Here’s an interesting book: The Mathematics of Gambling (free download), written by the legendary mathematician and hedge fund manager Ed Thorp. The book is about mathematical systems and optimal betting, and encompasses various games, such as blackjack, baccarat, roulette, the wheel of fortune, horse racing and backgammon.

[ cross-posted from Reasonable Deviations ]

----------

Midas Oracle .ORG = Site Map + Archives + Best + Charts + Exchanges + Software + Links + People + Write A Post Or A Page + How To Publish

• Gambling Commission and DCMS stance on the Alderney Gambling Control Commission, a regulator which condones its licensees’ unlawful behaviour
• We could use a US Gambling And Betting Commission, but the best would be to have prediction exchanges (modeled after BetFair) that alert the sports bodies about any suspicions.
• Playing fantasy sports is not gambling. The Unlawful Internet Gambling Enforcement Act includes a specific exemption for fantasy sports, provided the prizes are determined in advance and the imaginary teams don’t correspond to any real teams.
• A libertarian view on the Internet betting and gambling industry in the United States of America
• China is considering allowing gambling on horse races in 2009.

If you are interested in commodities trading, I recommend you take a look at this pretty interesting presentation, “Structure and Behavior of Commodities Markets” (.pdf file - 1.47 MB), by Dr. David Eliezer, former chief quant of the commodities group at Goldman Sachs (he is also a Physics PhD). The presentation is almost 2 years old, but the content is far from being outdated.

Here’s the abstract:

We present a review of those features of the commodities markets which distinguish them from those of other financial assets. These features are, principally, the cost, and in particular the physical limits on storage and transport, the fluctuations of the market inventory of commodities, the inability to short the spot commodity, and the feedstock and substitution relations between one commodity and another. These present novel challenges for accurate stochastic modeling, which has not yet drawn attention enough from the academic community to go beyond first attempts, often borrowed from other fields such as fixed income. By elucidating those features which make commodities markets especially distinct, and far more interesting than other financial fields, we hope to stimulate greater academic interest in the field. We describe the terms of the fundamental instruments that trade in the markets, and give a sense of order of magnitude of the numbers, especially storage limits and production rates. We do not present any new results in this paper, nor any original work. There is very little mathematics, and our primary focus is on the qualitative empirical facts from the point of view of a dealer who wishes to calibrate a market to forward-looking market-implied data, rather than historical data.

(via Ernie Chan’s Quantitative Trading)

The original post on this topic can be found in my blog.

----------

Midas Oracle .ORG = Site Map + Archives + Best + Charts + Exchanges + Software + Links + People + Write A Post Or A Page + How To Publish

• The Consumer Behavior of Prediction Markets
• Levitt’s risky prize-seeking behavior
• Meet Tom W. Bell, the man who knows the legal difference between “excluded commodities” and “exempt commodities”, and the legal difference between “contracts” and “notes” —but still can’t get himself a gravatar.
• Tradesports announces new fee structure.
• New Fee Structure At TradeSports Causes Confusion.