Why it is harder to find value in fixed odds longshots than it is for favourites? Why do handicap bettors prefer to bet on favourites? Why do twice as many people prefer betting over than under? Why does losing feel so much more horrible than winning is enjoyed? Why do any of us even want to bet at all? In his book Squares & Sharps, Suckers & Sharks: The Science, Psychology & Philosophy of Gambling, Joseph Buchdahl, betting analyst expert, Pinnacle author and owner of the results and betting odds data archive Football-Data.co.uk, takes you on a journey to find out what motivates people to gamble and how their cognitive biases can lead them to make errors that they may not even be aware that they are making.
Relatively new to the world of trading? Check out VOdds’ guide to sports betting.
People bet to feel in control, by gaining authority over the unknown, the uncertain, and forecasting of the future. Joseph shows us that whilst for the majority this sense of control is largely illusory – almost everything that happens for a sports bettor is nothing more than luck – it is no less rewarding. Merely feeling in control reduces anxiety and a sense of helplessness and enhances motivation. The wonderful contradiction is that our craving for knowing, meaning and certainty is motivated by the very quality that makes gambling largely unknowable, unconquerable and uncontrollable: randomness. Science is teaching us that the uncertainty of rewards, rather than the rewards themselves, is what drives a curious mind.
Curiosity is a wonderful thing, but our underlying biases can lead us astray when trying to satisfy it, particularly when required to make judgements under uncertainty. Would you bet red if black had come up ten consecutive times before? If yes, you are a victim of the Gambler’s Fallacy. Most of you probably know that one already. Perhaps some of you have heard of the hindsight bias. Now you know what happened, it was obvious all along why you lost your bet. Closely related to it, but perhaps less familiar, is outcome bias.
Do you stick or twist on 17 in blackjack? Twist and get 4 and you’re a genius; get 5 and you’re an idiot. Of course, you’d really be an idiot regardless of the outcome. The intelligent play is to always stick on 17, and this doesn’t change whether you win or lose. Similarly, in betting, Joseph explains how all too often we assume that because we won our bet, we assume the things we did will have influenced that outcome. In fact, most of what contributes to an outcome is luck, good or bad, and these dwarf anything we might have done that had any sense of intelligent thinking. Too often, lucky outcomes are considered to be skilful outcomes. The majority of sports bettors only discover this truth after losing a lot of money. Don’t pay any attention to results, focus on your process that goes into those outcomes instead.
Even more blinding than outcome bias is overconfidence. Ask 100 men how good they are at driving: below average, average or above average. You’ve probably guessed that the distribution of replies will represent a statistical impossibility; about 70% of them consider themselves to be above average. Much the same is true in betting. Without overconfidence, almost no sports betting would take place.
In its simplest form a bet is simply a consensual contract for two people to agree on a particular transfer of wealth depending on the outcome of an uncertain event. Unlike craps or roulette, the probabilities of outcomes remain unknown. Ignoring the rare occasions where both players might be exactly right about their assessment of the true odds, typically one player will be more wrong than the other. How, then, does a bet even take place? Of course, the trick is that both players believe themselves to be more correct than the other. That belief stems from overconfidence; when a player wins, they will be fed new dose of outcome bias.
Joseph has analysed a large number of bettors’ performances. His work has revealed that this sense of superiority is, for almost all players, just an illusion. They distribute almost exactly the same as they would if they were simply tossing coins, with those making money simply doing so because of good luck, those losing it because of bad. This is a bitter pill to swallow, and some simply refuse to believe it.
However, this is not to say that becoming a winner through something other than luck is impossible. It’s not, it’s just very hard and takes a lot of hard work. Learning to understand and overcome our cognitive biases, like hindsight, outcome and overconfidence, is just one of the tasks a serious bettor must undertake. The good news is that for those hard-working and skilled enough at the task, betting represents a winner-takes-all competition, where even a tiny advantage on a single play accumulates into a much bigger one over many iterations.
Albert Einstein famously coined compound interest the most powerful force in the universe. Since winning players are able to reinvest previously accumulated profits again and again, it is possible with the correct money management strategy to build your returns into something that could sustain a living. Study the rewards distribution of any relative-skills competition where players are rewarded increasingly generously after each successful outcome. This will not look like the familiar bell-shaped curve of IQs, weights and heights. On the contrary, it will be a hugely skewed distribution where the median player returns just a tiny fraction of those at the top of the tree. Of course, after paying the bookmaker for the privilege of competing (through his overround or commission) such a player will be losing money.
In this book, Joseph doesn’t promise you to give you the pot of gold waiting at the end of the rainbow, although his Wisdom of the Crowd betting system is one that has been proven time and again at recreational bookmakers who will unfortunately try to stop you exploiting them. Indeed, once you read it, you’ll more fully understand why for almost everyone who arrives at the end of the rainbow, the pot of gold has already been taken. He does, however, take you through the science and psychology of sports betting in a way that, if nothing else, will hopefully make you a wiser and more informed bettor who will be able to avoid making the mistakes most other bettors make.