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Public Zone 公開區 => Bookwyrm 書蟲天地 => Topic started by: chin on 02 October 2010, 02:40:52
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In the middle of reading The First Tycoon, I took a break and read this memoir of a young girl's adventure in the realm of professional gambling. The form of gambling she wrote about were betting sports, horses, making books either on shore inside US, or off shore in the Caribbeans.
This is an interesting book on an interesting subculture. It sort of read like a novel to me, thus I am not sure to believe some of the stories or not. However the author did have some keen observations and comments on the characters.
In the late part of the book, she recounted in detail her works and stories in a Caribbean book making operation, and how it eventually failed. When reading this part, I could help but to relate to my comment on The Eudaemonic Pie (http://chinman.com/index.php/topic,272.msg3542.html#msg3542). The reason of failure is almost the same - that the business was not ran on business principles, that emotion and ideology overcome logic.
The below is a short review of the book by someone who is making a living from horse racing.
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BTW the quick rise-and-fall seems to be a recurrent theme in books about gambling and stock market speculations. Beside this book, The First Tycoon touched on a few "stock operators" rise and fall (not Vanderbilt). Very similar story in Reminiscencse of a Stock Operator (http://chinman.com/index.php/topic,452.0.html). A few other books mentioned on this site also had similar stories. An example of self-selection by yours truly?
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BTW the quick rise-and-fall seems to be a recurrent theme in books about gambling and stock market speculations. Beside this book, The First Tycoon touched on a few "stock operators" rise and fall (not Vanderbilt). Very similar story in Reminiscencse of a Stock Operator (http://chinman.com/index.php/topic,452.0.html). A few other books mentioned on this site also had similar stories. An example of self-selection by yours truly?
Maybe. But whether the story is non-fiction, fiction, or somewhere in between it's usually more interesting if it details rise and fall, or at least rise from humble beginnings (the last may be my personal preference).
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Instead of starting another thread on this book, I am just adding the short comment here.
The author punts for a living in the UK. The core of his expertise (which he calls the engine room of his operation) is what he called a tissue. The tissue is what sets him apart and ahead of the majority of gamblers.
The author realized very early on in 1994 or so that "if you just try to pick winners you can't win, but if you play the percentages, you can." So for each race, he priced up every horse based on his view of each horse's winning chance, and bet all horses that offers significant higher price than the estimate. This set of his own reference price is what he called a "tissue". In essence, it's a probability model and he only bets high expected value horses.
In UK, the majority of the betting actions are with bookmakers. And bookmakers do not like consistent winners. So one of the recurring problem for the author is how and where to place his bet. He's essentially blacklisted by bookies. Thus he has to use his friends' accounts, etc... which created additional potential problem of timely collection, operational complexity, etc... If there is anything to learn from this, it's that one should avoid betting against the bet taker, because it cannot be a long term business.
In around 1993, after lost his job as a trader at Credit Lyonnais, he started to full time gambling with capital of GBP50,000. In the book, he said that in 2003 & 2004 he made GBP260,000 & GBP325,000 respectively, and in 2005 only GBP4,000. And in the final months of 2005 he was almost wiped out before a large recovery. These figures seems to be gross winning before deducting expenses (of well over GBP100,000/yr) to be shared with his betting partner, so I am guessing his accumulated betting capital was a few hundred thousand GBP by 2005.
I did not find any reference in the book as to how he size the bet, or allocate capital. However from the bits and pieces about his betting volume and swings, I suspect he may be over betting. If so, he could have problems in optimizing how much to bet. Given that he focused and bet big on a few large annual racing festivals, it seems to me he would risk more than a few percent of his capital on one single race.
For a single individual who can net a few hundred thousand GBP a year tax free, it was good money and no easy task. It was a 7-day a week job starting from 8am to evening.
He also had side jobs like selling tips, and commenting on racing TVs. Now he also have income from selling books.
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This is the 2nd book I read by a pro gambler betting horses in UK. It took me a long time to finish this book, because the middle 50% of the book is very boring.
