Columnist Marcus Padley

Melbourne Cup Day has been and gone for another year.

Got wiped out again this year. Was doing well ahead of the Cup Race itself - had two days babysitting paid off. But that was the peak. "Efficient" coming in paying $22 was enough to silence the whole of Melbourne....if not the country. Over the hush of disappointment you could just hear the yelps of elation from the bookies at the back of the stand. They cleaned up. The favourite came in 8th.

Either way....most of us came away penniless.

The Races are a wonderful thing. Can't wait until the kids grow up. The sooner we introduce them to fashion, alcohol and gambling the sooner they'll be off our hands. But until then it looks like we'll have to hog all the fashion, alcohol and gambling to ourselves. Especially the gambling.

Gambling serves a great purpose at the races. It gives you something to talk about in those awkward social moments before the Pimms kicks in, it gives you something to get emotional about when those unidentifiable horses thunder past and it helps you identify the people that are out for a good time. That'll be them, shouting their heads off with their hands in the air.

But there's one thing that has always fascinated me about the Races. And that's the big gamblers. Some people do seem to put an inordinate amount of money on the outcome of a horse race. It is the most extraordinary thing. My goal is to win back the babysitting money. Some people seem to trying to win back the mortgage.

Having ridden horses for some years in England and Australia I can, with authority, conclude for you, that horses possess little more intellect than a small rather overly sensitive child. In fact if they spoke English it is beyond certain that they would make even less sense than any other two or three year old. Just because they are big, thoroughbred and beautiful doesn't make them mature, sensible, intelligent, reliable or predictable. There is no mystery. Betting on horses is the same as betting on very young, large, irresponsible children that possess only a fraction of the usual brain power.

On top of that there are a host of other unpredictables. The barrier, the track, the jockey, the trainer, the ride, the other horses, injury, distraction, stupidity, let alone scratchings, the "fix" and the "nobble".

All in all betting big as a means of making money, is, as they say, a mugs game. Hence the title, Mug Punter.

To prove the point let me tell you about a "bookie" that listed on the stockmarket a few years ago. Their operation was run by sophisticated models and algorithms that took into account every conceivable and relevant betting variable. Their models had integrity, they went way beyond "the form" that you and I study in the paper. They had "an edge", a long term reliable edge, on other gamblers.

But more interesting than the models was something else. It was one of their business units. As a sideline, they bet. They took advantage of other bookies. They used their algorithms to identify when other bookies had got it wrong and they tried to make money out of them, by betting.

So here we have a corporate gambler, with sophisticated models, little emotion and plenty of capital, doing exactly what you and I were trying to do just last week, trying to beat the bookies.

And how did they do?

Well I don't want to depress you, but in the game of beating the bookies, with all the tools they had available, they did little better over the long term than the paltry risk free return on a bond. You could have got the same return with no risk in the financial markets. You would have done a lot better in equities.
Now I ask you. If they couldn't change their lives with all their experience and skill, why would we ever bother trying to change ours?

It's not hard to be a Winner at the Races. All you have to do is not be a loser, which means keeping it in your pants. The money that is.