The Well: King Yao

[Performify]

A stranger is being shown around a village that he has just become part of. He is shown a well and his guide says "On any day except Wednesday, you can shout any question down that well, and you'll be told the answer" .

The stranger shouts down several questions, and all are answered. The stranger is impressed, and after thinking a minute he shouts down: "Why not on Wednesday?" and the voice from in the well shouts back "Because on Wednesday, it’s your day in the well".




I'm pleased to introduce King Yao who has volunteered to take a turn in the well.

For those who do not know him, King Yao is a former derivative trader who quit his job in 2000 and now dabbles in gambling. In 2005, he wrote "Weighing the Odds in Hold'em Poker", a strategic book with an analytical approach. (via amazon).

Yao maintains a blog at http://weighingtheodds.blogspot.com and is currently working on a book "Weighing the Odds in Sports Betting." Yao has also contributed articles to the Two Plus Two Internet Magazine.

Yao has long been a part of the sports betting forum, but not always the most vocal of participants - instead he's one of those posters who when he steps up, tends to step up with valuable information or insight. Its an honor to have him and please treat him - as with all Well participants except Thremp - with all due respect.



If you're interested in taking a turn in The Well, see this thread.

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Previous turns in The Well: [*] Performify - 02/02/07[*] B00T - 02/07/07[*] Thremp - 02/14/07[*] NajdorfDefense - 02/21/07[*] King Yao - 05/23/07[/list]

[King Yao]

I'm glad to be here. Because I use my real name, there may be some questions I'll feel uncomfortable answering. I'll try to note those as such.

Fire away!

[rjp]

I'm interested in your upcoming book, so I'll give things a start.

How long have you been betting sports?

How often do you bet sports?

What's the top misconception most sports bettors believe to be true?

What sort of mathematical techniques (if any) do you use to handicap or bet sports?

That should start... I'll think of more. Like the blog, though it isn't updated much.

[King Yao]

"How long have you been betting sports?"
Since high school, but not seriously until 1999.

"How often do you bet sports?"
Almost every day.

"What's the top misconception most sports bettors believe to be true?"
That a good handicapper can win at a rate greater than 55%. I don't even think a great handicapper can hit greater than that rate. A good one should be happy with 53% against widely available lines.

"What sort of mathematical techniques (if any) do you use to handicap or bet sports?"
I don't know if I can list them all here...but, I'll try. Mostly, I use stuff that is available on Excel, I don't use other software. Mathematical techniques include: simulations via Excel macros, possion distribution for props, simple arithmetic functions but may be a pain in the butt to write all the formulas into Excel (such as every permutation of a 7-game NBA playoff series), multiple regression, and although this is not a true mathematical technique, it's probably the best thing I do - that's comparing relative-value between two related bets.

"Like the blog, though it isn't updated much."
That is true, especially in the last few months when all of my time was taken up in writing the book. I will probably post a bit more often now, but it will come in spurts. Maybe one week I'll post everyday, but then I won't post for a couple of weeks. <font color="blue"> </font>

[TomG]

King, I am thrilled that you're doing this. I loved Weighing the Odds in Hold'em Poker and can't wait for Weighing the Odds in Sports Betting.

What is your favorite sport to bet/handicap and why?

Have you ever had problems having your bets accepted at the limits you desire?

What longterm ROI do you reasonably hope to accomplish from various types of wagers and sports?

I assume you are publishing Weighing the Odds in Sports Betting through Pi Yee Press?

What is Stanford Wong up to these days? Is he still actively involved in sports betting?

[Moneyline]

Strictly from a financial standpoint, is there any reason for a winning poker player to handicap sports?

There are a couple guys that I follow because it requires very little time and effort on my part, but in my experience the time that goes into handicapping makes it a much less profitable use of time than playing poker. Agree? Disagree?

Thanks for doing this.

[King Yao]

Thanks for the nice words Tom.

"What is your favorite sport to bet/handicap and why?"
NFL. Because there are the most opportunities in the NFL.

"Have you ever had problems having your bets accepted at the limits you desire?"
All the time.

"What longterm ROI do you reasonably hope to accomplish from various types of wagers and sports?"
Anywhere from 1% to 4%. It depends on what kind of wagers you can find. Last year, my ROI was only about 1.5%, whereas it was around 3.5% in previous years. But the reason for that was I was finally cut off from correlated parlays and teasers. I didn't get dumber and have a lower ROI this year...I just didn't have the same betting opportunities anymore. In the future, I'd be satisfied with 1.5%. The good times are gone.