The book starts with an intrigue on page 1 that attracted my attention. He mentioned that over the years, his return on turnover stood at 16.7%. At the end of the book, the author tallied total winning of £10 million over the 8-year period documented in the book. In other words his total betting would be around £60 million.
For any investment professional who traded repeatedly over a period of 8-year or so, this average return on turnover is very high, and could easily translate to well over 100% return on capital per year. In fact about 30 pages of the early part of the book was about how his life was threaten by criminals and that he had to went into hiding, and that when the case settled and he re-started his full time betting, his capital then could not have been more than a few hundred thousand £. His capital gain over the period was truly remarkable!
Just like what I have learned reading the previous book on punting in UK, one of his major challenge was very operational - that is to place large enough bets with bookmakers. His solution is to use a large, and very likely multi-level, team of agents to place bets for him. He did not pay salary to these agents - instead the agents put their faith on him betting along side. (So at the end of the book, he said that for him to earned £10 million, the bookies probably lost £20 millions or more.) One of the pictures and descriptions saw him with more than 10 hand phones on his desk. One of the chapters was entirely about how he organized a betting coup, with 3 waves of betting by different means and channels, in order to bet enough.
The middle 50% of the book was very boring to me, as he talked about some of the major winnings with only a short description on each win. Since I don't really know any significance or prominence of the horses, jockeys, trainers, races or traditions involved, it was just a long list of numbers and names. If there was anything to get out from this part, it was the impression that many of his winnings were due to the fact that he co-owned those horses and knew about the true progress and fitness of those horses.
In other words, the stories reinforced the stereotypical image that horse race betting is an insiders' game.
In Britain, the prize for the winning horse is so small that there is no hope for the owners and trainers to cover the cost of keeping horses from purse alone. From reading another book on British racing, it seemed that the UK government has upheld the philosophy that owning race horses should be a wealthy person's hobby and resisted calls to subsidize racing by legislation. So trainers and owners would go in great length to hide the true ability of a horse, in order to land a betting coup for financial gains.
I think in other racing market where the betting is pari-mutuel, books like this won't be published because winning by hiding information from the public would be at least immoral, if not illegal. But in UK you bet against the bookmakers, instead of the gambling public, winners like the author of this book would actually be seen like a hero.
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Other bits and pieces of interesting info from the book:
- he apparently was very gifted in mathematics, and accepted to the Trinity College at Cambridge at 16 (but couldn't study there until turning 18.) But he left the college without finishing the degree, because his started to gamble on horses and was very successful.
- when he returned to full time betting after coming out from hiding, his personal and business expenses was £3,000 per week, or £150k per year. Very similar to Dave Nevison in the post above.
- in the chapter that he talked in detail one of his major betting coup with 3 waves of betting, the 3rd wave was backing the horse on betting exchanges. After the 1st and 2nd wave betting with bookies, the odds have dropped from 100x to 16x and aroused lots of attention. Many traders on the exchange would have backed the horse in the early movement and would looking for trading out to lock in a profit. With the readily available offer to trade out, he was able to bet all the way down to 10x. This bit is very interesting because it contrast sharply "trading" vs "investing".
Yesterday I happened to read about a betting exchange trader who bet £250 million a year to earn maybe £500k, or 0.2% profit margin. Traders trade with "sure win" strategies for small % profit, and need to turnover very large amount to earn meaningful profit. Guys like Veitch who buy-and-hold took the risk but ended up much higher profit margin in the long term.
- the book does not talk much about how he handicap the races. But there is one message that was emphasized and repeated by many other successful investor gamblers - that picking the winner is not enough. Picking value is the key to profit.
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The Story of The Computer Group
http://www.offshorebettor.com/images/COMPUTER.htm
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I recently watched a CBS 60-Minute story on Bill Walters, and was intrigued about gambling on sports events. I subsequently bought two books on sports betting in the US. (See link about about Bill Walters' earlier betting venture The Computer Group.) The book are "The Odds - One Season, Three Gamblers and the Death of Their Las Vegas" by Chad Millman, and the other one "Smart Money" by Michael Konik.
