Chapter 3
Why this gambling coup? What prompted Tanaka to devise such a scheme?
Of course, there was his old aspiration of independence, freedom; he was looking for a way out of the mob. But most of all, the Asians’ penchant for risk, gambling, free money, some kind of sense of mastering and owning the future, must have had a decisive influence on choosing this path to richness.
Mankind was always fascinated with gambling. The dream of making money out of nothing had never parted from peoples of all historical ages. Of course, everywhere and every time gamblers tried to take out the randomness of the event they were staking on. Tanaka was not the first to concoct a scheme of risk free betting.
Gambling on sports was a more recent development in the evolution of the game of luck. Jay was not new to the sports betting world, of course, he dabbled into betting from time to time. As a sportsman he was never far off of this subject matter and even liked to bet small stakes on various results on hockey and basketball, the American sports he understood. But he played for fun, on astronomical combined odds which, of course, never materialized. On the plus side, he lost insignificant stakes.
He was still in the States when Jim “Mattress Mack” McIngvale, a businessman from Houston made history by wagering 10,448,163 USD on the Houston Astros to win the World Series in 2022, resulting in a massive payout of 78,361,222 dollars.
At the same time, sports people still occasionally mentioned Billy Walters gamble on the New Orleans Saints winning the Super Bowl in 2010. One of the greatest sports bettors, Walters staked 3,680,771 USD on them, winning 6,619,787 dollars.
Europeans, and Asians as well, enjoyed the most betting on their football. For example, the prestigious UEFA Champions League had a prize pool of 2.032 billion US dollars during the 2022-2023 season.
Nearly half of American adults bet on a sporting event, and many bet online, with 45% of sports wagering now taking place through the Internet, according to a report by the National Council on Problem Gambling.
The lure of betting was easy to understand. If you have a sum of money and put those savings in a bank as a deposit, you stand to earn about 3-4 % per annum and that on a good year. Interest rates close to zero or negative are not very rare. But if you are willing to take the risk, if you study the results and know the sport you are betting on, a bet with an odd of, say, 1.30 or 1.40 is not a farfetched prospect. And instantly you have more than 10 years of bank interest rate gained. And if you lose, you can always repeat the bet with a raised stake to cover for the previous loss. The trick is to limit the amount of the stake and plan for multiple successive bets to cover any contingency. There was a side benefit which added to the pleasure of earning money when guessing the result. It was the feeling of mastering the future, of having had a glimpse spanning time.
No wonder many people were hooked on gambling on sport events. Sports gambling addiction involves compulsive betting on sports events, where individuals struggle to control their betting habits. This addiction can lead to various problems, including financial issues, work issues, relationship strain, and mental health issues.
But if the humans encountered these many problems that arose from gambling, the machines didn’t and they started to get used for their computational power by enterprising businessmen and their companies. Computers became essential in the modern sports betting industry, allowing companies to operate scientifically and efficiently, manage risks, and gain a competitive edge through automation and data-driven decision-making.
Such companies, often referred to as sportsbooks, betting syndicates, or arbitrage betting firms, use advanced computing technology in several key ways:
- For employing statistical models, machine learning, and Artificial Intelligence to calculate the probability of different outcomes in sports events. Models driven by AI predict outcomes based on player statistics, team performance, and other variables.
- For processing massive amounts of historical and real-time sports data to identify patterns and profitable betting strategies and algorithms, using machine learning and statistical models to predict outcomes.
- For identifying opportunities of betting arbitrage, where they use bots to scan multiple bookmakers for pricing inefficiencies and place bets that guarantee profit.
Jay always thought the betting arbitrage was a splendid business opportunity, but it would have required huge capital, complex and expensive hardware and a very good knowledge about different fiscal jurisdiction and an army of accountants. It was definitely out of his reach.
Among the systems he studied for gambling success he – ironically, given the present Tanaka’s scheme – designed a betting strategy involving draws in football. The idea was to put the stakes on draws and double the amount of the bet if the initial bet was unsuccessful. He started with a few dollars and made it fairly easy to a thousand, but then an incredible run of 13 games without a draw of a certain team ruined his attempt of getting rich this way. He never tried again after that.
Most of the gamblers, however, were still ordinary humans who kept on betting despite an increasing rate of addiction. Due to the vast growth of gambling sites and betting apps, sports gambling was becoming more accessible to people. Thus, the addiction became widespread. Warning signs of sports gambling addiction included preoccupation with betting, lying about gambling activities, increasing the amount of money wagered, and neglecting responsibilities. Other signs involved chasing losses and experiencing mood swings tied to betting outcomes.
The global sports betting industry reached a market size of 242 billion U.S. dollars in 2022. This substantial figure reflects the immense popularity of sports betting worldwide.
The bulk of the action, betting-wise, took part in Asia. Betting in Asia was huge in comparison to the rest of the world. The sports betting industry in Asia accounted for billions of pounds every year. This meant that there are bigger bets and more competitive prices to take advantage of. Due to the massive stakes involved, the large Asian bookmakers operated on a much lower margin than their European counterparts.
Thousands of computers across the world made a huge number of bets concomitantly which were more akin to high frequency trading in the sense that the operators look for the small spread in-between the shifting prices than taking a position on individual outcomes. The punter therefore had a better chance of winning long term than they do using many European books where the margins are typically double or three times that of those in Asia.
Due to this massive demand for sports wagering, the major bookmakers in Asia offered prices and significant liquidity on almost every game for football, no matter how obscure the league or division.
