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Artificial Intelligence and The Kentucky Derby

 

Artificial intelligence has come to the Kentucky Derby.   According to a recent article in Forbes, the Kentucky Derby is partnering with an AI company to apply the science behind artificial intelligence to “handicap the race.” According the Forbes, the AI company correctly predicted the Superfecta outcome of last year’s Kentucky Derby, which means that the technology could predict the first, second, third and fourth horse correctly in the correct finishing order.  “To put it all in perspective, getting the first four horses correct is such a tough task that a $20 Superfecta bet on last year’s race would have returned $11,000.” For this year’s Kentucky Derby, the same AI will attempt to predict the results and then release the predictions so that the bettors will be more informed.  In theory, this informed universe of bettors will result in odds that more accurately reflect the risk adjusted potential outcomes of the race.   The AI company, Unanimous A.I utilized technology it created called Artificial Swarm Intelligence. Dr. Louis Rosenberg, founder of Unanimous AI, emphasized that “[W]hile predicting sports always involve a large element of chance, Unanimous A.I. taps the intelligence of groups and evokes the best possible prediction based on the available information.”  I was curious so I did some additional research on Swarm A.I and learned that this technology attempts to combine the ideas of many participants to create the outcome of one brain, which is similar to how flock of birds use their combined intelligence to for navigation. The Swarm AI uses the human input of many to create datasets that can be used to create predictions of future events or conditions. The article explains that the predictions being made concerning the Kentucky Derby will be made with the help of Swarm AI in combination with data from top handicappers and other horseracing experts.

 

As discussed in class, handicapping horse racing involves betters distributing their wealth across a wide range of races. Our conclusion was that the bettor always bets his belief about the potential outcomes. In effect, the proportion of wealth that one puts on a horse should be based on the probability the bettor places on his belief that any one horse will win the race. This fact, combined with the new variable created by the use of Swarm AI in this year’s Kentucky Derby  raises new questions for the bettors at the race. Most likely, the odds this year will most likely be more spread out because of the input from Swarm AI, which will create more viable choices.  This may create more incentives to bet on the underdog. In my mind, even though this may appear like an appealing strategy based on AI, the science is untested and a bettor may still do better by just betting his beliefs.

https://www.forbes.com/sites/alexkay/2017/05/03/kentucky-derby-partnering-with-a-i-company-that-correctly-predicted-last-years-superfecta/#10f231552aba

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