I just finish reading The Odds. The three main characters portraited in the book included a middle aged old hand with a university education from the prestigious U Penn, a young kid from small town America who decided not to attend university but to bet full time in Las Vegas, and then the sports book manager at the casino Stardust. The stories have a very familiar tone, as related to in other books about gamblers - large swings in bankroll, huge emotional ups and downs, self loathing, social isolation, and often broken relationship or family.
I always suspect that large swings in bankroll was due to overbetting. In the case of the middle aged old hand, at least once in the book, he was mad at himself for overbetting. However in the young kid's story, he seem to be betting very prudently only 1% of his bankroll per event. (The book mentioned that he was once down $3,500 or about 10% of his bank, and he always bet about $200 per basketball game.)
The emotional swings (and sometimes self loathing) also seemed to be a common thread in most books about gamblers. For many of the large gamblers, it may not simply because of the large amount of money involved, as they should be somewhat desensitized to large sums. I think the problem was emotional attachments to the game, since they handicap the games manually (even though often with the helps of computers.) It didn't help that they work alone in their home (in the case of the two gamblers, not the casino manager).
For me, reading this book was an educational experience about how sports betting works. In my first job out of school, the guy sitting next to me went to USC (University of Southern California, a.k.a. University of Spoiled Children). He told me many times how he booked bets from his college friends, told me about making lines, etc... Now I finally know what he was talking about.
I am just starting to read Smart Money, and in the first few pages I read, I think the tone would be quite different from the Odds. This book is written by a journalist who worked for Bill Walters for a few years. The book did not mention Bill Walters by name, but I read that he was the boss mentioned in this book. I may commend on Smart Money once finishing reading it.
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Another observations from the books about sports betting.
There are lots of data available, and the vig is "only" about 5%. So it should be much easier to build a profitable model, than for horse racing.
However, since you bet with bookies, who never like winners, there are quite a bit of operational complexity in placing the right amount of bets. The operational cost and leaks are also higher than betting into pari mutuel pools.
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Smart Money, by Michael Konik
Like I mentioned above, the tone of the book in the beginning was markedly different from The Odds. Because he was on the winning side from Day One.
The author is a free lance journalist for slick gross magazines, often covering gambling related stories. He was recruited by the big gambler Rick to front the big gambles. The reason for needing someone to front is the same as mentioned in other books mentioned in this thread - bookies do not like winners. So winner always need to find someone new to place bet for them.
Since Rick already have a winning method, the bets the author placed for him have more winners than losers. The author worried not about finding winners, but finding bet takers. The first part of the book describe a lot about how the author played sucker to conceal the smart bets, how he getting used to be treated like a high roller, free dinner in top restaurants completed with 1st growth Bordeaux, etc...
After a while, he was probably desensitized to handling large amount of cash and stakes. This is IMHO a pre-requisite for someone to step up into the big game, and essential for his mental health. Two posts ago I provided a link to the story of The Computer Group, where the real founder of the intellectual concept had problem handling large amount of cash, thus relinquish control of the operation, and eventually things got out of hand so much the group was broken up.
Further down the road, just when he started to got comfortable handling large amount of money and large bets, the author started to show signs of addiction - to look at the betting spreads, to watch games, to place bets, at the expenses of real personal relationship. In this case with his girlfriend. Toward the end, the author helped found another betting group based on computer modeling of game results, while he was still placing bets for Rick (No matter how he explain, it was a clear conflict of interest.) At the end of the book, he stopped all gambling - either placing bets for Rick or participate in the new computer betting group he help formed.
Through out the book, the one thing stayed constant is the difficulties and operational hassles to place bets with bookies, when you are a known winner. This is a strong reminder that if you can only bet with bookies, don't be bother to develop any winning system. You will be kicked out, and eventually the cost to place a bet may just be high enough to off set any potential gains. (Either the bookies not paying up, or your placing agent gone missing. Then you will need a lot more winner to off set the loss.)
