RICH PICKINGS: High rolling with gambling's greats

It was the sort of letter a rich list compiler dreams of.

On December 18, 2007 at about 11pm, an email hit the inboxes of BRW's Rich 200 team from a man called Alan Wood.

"Dear Sir,” the email started.

"For some years I have considered contacting you in order to ascertain whether you might be interested in including me on your top 200 rich list…

"…I anticipate I can show about $700 million in hedge funds or time (sic) deposits plus equity in an unlisted company worth about $500 million.”

Alan Wood wasn't on the radar of the BRW and for good reason – he hadn't lived in Australia for 28 years.

In addition, Wood was hardly a captain of industry. While the Australian rich list is dominated by property developers, retailers, miners and media barons, Wood's fortune came from a very different source – gambling.

Tragically, Wood died of cancer just five weeks after sending the email and before BRW could get him on the list. It's not clear how much he would have been worth – perhaps somewhere between Wood's own $1.2 billion assessment and the $670 million valuation mentioned in an obituary.

The presence of a punter on the Rich 200 would have hardly been out of place.

While many entrepreneurs will tell you that business is often about making carefully calculated bets, more than a few members of the world's rich lists can lay claim to incredible gambling stories. In Australia, Kerry Packer, Lloyd Williams and John Singleton spring to mind.

But Australia can also lay claim to a group of reclusive, largely unknown professional gamblers who arguably should have found their way onto a rich list.

Let's take a look at this eclectic punters' club.

The rich list members who love a punt

Kerry Packer

The late Kerry Packer loved a punt and developed a reputation in Las Vegas as the "King of Whales” thanks to his prodigious gambling and generous tipping. The stories about his legendary betting blitzes have become so mythical that it's hard to tell fact from fiction – Packer is said to have paid off the $150,000 mortgage of a cocktail waitress on one trip, regularly tipped the dealers at the Bellagio $1 million and, perhaps most famously, offered to flip a Texan punter for his $US70 million fortune.

But the story that really cemented Packer's reputation regarded a trip in 2000 when he lost a reported $US20 million. Packer was heavily criticised, with then Prime Minister John Howard and Mark Latham opining on the loss. For his part, Packer said the loss was a fraction of what was reported. "This is not someone else's money, this is mine, and I am entitled to spend it in any way I choose," he told The Australian at the time. "I understand that it's a lot of money, and I understand how it comes as a shock to some. But the truth of the matter is that I like to have a bet every now and again."

Lloyd Williams

Packer also loved betting on horse racing, often with great friend Lloyd Williams, a man who would make his fortune as a casino operator. Packer and Williams launched a number of Melbourne Cup betting raids, but few were better calculated than in 1997, when champion galloper Might and Power won the Melbourne Cup. In 2002, bookie Alan Eskander recounted his dealings with the pair; Packer stung the bookie just before the start of the race and then Williams had $150,000 on the horse to win $675,000. In total, the pair were said to have taken $6 million out of the betting ring on that day. These days, Williams says he doesn't punt, instead concentrating on owning a giant team of horses.

Andrew Beal

The poker craze of recent years has bought a number of wealthy entrepreneurs to the card table, but few have gambled as much as US billionaire Andy Beal. While the cornerstone of Beal's $US7 billion fortune is banking, Beal is also a skilled poker player who became known for a series of legendary poker games versus a set of poker professionals who called themselves The Corporation. The idea behind the games was simple – the group of pros, which included legendary players such as Doyle Bruson and Phil Ivey, saw the chance to take on rich banker, while Beal wanted the players to force the pros to pool their resources and play for such high stakes that money would cloud their judgement.

In a series of games between 2001 and 2004, as much as $20 million was up for grabs at any one time. During a series of rematches in 2006, Beal lost $3.3 million, won $13.6 million and then lost more than $16 million. The games ended soon after that. However, Beal could console himself with the fact he holds the record for winning the most at the poker table in a single day – more than $11 million.

The pro punters who should have made a rich list

Zeljko Ranogajec

Tasmanian-born punter Zeljko Ranogajec carries the reputation of being the biggest punter in the world. He is said to account for 6 to 8 per cent of the turnover of Tabcorp, with his outlays reportedly as much as $1 billion a year. The former blackjack player started out as part of a Hobart-based punters syndicate called the Bank Roll, which operated out of a hotel and used complex computer algorithms to win at the Keno lottery game – the syndicate's big wins are reported to have included at $7.5 million jackpot during the 1990s. Ranogajec has never given an interview, but took his bookmaker to court in 2008 and revealed that his syndicate had won more than $44 million betting on US racing over a three-and-a-half year period.

The syndicate, which bets on races all over the world, uses computer systems to place huge numbers and varieties of bets just before a race begins, relying on a combination of winning bets and rebates from betting companies on losing bets (these companies are desperate for Rangojec's extraordinary turnover) to make a profit. Ranogajec's net worth is unknown, but reports suggest he is fighting a $900 million tax battle with the Australian Taxation Office from his current base in Europe.

David Walsh

Another member of Ranogajec's syndicate is David Walsh, who has risen to national prominence in recent years as the backer of Australia's biggest private museum, the Museum of New and Old Art, or Mona. But last week it was revealed Walsh has his own issues with the ATO, which is pursuing him over almost $40 million in taxes. The ATO's basic argument is that the punters club was a business, but Walsh disputes this and raises a great question: If gambling winnings are taxable, are losses tax deductable? "There have been frequent reviews and audits into my gambling, all of which have found that winnings are not taxable, perhaps in part because no one knows how to treat losses and deductible expenses.” Watch this space.

Alan Wood

The definitive profile of Alan Wood was written by Tony Wilson in The Monthly in late 2005. Wood lived an extraordinary life. A university drop-out with a prodigious talent for maths, Wood worked for a firm of actuaries and an investment bank, Wood started counting cards around the world and winning at blackjack. But in the 1980s and 1990s, Wood created on of the world's most profitable computer betting models, concentrating on Hong Kong horse racing.

What Wood created was an algorithm designed to find horses that were undervalued by the public – that is, a horse whose winning chances were better than the odds suggested. Hong Kong, with its limited number of races and small horse population, allowed the computer betting teams to keep improving their data. The huge betting pools in Hong Kong also meant that when the syndicates bet, their wagers wouldn't overly influence the odds.

Woods was also smart enough to dodge tax authorities through a simple strategy. "Theoretically I'm not resident anywhere, given I come here (the Philippines) on a tourist visa,” he told Wilson. "And my plan has been for some years not to be resident of any particular country for the rest of my life.”

James Thomson is a former editor of BRW's Rich 200 and the publisher of SmartCompany and LeadingCompany.