Did investment bank’s AI correctly predict the Melbourne Cup winner?

Defying AI: The 2024 Lexus Melbourne Cup shown around Flemington Raceway. Photo / Alyse Wright

For the second year in a row, it was a case of AI versus humans as Australian investment bank Macquarie issued its Melbourne Cup predictions.

A group of human staff from Macquarie Capital’s quantitative analysis (or “quant”) team used their algorithms - more normally applied to sporting trading opportunities - to predict the a win for Vauban, followed by Onesmoothoperator and Sea King in second and third.

“PunterGPT”, an AI tool created by two ChatGPT experts - Michael Kollo, chief executive of Evolved Reasoning and John Conomos, the head of quantitative research at investment bank Macquarie Group - Sea King winning the race, tailed by Interpretation and Onesmoothoperator, after being trained on prompts that guides the AI through “logical steps to reach more nuanced conclusions”.

Vauban was the TAB favourite, while the Herald’s Michael Guerin saw Onesmoothoperator taking the cup, followed by Sea King then Vauban.

In the event, both man and machine got it wrong.

Knight’s Choice won the 2024 Melbourne Cup in what was described as a “huge upset” and a “massive boilover” (possibly a phrase PunterGPT will now have to be trained on). Warp Speed was second and Okita Soushi third.

PunterGPT took a different approach to other more data-driven predictions as it processes words, not numbers, to find overarching trends.

“We turned to the idea that so much of horse races, like financial markets, work on a revolving door of news, context and bits and pieces of information. Much of it is noise, it’s transient and irrelevant. But some of it is relevant, and specifically relevant to some horses but not others,” Kollo said in a blog post ahead of the race.

“Our job was to feed it a cross-section of different articles written by different professional punters, with the view that in among all of that expertise, there is a truth,” he said.

“A human would be talking to a bunch of experts on a topic, and trying to work out what’s common or what’s not, or you’d be trying to work out what’s different ... I think PunterGPT was trying to do the same kind of thing a human would be doing, but just with a lot more articles and a lot more subtlety.”

Humans won in 2023

Last year, on its debut, PunterGPT said Gold Trip should take the cup, followed by Without A Fight and then Daqiansweet Junior.

In the event, the race was won by Without A Fight, with Soulcombe second and Sheraz third.

Macquarie’s team of human analysts correctly picked Without a Fight.

Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.