I read far more books about gamblers than the ones listed here. Again one of the recurring themes in almost all these books is the self-destructive behaviors developed in many of these professional gamblers career. Like addition, social isolation, betrayal, self loathing, extreme emotional ups and downs. It does not matter what's the instrument of the gamble - sports, horse, poker. It even does not matter which side you are on - the gambler or the bookie. Yet everyday lots of people dream of making a living by gambling. Maybe it was the (perceived) freedom gamblers enjoy?
There is another key problem I see from reading this book, the story about The Computer Group, The Eudaemonic Pie, and Lay the Favorite. Many of these gambling ventures required group effort, yet they didn't organized in a business like manner. If they have clearly define capital contribution, responsibility, intellectual property ownership, leadership, etc... their ventures may be much more fruitful. And equally important their gambling life may have some resemblance of structure and normalcy, thus avoiding many of the self-destructive behaviors.
Maybe it was like the review in the first post of this thread, a big gambler who live a normal life does not make an interesting book. Thus books get published need to have the dramas.
The author has declare up front that he changed the names and timings to protect his source. I strongly suspect that some characters and stories were synthesized. But for the sake of interest, I read in some online forum that Rick in this book actually refers to Billy Walters. You can go to SBC 60 Minutes web site to watch a recent interview of Walters.
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Lastly, after reading this book, I really think that sports betting can be modeled. Modern days professional sports are stat driven to feed the audience (and perhaps their gambling need.) The vig is relatively low. The the number of events plentiful. It should be a matter of spending the time to build the right model.
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My next reading is The Predictor, which is again sort of about gamblers. But this time in the biggest casino in the world - the financial markets.
The Predictor is sort of a sequel to The Eudaemonic Pie (http://chinman.com/index.php/topic,272.0.html). It follows the key players in the Eudaemonic project to their next real business venture. It's the story of rocket scientists taking on the financial market.
I almost finish reading the book and will either have a separate thread or follow up on The Eudaemonic Pie.
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The book is more about bookies than regular gamblers. But then again, bookies are among the biggest gamblers.
This book is mainly the story of Alan Tripp, the largest illegal bookie in Australia who eventually able to "whiten" his operation and sold the company for A$100 million, and did it again within 10 years. A relatively minor part of the book is about Mark Read, who was also among the more prominent legal bookies.
There are many interesting parallels in the careers of Alan Tripp and Mark Read. Both were bright ambitious young men who decided to start book making rather than finish their education. Both have family connections to the book making world. Read started in the on-course legal book making world, and soon reach the top at very young age, and played the part of successful bookies. While Tripp started as harmless illegal street bookie, skirting on the edge of the laws, and have been caught and convicted a number of times. By 1990 or so, Read was way ahead of Tripp, career success wise.
Tripp's big break came when he convinced the Vanuatu government to issue him a license, and brought his book making operation from Australia to Vanuatu. His fortune started to change as his business grew exponentially. By around 2000, Tripp's business was taking in more than A$500 million bet, vs Read's A$150 million. The change in fortune also reflected the change of times - that gamblers wanted to bet by phone instead of going to race courses. Tripp's business take bets by phone, Read had to be physically on course (as I understood from the book.)
Tripp was able to sell his business to a listed UK gambling operator for about A$100 million. He then turned around, bought Read's business and started to compete with his former operation. Again his success in his second venture also reflected the change of times - that gamblers were migrating to the Internet en mass.
In 2009, he sold his second ventures to Paddy Power. (This book ends before the sales of the 2nd venture was completed. But from reading Paddy Power's recent announcement and financial statemetn, I think Tripp & Co sold the second venture for about GBP130 million, including earn-out, for mainly cash plus some shares in Paddy Power. Anyone interested can read in paddypowerplc.com for the exact numbers.)
This book put the bookies in very positive lights. Tripp was portrait as ambitious, driven, resourceful, good with people, and lucky. I am in no position to dispute any of the above characters, as I think they are the basic requites to success in business - legal ones or otherwise.
