Psychology of Betting – Invented Patterns

 

At a roulette table in the Monte Carlo casino in 1913, black fell 26 times in a row.  Gamblers lost millions of Francs. They believed the law of averages meant that red had become an increasingly likely outcome and bet accordingly.

Most experienced punters are aware of the miss-thinking this represents – it is known as the gambler’s fallacy – recognising that the law of averages does not exist.  On the tenth, eighteenth and twenty-sixth time the roulette wheel is spun, there is the same probability of the number being red or black, no matter what pattern of results precede those spins.  Furthermore, the chances of a roulette wheel producing 26 blacks in a row is the same as it producing any other combination of results.

Whilst this is easy to demonstrate mathematically, though, it is much harder to accept emotionally.  The reason most of us choose non-sequential numbers when entering a lottery – rather than, say, 1, 2, 3, 4, 5 & 6 – is that the non-rational part of our brain believes that, if a lottery is the random drawing of numbers, then the outcome is more likely to look random; forgetting, of course, that the mathematical probability of any six numbers being drawn is just as likely as any other.

Few of us, then, can honestly say that we wouldn’t be drawn to similar conclusions if stood in that Monte Carlo casino.  Humans seem to be predisposed to neglect rational probability.

For example, in a series of experiments by Sunstein and Zeckhauser, subjects consistently ignored probability in their decision making, especially when they were presented with possible emotional outcomes.  When asked how much money they would be prepared to spend to eliminate a cancer-risk in drinking water, participants showed little sensitivity to whether that risk was 1/100,000 or 1/1,000,000, especially when cancer was described in emotive terms.

This human predisposition to ignore probability should terrify anyone who wants to become a profitable punter. After all, probability underpins every decision a gambler makes.  Successful punters are those who are aware of this cognitive bias and constantly check their thinking to ensure they are acting rationally.

Take this scenario. Two punters visit the greyhound track. Trap One wins the first race. Trap Two wins the second.  Trap One again the third. Punter A spots a pattern – there must be a track bias favouring an inside draw – and starts betting accordingly. Punter B doesn’t and continues to use whatever selection method they had used previously. Who is most likely to be profitable?

The answer, of course, is that we don’t know. Punter A may turn out to be right. However, to change his punting based on such sparse information is ridiculous: just like on the roulette wheel and in a lottery, a clustering of results – especially in small samples – will happen frequently.

In numerous studies, humans have shown themselves to over-interpret insignificant data in this way.  And as punters, we are quick to declare a cricket pitch to favour batsmen after an opener hits two boundaries in the first over; or to conclude that the forwards of one Rugby team will dominate another’s after the first scrum; or to declare that a female won’t win a television reality show after a male wins the first two series.

In their determination to neglect rational probability, humans, even when they have large amounts of data at their disposal, are prone to ignore it, instead favouring the anecdotal. As a species, we are drawn to stories of centenarians who have smoked daily throughout their adult life, but show less interest in complex data demonstrating a link between tobacco smoking and lung cancer. Similarly, we are keen to ignore statistical evidence of climate change, preferring to take an unseasonably chilly summer-day as evidence that global warming is a myth.

Punters need to guard against this human predisposition.  If we see a horse struggling the final stages of a race, it is easy to assume that it doesn’t have the required stamina. That evidence is anecdotal, though: the poor finish could be due to numerous other factors. Properly assessing a horse’s chances at a distance means analysing the entirety of its form and comparing it to the form of its competitors. Given this is difficult, and takes time, it is little wonder that most punters instead base their decisions on these snatched, irrational conclusions.

As with all the cognitive biases explored in this series, the way the profitable punter can overcome an inherent desire to neglect probability is to ensure they follow a process that undermines the bias. Having a series of questions to answer before striking any bet is an obvious first step. Is this outcome statistically more or less likely than any other? Am I basing this decision on a large enough data sample? Is anecdotal evidence distracting me?

It takes more work – for sure – but the reward is fewer losing bets.

 

About The Author – Jack Houghton 

As a passionate sports’ fan and punter, Jack has written about sports and betting for over a decade, winning the Martin Wills Award for racing journalism in 2002 and writing Winning on Betfair for Dummies, first published in 2006 and now in its second edition, having sold over 35,000 copies in two languages.

 

 

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