Distinguished Teaching Professor Steven Skiena and his students studied the obscure game of jai alai and developed a successful betting system that proved to be very profitable.
Jai alai is a Basque game that is played on a court similar to racquetball or handball. It is popular with gamblers in South Florida, which is where Skiena was first introduced to the game.
He and his team used algorithms — programmed procedures for making decisions — and computer models to break the system and quickly beat the world of jai alai betting. During a six-month period, Skiena’s system produced 500 percent profits.
Professor Skiena gave an interview on Bloomberg’s Odd Lots radio show about his system.
Calculated Bets, Skiena’s book on the subject, has gained much attention from stock traders. “Building a system for jai alai betting was harder than I thought it would be,” he said. “The betting community was small enough that you bet against yourself. In trading, the community is larger so that is not an issue.”
Skiena now teaches computer science students how similar models can be applied to normal business and economic decisions.