Inside Information

My first experience of ‘inside information’, or at least the first I remember, was in the late 80s when a friend of mine, Keith, was alerted to a promising 2 year old colt called Nashwan by a contact in Major Dick Hern’s stable. Keith made thousands backing it antepost, in singles and multiples, for the 2000 Guineas and the Derby. Had it won the St Leger, which it might well have done had the owner not decided to race it in France instead, he would have made many thousands more. At the time, young and naive as I was, I had no reason to doubt the value of stable tips. These days, however, I think Keith probably just got lucky: he just happened to have a contact in the stable that actually did have the wonder horse that year, not one of the many other stables that thought they did.

In this however I am in a minority. There are legions of punters, in particular horse racing punters, wedded to the idea that the secret to winning at gambling is to get access to inside information. Setting aside for a moment the possibility that stable tips genuinely are the key to gambling success I can think of several possible motivations behind the belief. My leading candidate is laziness (forget putting years of effort into learning, can’t someone just tell me the answer), but others include belonging (the pleasure of feeling in on a secret, of impressing your friends with your inside knowledge) and self-justification (I lose because I’m not privy to inside information like the cheats and the spivs). Add to this practical reasons such as confirmation bias (winning tips are more likely to be reported and to be remembered than losing tips) and we can begin to understand why so many gamblers are so keen on stable tips and the like.

Experienced professional gamblers, by contrast, tend to be extremely dismissive of inside information. Is this a conspiracy? Are they dismissing tips to try to throw the lumpen masses off the scent, wishing both to keep this arcane knowledge to themselves and to maintain the gratifying illusion that they pick winners through their own skill and judgement? Or is it, perhaps, because most ‘inside information’ isn’t worth a candle however close to the horse’s mouth the informant might be?

Generally speaking professional gamblers win not because they have access to more information than others but because they are better able to process the commonly available information – they know which information is useful, where to find it and what to do with it when they’ve got it. Robust discipline and the ability to turn raw data into accurate prices (or at least more accurate than the market’s prices) are what makes a consistently successful gambler, not close personal friends in every stable.

This is not to say that pros wouldn’t love good inside information, nor is it to say that good inside information doesn’t exist, the trouble is there is so much bad inside information flying around that, in the absence of a reliable method of sifting the good from the bad before the event, a gambler will do far better in the long run, to paraphrase gambling legend Phil Bull, to keep their eyes open and their ears closed.

Ironically one of the main reasons most ‘inside information’ is worse than useless – just noise distracting you from the real data – is precisely because people believe it isn’t. The desire for inside information creates a demand for good tips that far outstrips the limited supply. If it was easy to differentiate between good and bad tips the market would probably correct this imbalance by increasing the price of tips thereby reducing the demand; because differentiation isn’t easy the shortfall in supply can be made up by bad tips. Sometimes these are bad tips given in bad faith, a pretence of inside information for the sole purpose of parting the mug from his money or a rumour planted with the sole intention of manipulating the market. Generally, however, they’re just a result of incompetence, the stable lads and so forth looking to supplement their meagre income by selling information lack the necessary skills to evaluate the significance of what they observe.

Stable lads – and trainers and owners for that matter – suffer from the same human failings as the rest of us, failings that get in the way of a measured, rational assessment of the qualities of the horses in their charge. In particular, like a parent who sees every tiny achievement by their toddler as a sign of future greatness, they tend to overvalue those things they are personally associated with. In their heads a good workout becomes an impressive workout, an impressive one becomes a great one. If the horse performs well against the other horses in the stable it is yet more overrated because, of course, these horses are overrated too. There are good psychological reasons why this happens – it is much easier to motivate yourself to pursue an activity you believe will lead to success, for example – but there are also good financial ones. Punters don’t want to hear a horse is in average form, they want bullish predictions; as such it is the tipster’s interest to embellish and exaggerate, to do what comes naturally and over-interpret the smallest event.

Which brings us to another problem with stable tips: for the shrewd punter the only piece of information worth knowing is how much better, or worse, the horse is likely to perform than its last few runs suggest, they can use that information to create their own assessment of how the race might go. By contrast, all the mug punter, who can’t use that information usefully, wants to know is whether the horse is going to win. The trouble with this is the provider of the information is barely better qualified to make that judgement than the mug punter himself. Stable lads don’t tend to be great students of form; even if they could give an unbiased assessment of their own horses, they don’t really have any idea how their horse compares to the other horses in the race but this doesn’t stop them trotting out the required formula ‘he’s a good thing today’. The average punter fails to appreciate that gambling is not about prediction, it’s about probability, it’s not about absolutes, it’s about comparisons; he doesn’t want information he wants tips and as such he gets the tips he deserves.

How the horse is performing on the gallops at home is only a small part of the picture – apart from anything else there is no guarantee he will reproduce that form in the very different circumstances at the racecourse. The horse may be a ‘good thing’ today but I’d far rather that conclusion was based on an analysis of his previous races and, equally importantly, those of his opponents, than on a whisper from the stable.

Ultimately people give tips because it is in their self-interest to do so; the benefits gained by doing so outweigh the costs.  Though everyone can see the benefits – whether physical (money or gifts from those you give tips to); or psychological (a sense of importance, for example) – most gamblers fail to appreciate how great the costs of sharing good inside information would be. Over the course of a season accurately knowing when your horses are going to perform far above, or far below, their usual standard should be worth tens, if not hundreds, of thousands of pounds provided this information doesn’t become widely known. The more people who know the ‘information’, the greater the competition in the betting market, the less each will win if the tip pays off. Why, in that case, would anyone with tips worth having wish to share them? The very fact someone is willing to give you a tip is a bit of a clue that he’s not worth listening to; the very fact there are no end of stable lads still struggling to pay the bills after twenty years in the job is a bit of a clue as to the uselessness of horse racing inside information in general.

The temptation to look for a shortcut to riches is strong in most of us so it’s unsurprising the myth of inside information is so resilient. But the myth is toxic: the belief that inside information is the key to success means the actual key, information interpretation, is neglected; the effect on the motivation to learn is the real problem, next to that the money spent backing erroneous tips pales into insignificance. There is no shortcut to gambling riches (no legal one anyway); as with most endeavours, for all but the super-talented (and the super-lucky), hard work and experience are the only routes to success. One of the skills one has to learn is information gathering, but this means knowing where to look not cultivating stable staff. Until a gambler accepts that what separates the pros from the amateurs is not the information itself but what they do with it, his journey down the road to profit can barely be said to have begun.

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