In the following link and attached report, Tripp was put in a more negative lights. However, one can always argue that Tripp was clever enough to maneuver into a position to exploit the situation, without getting caught as outright criminal.
Burbidge Report
http://www.hansard.act.gov.au/hansard/1997/week14/4693.htm
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My initial interest in reading this book was because of Mark Read. I recently was introduced to a Hong Kong guy working for Read. Although I don't see any possibility of doing anything with Read's operation, I was intrigue about his company, relationship with other bookies, etc...
I first came across Read's name in Alan Woods web site, mainly in discussions about Betfair. His company ISABet was sold to Sportsbet, who was in turn acquired by Paddy Power for about GBP30m up-front plus GBP100m earn-out. From the above comment, you should know that the 2nd venture referred above is Sportsbet.
Tripp's first venture, the one started in Vanuatu, was called Number One Betting Shop (curiously called Numbawan Betting Shop in the link above), which was subsequently acquired by UK listed book marker Sportingbet. Initially I was confused with the names Sportingbet & Sportsbet. Anyway, according to the attached Fossen paper, the followings are the turnover and gross profit figures of Number One, and I compute the margin in the 4th column:
1998, A$177m, A$2.6m, 1.5%
1999, A$329m, A$12.1m, 3.7%
2000, A$526m, A$9.3m, 1.8%
The margin of the Vanuatu business was actually very low. Maybe this reflects the nature that they had to be a low cost bookie in order to attract people to bet with them. Using the above figure, their over rounding is 102% to 104% which is only slightly less efficient than the exchange markets.
When I was reading the book, I expected their margin to be quite a bit higher. In absolute dollar terms, A$10m profit was not bad at all. Especially considering the operation had less than 30 people. With margin like these, no wonder a proposed 1% tax was enough to break the negotiation with the TAB during Tripp's second venture.
Paddy Power gross margin in 2009 was €296m on amount staked €2753m, or 10.8%. I wonder how come Paddy Power can maintain such high margin.
And I also wonder why Sportingbet was paying 10x of gross profit to buy an operation that was working on the fringe of the laws of Australia, where the majority of the clients based!
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Not quite a book, but still interesting readings about junket operators.
http://chinman.com/index.php/topic,299.msg10162.html#msg10162
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Few million GBP a year in turnover, 7000-9000 bets per year, that's 30 bets a day.
He had to sell his car to raise betting capital, maybe he's over betting?
The strangest comment is about relationship with bookies (near the end of the article.) Is he really a winning player? If yes, it's really strange that he has good relationship with bookies.
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http://www.reuters.com/article/2011/12/23/lipper-column-idUSL6E7NM1MG20111223
Equine vs equity investing: Lipper
Fri Dec 23, 2011 9:29am EST
(The author is Head of UK and Cross-Border Research at Lipper, a Thomson Reuters company. The views expressed are his own.)
By Ed Moisson
LONDON Dec 23 (Reuters) - Is betting on horses very different from picking stocks? Can understanding a gambler's approach and mentality give a better understanding of fund managers?
In searching for answers to these questions, I spoke to Paul Moulton, a professional gambler who originally worked in the fund management industry. He then set up a fund research company (Fitzrovia International, which he eventually sold to Reuters), although his working life began with an attempt to become a professional chess player.
Most of the fraternity of professional gamblers who make a living from horse racing are what Moulton describes as 'traders' or 'chisellers'.
This group do not really look at horses at all, but look at market movements, hedging back their bets, and aiming to make tiny but regular profits with much less risk. They remain tucked away in their homes in front of an array of computer screens.
Moulton sees himself as part of a second, smaller group of professional punters, those he refers to as 'judges', some of whom look at horses in the paddock to assess their physical condition and thus their chances, while others are more reliant on assessing form based on previous races.
Some of them may even be conscious of the FSA's warnings on funds' past performance, which is deemed to be no guide to future returns. Although past performance does tend to shorten a horse's starting price.
As part of this approach, Moulton has gathered vast amounts of data on all aspects of racing (jockeys, trainers, pedigrees, speed figures and so on) in a database that covers all horses in all races in the UK and Ireland since January 2005.
