British settlers brought horses and horse racing with them to the New World, with the first racetrack laid out on Long Island as early as 1665. Although the sport became a popular local pastime, the development of organized racing did not arrive until after the Civil War. (The American Stud Book was begun in 1868.) For the next several decades, with the rapid rise of an industrial economy, gambling on racehorses, and therefore horse racing itself, grew explosively; by 1890, 314 tracks were operating across the country. The rapid growth of the sport without any central governing authority led to the domination of many tracks by criminal elements. In 1894 the nation’s most prominent track and stable owners met in New York to form an American Jockey Club, modeled on the English, which soon ruled racing with an iron hand and eliminated much of the corruption.