"I assume you are publishing Weighing the Odds in Sports Betting through Pi Yee Press?"
Yes!

"What is Stanford Wong up to these days? Is he still actively involved in sports betting? "
I don't think he bets much anymore...I also don't think he ever bet that much. He was (is?) more interested in the intellectual process rather than the money making process. He's got a good life going.

[King Yao]

"Strictly from a financial standpoint, is there any reason for a winning poker player to handicap sports? There are a couple guys that I follow because it requires very little time and effort on my part, but in my experience the time that goes into handicapping makes it a much less profitable use of time than playing poker. Agree? Disagree?"

It depends how you handicap. Are you a "scouting" handicapper where you have to watch the games to get a good feel? Are you a fundamental handicapper that needs a lot of time to input current statistics as they happen? Are you a relative-value handicapper that just looks at a database and compares value in different bets? This is pretty much what I do for baseball...it takes me about 5 minutes a day now. It did take me a long time to set up my database, but now it is almost automated.

Also, do you ever feel you need a break from playing poker? If so, then another positive EV activity can really be a nice addition. Some people don't mind just playing poker 24/7, but others get a bit bored and lose focus. So a different activity can help.
Sorry for the vague answer, but "it depends".

[SonnyJay]

What kind of derivatives did you trade?

What drove you to quit the trading world and go to gambling?

You mentioned that you primarily use a database of information for your handicapping. Did you have someone mentor you with this, or did you design, create, test, and implement it all on your own?

Thanks for doing this, can't wait for the new book.

[King Yao]

"What kind of derivatives did you trade?"
"What drove you to quit the trading world and go to gambling?"

1993-1996 Equity Index Options as a Specialist in the American Stock Exchange (that means I was the lead market maker for the products that I traded)

1996 for three months: Currency Options at Bank of New York - mostly $/Yen, a little Yen/Mark (this was before the EU)

1996-1997: Oil Options at the NYMEX (Crude and then Gasoline &amp; Heating Oil - it was a very quiet year in oil when I was there)

1997-2000: Mortgage derivatives (CMOs) - proprietary desk for firm's account. Ran head-first into the LTCM debacle.

I was at Susquehanna during that whole time. I moved from equity options to the Bank of New York desk for currency options (Susquehanna had a partnership where they supplied the traders while BNY supplied the capital and salesmen) which is a very unusual lateral move. I was trading $/Yen within a month. I needed a change for personal reasons. I was under a non-compete contact, but I was able to use playing poker as my leverage. The main partners at Susquehanna were ex-poker players and I think they knew about the poker games after work in the office...so they knew I was serious. Its unusual to go from one sector to another without having to start from the beginning. Luckily, I was able to do that 3 times, all because they knew I had no problems leaving .. and not for another job. I was never afraid to say "screw this, I don't like the people I'm working with, I don't need this" (that's why I was only at the currency desk for 3 months). In late 1997, they moved me with my wife to San Francisco. The main reason was they wanted my wife to head the options floor for them in SF. But they also wanted to get into the mortgage derivatives business, so I was a natural choice to start it up for them - someone they trusted and could shift to another sector quickly and easily, and someone who enjoyed new things. In 2000, the amount they needed to pay me to stay was finally too high. So it was a good time to leave and finally pursue poker. Even though the money is much less in poker/sports than it would be on Wall Street(after the fact, it turned out I missed out on a $3 million year in 2000 if I had stayed), I've been very happy ever since. And even though I loved trading and wouldn't do anything else if I had to work for someone else...it was one of the best decisions of my life.

"You mentioned that you primarily use a database of information for your handicapping. Did you have someone mentor you with this, or did you design, create, test, and implement it all on your own?"

Actually, I use my databases a lot, but I don't use them for handicapping, but for relative valuation. I think those are two different things. Stuff like: if the Patriots are a 3 point favorite on the road, what is the fair value pick'em line in the first quarter? If the line is different than my database shows (after the curve is smoothed out) then there's a bet for me. As for the database, I did all the work and discussed it with few people. I have hired some people to gather the raw data for me...and asked some math questions to the right guys....and I share it with a very good friend of mine that I trust would keep it to himself(we partner up once in a while for special events). But I take credit for all the good and bad that come out of those databases.