Although his background in fund research lends itself to such an approach, Moulton admits that, while his original idea was to "out-stat" everyone else, this approach has turned out to be much more limited for determining which outsiders to back.
He did try to do all of this from home, but in the end he was better able to deal with losses when trackside. The journey home enables Moulton to carry out a post-mortem of his performance, win or lose, and to clear his mind before returning to the family.
So he now spends more time looking at the horses in the paddock too, even though being at a course means that it is a little more "archaic" when trying to work out "what the market is doing".
But even this has a beneficial side-effect: it is far easier to bet on too many horses in too many races when sitting at home and betting over the internet, he says, while, for practical reasons, this is far less the case when at a course.
So Moulton travels the country pretty much every day, from Redcar to Uttoxeter, Beverley to Haydock Park, not forgetting Newmarket, Ascot and Goodwood.
TOO MUCH INFORMATION
To see a graphic on the relationship between information and the accuracy of handicapping, click on the following link: r.reuters.com/sag75s
Moulton acknowledges Russo and Shoemaker's findings. From his own experience of building a horse racing database, he is all too aware of the desire to add in a new piece of information after virtually every race.
In the early days this process of amassing more and more data on which to base decisions was "comforting" he says, but he has found that "it doesn't help results." The more detailed any extra analysis that he runs, the smaller the sample size becomes (for more recent races) and the less meaningful the findings are.
"Once filtered to that degree, apparent patterns are really just statistical tricks."
At its heart, Moulton's approach to placing bets is to look for value in the market.
He creates a 'tissue' for each race, assessing the price at which he would be prepared to back a horse and then compares this to the odds offered by a bookmaker.
Moulton tries to divorce himself from picking winners. "Anybody can pick winners," he says. "There's no point in picking winners if you're backing them at the wrong prices, because sooner or later you'll come a cropper."
It's for this reason that he's always reluctant to answer the question from the occasional punter "who is going to win the 2.30 at Haydock?"
"In all likelihood I'll back several horses in the race if I think they're good value and still expect to lose, which most punters can't quite get their heads around."
Yet after all this work over the past five years of professional gambling, it might come as a surprise that 93 percent of the time Moulton's chosen horses lose.
Luca Cumani, one of British racing's leading trainers (and who trains some horses that Moulton owns), on hearing this said, "if I got 93 percent of my decisions wrong, I would not be able to call myself a professional anything."
Moulton's response to this is that it doesn't matter as long as the average odds of his selections are greater than a 7 percent chance (or 13-1) because, in the end, "it's all about profit".
In the same way, if typically one backed horses at 33-1 (i.e. a 3 percent chance of winning), then one could get away with losing 96 percent of the time and still make a profit. This contrasts with picking 2-1 shots (a 33 percent chance), where one has to be right more than 35 percent of the time.
In Moulton's view, each gambler has to decide where on this 'risk spectrum' he believes he can succeed, much of which comes down to temperament. Most professional gamblers are focused on those horses with shorter odds, while Moulton chooses horses with longer odds but has to deal with losing more frequently.
He admits that there are very few punters at his end of the spectrum. But this does not come as a surprise, indeed he seems to relish the apparent loneliness. As he says, "it does do funny things to your brain when you lose 93 percent of your bets!"
Whatever happens, he can draw more than a little comfort from the fact that all his work is tax free (since the 9 percent betting commission was abolished a decade ago) and has gone to great lengths to check that HMRC will not come knocking at his door (bit.ly/uVWsk9). It is as though all of his investments are held in a huge ISA wrapper.
To hit the golden 7 percent, he spends over 80 hours a week at work. His unwavering logic is that to spend that amount of time he needs a decent return, and to do this he needs to place a decent stake.
So Moulton fairly routinely turns over £100,000 a day at the big festivals and consequently turns over several million pounds a year.
"I don't think there's a serious professional gambler who has made 10 percent of turnover" he says, so his daily stakes of a few hundred pounds back in 2006 were simply not high enough to earn the sort of living he wants to sustain.
