Does gambling on horse racing seem like a good career path? For a college dropout from Pittsburgh who spent years figuring out how to increase the odds, it became amazingly profitable.

Like, almost $1 billion profitable. 

Meet Bill Benter, best known nowadays as a Pittsburgh-area civic benefactor and owner of a medical transcription company. Once upon a time, however, he was a college physics major who became obsessed with a 1962 book about how to beat the house in blackjack. 

Convinced that he could put the strategy to work, he quit school in 1979 and headed to Las Vegas to count cards. At first, it was a struggle, and he supported himself more by working at a 7-Eleven than by winning at the casinos. 

But after a year of playing his system, two things happened. First, he hit his stride, making $80,000 a year (the equivalent today of $250,000). And second, he got banned from Las Vegas.

Forced either to go home or to find another game in which to test his theories, Benter took his process to horse racing. And, over a 30-year career, he made more money at the track than he could possibly keep track of.

The promise of the method 

Benter's technique and his story are explained at greater length in a recent 6,500-word article on Bloomberg Business, by Kit Chellel, who interviewed Benter in Pittsburgh. It's a great piece, and highly recommended.

But to summarize his strategy, it comes down to one word: Data. (Okay, maybe make that two words: Data and analysis.) Benter dug into every source he could find about the history of horse racing--and ultimately, in particular, horse racing in Hong Kong. 

Among his finds: a 1986 academic article called, Searching for Positive Returns at the Track: a Multinomial Logit Model for Handicapping Horse Races. The two Canadian professors who wrote it argued that if you tracked enough variables, and had enough data, you could calculate better odds than the racetracks came up with. 

In order to do that, you'd need to be a statistician, and so, "Benter taught himself advanced statistics and learned to write software on an early PC with a green-and-black screen," according to Chellel's article.

By now, he had teamed up with an ex-insurance actuary named Tony Woods--a fellow gambler who was also persona non grata in Vegas, and who had enough money to stake them for a while. The two men set up shop in a dilapidated Hong Kong apartment, outfitted it with early computers, scoured facts about horse races, and poured the data into the statistical models.

They made small and moderate bets--and lost $120,000 during their first year. As certain as Benter was that he could handicap horse races, he realized now that they just didn't have enough data.

The second chance

The partnership between Benter and Woods didn't survive these lean times. Benter wound up back in the U.S. to count cards and play blackjack again, only this time in Atlantic City, N.J. He pulled together a few hundred thousand dollars over two years in the late 1980s, and made a beeline again for Hong Kong.

The city-state's horse racing allure was twofold.

First, the stakes were higher there--$10.7 billion a year according to a contemporary estimate.

Second, Benter believed that at least in theory, he wouldn't run into the strong arm tactics that had convinced him to leave Las Vegas. Hong Kong horse gambling was run by private clubs but the ultimate beneficiary was the government in the form of 10 percent of all tax revenues.

And, the house made its money not by winning against the customers, but by taking 17 percent of the total pool as a commission. 

Benter fed his statistical model with about 17 data points about the history of every horse in every race he planned to bet on--things like the number of days that elapsed between each horse's run, and how that affected its performance. He spent considerable effort trying to obtain and analyze a history of Hong Kong's daily weather, to see how might have affected race outcomes, but couldn't spot a pattern.

But even though he was making money again, it still wasn't enough--not until he hit on what he thought of as an incredible data point that changed the entire game: the publicly available odds that the race tracks themselves put out.

It turned out his prediction model was exponentially more effective at improving the public odds than it was at generating odds from scratch. And, in his first season after adding the public odds to his statistical mix, Benter told Chellel he made about a $3 million profit.

The end run

The money really started to add up now. In the first half of 1997, just before the handover of Hong Kong to China, Benter reportedly made $50 million. Imitators popped up, however, and the logistics of actually running the gambling operation wore on him.

He wound things down, gambled less, got involved with the Rotary Club. He thought about giving it up and coming back home to the U.S.

But he decided on one last big race: a giant November 2001 jackpot called the Triple Trio. Winning was a 1 in 10 million shot, and it was such a big deal in Hong Kong that one-seventh of the entire population made at least one bet.

Benter and a partner spent more than $200,000 placing a total of 51,000 bets. It turned out one of the 51,000 was exactly right. His system had worked, again; he won the grand prize--a one day haul that was worth about $16 million.

But by now it was just too easy, "unsporting," as he later characterized it. And he realized, too, that even though the government was getting its cut regardless of whether he gambled, his presence significantly reduced the odds that regular citizens would win.

He and his colleague posed for a photo with the winning betting slip, Chellel writes, and then just put it in a safe deposit box. He'd never get around to cashing it out. 

Back in the U.S.A.

If nobody claimed the jackpot, Benter knew, it would be donated to charity. But the fact that such a giant prize was never claimed became a major news story in Hong Kong.

Eventually Benter sent an anonymous letter saying he'd won, but that he had no intention of ever claiming the prize--and he moved back home to Pittsburgh. He then started betting on U.S. horse racing, and today, via the Internet, reportedly continues to bet all over the world.

Most of the people he meets now have no idea how he made his money, he said.

He runs his medical transcription company, which is nowhere near as profitable as his gaming, teaches classes and lectures, and makes donations: $1 million for a charter school program, $3 million for polio immunization, more for political causes.

And Benter, now 61, tries to stay out of the public eye--with the notable exception of his recent interview.

"I have been avoiding you, as you might have surmised. The reason is mainly that I am uncomfortable in the spotlight by nature," he said in an email to Chellel. "None of us want to encourage more people to get into the game!"