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February 7, 2007

Online Betting, Sports Forecasting, and Accuscore

One of my favorite quirky investment books is Calculated Bets, a comp sci professor's journey through coming up with a working computation model for betting on the jai alai market. While it's nominally about jai alai-related issues, much of the discussion is around coming up with functional models, real-world probabilities, transaction costs, and so on. Highly recommended for anyone with a quantitative finance bent -- and it's easy and fun reading.

I got to thinking about Steve Skiena's five-year-old book today when mulling Accuscore, a former biologist's sports-betting service that simulates U.S. football. He has been selling the service for more than a year, and he claims he is beating the Vegas two-point spread 56 per cent of the time, which is enough to be profitable. There are still lots of questions, not least of which is, If the model works, why would you ever sell it to outsiders rather than using it yourself?

Nevertheless, fascinating stuff -- and sports simulation doesn't stop here, as an article in the current New Scientist points out:

Can sports video games be used to predict the outcomes of real matches? Accuscore's simulations of American football games now have some competition in the form of Madden Football '07, a game from Los Angeles-based Electronic Arts that is based on the playing habits of real players and teams.

In 2001, Jon Robinson, a gaming enthusiast and columnist for bi-weekly sports digest ESPN The Magazine started an online column to see how each year's new version of the Madden game stacked up against human experts in picking the winners of real games. The computer would play itself and provide predictions. "So far machine has never beaten man," Robinson says. "This year it looks like maybe it could happen."

Why the improvement? A lot may have to do with powerful new gaming consoles such as Xbox 360 and PlayStation 3, which allow game producers to more accurately mimic the strengths and styles of real National Football League teams. Through 240 games this season, Madden had picked 140 winners correctly (58 per cent), six more than ESPN sports analyst Lomas Brown (56 per cent) but six less than Robinson (61 per cent). Accuscore predicted the winners correctly 62 per cent of the time. "Is the sim finally catching up with man? I don't know, but bookies might be out some money by 2010," says Robinson.

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