Even to make £25,000 a year, on 5 percent of turnover one would need to turn over £500,000 a year or £2,000 a day.
As a result, Moulton concludes that "betting on horses is only 50 percent of a professional gambler's skill, the rest is in temperament and stake management, both if betting too much and too little."
DEALING WITH LOSING
The biggest challenge for Moulton remains how to deal with losing runs when a 7 percent success rate looks further and further away.
For Moulton it is in the nature of things that he will hit bad spells as winners don't come neatly spaced between losses. His approach requires consistency but a run of losers has often tempted him to start tinkering with that approach in order to try and end the losing streak - a fatal error.
This has clear echoes of the pressure on fund managers to deliver short-term returns despite managing money for the long-term. Perhaps Professor John Kay, who is leading an independent review into long-term investing in UK equity markets, has considered talking to professional gamblers. (bit.ly/vyy6LU)
Moulton has learned this the hard way. Each year he has gone through a "horrible, horrible losing run" and each year he has tried to train himself to deal with it better. Indeed early on he admits to losing all confidence in his abilities.
He puts such losing runs down to being in his chosen end of the risk spectrum and he admits it would be "far better for my mental health" if he could find a proven method of making money from backing 4-1 shots.
Despite this, after five full years of betting, with 7,000 to 9,000 bets each year, Moulton has experienced two years that were essentially flat (before expenses) and three "pretty spectacular" years.
The occasional anonymous mention in the pages of the 'Racing Post' stands as testament to some huge wins. In July 2008 one columnist wrote in disbelief at meeting Moulton and finding that he had won £200,000 and £250,000 within a few weeks of each other. And in September this year he made nearly £600,000 over two pool bets.
INSIDER?
More generally, when considering the similarities with investing in the stock market, Moulton points out that the vast majority of the time, the competitive environment in which companies operate changes relatively slowly, enabling analysis to be carried out over a reasonable length of time and in depth.
He contrasts this with the competitive environment for a horse race that can change in moments - and often does, such as the previous race highlighting a bias relating to positions in the draw. And of course a horse race is over within a matter of minutes. Moulton has not had to develop the equivalent of a 'buy and hold' investment strategy.
While he may have found an asset class uncorrelated to stocks, bonds or even gold, indeed even the euro zone crisis does not figure very prominently in the minds of punters, if oil rich Middle Eastern owners such as Godolphin (the Maktoum family's private horseracing stable) decided to leave British racing, this would surely send an earthquake through the sport.
Meanwhile, Moulton's own moderate success as an owner (bit.ly/uRnaTC) -- despite friendships across a range of trainers and jockeys -- gives the lie to the idea that apparent 'inside information' is the key to success.
Indeed much trackside information is available to all, with those in the paddock able to tweet their views to punters within moments. Moulton himself is an avid tweeter -- @moulton66. So "market chatter" is increasingly open - and you don't get much more transparent than when a horse is sweating!
As for dealing with bookmakers, his response makes clear the implicit trust in those relationships: "If I had to choose one group of people with whom to do business the rest of my life, it would be bookies."
THE BITTER END
Moulton would not be drawn on whether his family was the equivalent of dealing with investors in a mutual fund, although he has avoided running a syndicate because this would end up with him being answerable to shareholders.
Instead he asserts that he is better at being a professional gambler than anything else he could turn into a career and so it offers the best chance for him to support his family comfortably.
What might be seen as a risky career is bolstered by steadfast confidence. "Even if I lost 50 percent of my capital, I would - I would, I would, I would - turn it around."
So in 2010 when he sold his beloved E-Type Jaguar to raise some cash, he did not adopt a more cautious approach and proceeded to lose the money made from the sale in 45 minutes on the racecourse.
So how far would he really go? "I would go all the way."
Conviction, dedication, self-awareness and a consistent investment process. Surely attributes all investors long for in a fund manager; although you would allow them some nerves if the trackside approach to capital preservation turned up in their fund factsheet. (Editing by Joel Dimmock)