When your betting “hobby” goes degenerate and those Sunday football bets spill over into Monday Night Football bets and then Wednesday college-basketball bets and then lunch-break bets on the five horse in the third race at the Aqueduct, there’s one mantra that can bring you a measure of comfort: every gambling theory is wrong, and, because gamblers all have theories, every gambler will eventually be as broke as you. The sense of community among the people who fall asleep at poker tables or ride the bus to Foxwoods or crowd around off-track betting screens comes, in part, from a collective sense of bewilderment. How could all of us be wrong all the time?
Last month, researchers at University College, London, released a study that seems to confirm the existence of one of gambling’s most ubiquitous and destructive theories: the “hot hand.” Loosely defined, the hot hand, better known as the hot-hand fallacy, is the idea that winning begets more winning. Suppose you’re playing blackjack and you hit sixteen against the dealer’s ten and then pull a five. This swing of luck prompts you, on your next hand, to double down on nine against a dealer seven. When the dealer slides you an ace, for a total of twenty, you win, and you certainly aren’t going to stop betting now. So, in the next hand, you split sevens against a dealer eight (a terrible decision) because you’ve just won two hands in a row and how could you possibly lose a third? That’s the hot hand in all its ruinous glory.
Juemin Xu and Nigel Harvey, the study’s authors, took a sampling of 569,915 bets taken on an online sports-gambling site and tracked how previous wins and losses affected the probability of wins in the future. Over all, the winning percentage of the bets was somewhere around forty eight per cent. Xu and Harvey isolated the winners and tracked how they fared in their subsequent bets. In bet two, winners won at a rate of forty-nine per cent. From there, the numbers go haywire. A player who had won two bets in a row won his third bet at a rate of fifty-seven per cent. His fourth bet won sixty-seven percent of the time, his fifth bet seventy-two. The best gamblers in Las Vegas expect to win fifty-five per cent of their bets every year. Seventy-two per cent verges on omniscience. The hot hand, it appears, is real.
Losers, unsurprisingly, continued to lose. Of the 190,359 bettors who lost their initial bet, fifty-three per cent lost their next, and those who had enough money left for a third round lost sixty per cent of the time. When unfortunate bettors got to five straight losses, their chance of winning dropped to twenty-three per cent. The losing streaks should be familiar to problem gamblers and can be explained by another well-worn theory called the gambler’s fallacy. If you’ve ever called heads on a coin flip, seen the coin land tails up, and then called heads again because “heads is due,” you’ve been caught up in the gambler’s fallacy.
Winning and losing streaks had no correlation with the skill or risk aversion of the gambler. Xu and Harvey examined the over-all payoffs of gamblers across three currencies and found no significant difference between hot-streakers and cold-streakers.
What the research did find was that gamblers on streaks—good or bad—acted under the influence of the gambler’s fallacy. Winning bettors began placing more prudent bets because they assumed their luck would soon run out. Losers began placing bets with longer odds because they wanted to win big when their luck finally, inevitably changed.
What this means is that streaky gamblers who win do so because they expect to lose, and streaky gamblers who lose do so because they expect to win. Or, more simply put, when you’re losing, you’re wrong, but when you’re winning, you’re also wrong.
Xu and Harvey’s study was commissioned by the Responsible Gambling Trust, an organization funded by casino companies which seeks out ways to prevent problem betting. The headlines on articles about the research, which include “Are ‘Lucky Streaks’ Real? Science Says Yes,” and “The ‘Hot Hand’ of Gambling Is No Fantasy,” might suggest an ulterior motive. For the most part, the articles written about the study will eventually clarify the nuances of the researchers’ argument, but Xu has come across a few sites that used the research as proof that God loves some bettors more than others. She sent e-mails politely asking for corrections. “I certainly don’t want people to think that if you’re winning that you’re more likely to win and eventually you win, win, win,” Xu told me. “That’s absolutely not the case.”
I e-mailed the results of the study to a collection of professional and semi-professional gamblers whom I’ve known for the past five or so years. Within seconds, I received a series of chat messages from one of these gamblers that read:
(!!!)
Dude.
YO!
I advised this particular gambler to read past the headline. Within two minutes, order was restored. The old mantras settled back into place.
Xu, for her part, believes in these old ways. She said, “If there’s one idea to take away from the study, it’s this: just don’t gamble.”
Last month, researchers at University College, London, released a study that seems to confirm the existence of one of gambling’s most ubiquitous and destructive theories: the “hot hand.” Loosely defined, the hot hand, better known as the hot-hand fallacy, is the idea that winning begets more winning. Suppose you’re playing blackjack and you hit sixteen against the dealer’s ten and then pull a five. This swing of luck prompts you, on your next hand, to double down on nine against a dealer seven. When the dealer slides you an ace, for a total of twenty, you win, and you certainly aren’t going to stop betting now. So, in the next hand, you split sevens against a dealer eight (a terrible decision) because you’ve just won two hands in a row and how could you possibly lose a third? That’s the hot hand in all its ruinous glory.
Juemin Xu and Nigel Harvey, the study’s authors, took a sampling of 569,915 bets taken on an online sports-gambling site and tracked how previous wins and losses affected the probability of wins in the future. Over all, the winning percentage of the bets was somewhere around forty eight per cent. Xu and Harvey isolated the winners and tracked how they fared in their subsequent bets. In bet two, winners won at a rate of forty-nine per cent. From there, the numbers go haywire. A player who had won two bets in a row won his third bet at a rate of fifty-seven per cent. His fourth bet won sixty-seven percent of the time, his fifth bet seventy-two. The best gamblers in Las Vegas expect to win fifty-five per cent of their bets every year. Seventy-two per cent verges on omniscience. The hot hand, it appears, is real.
Losers, unsurprisingly, continued to lose. Of the 190,359 bettors who lost their initial bet, fifty-three per cent lost their next, and those who had enough money left for a third round lost sixty per cent of the time. When unfortunate bettors got to five straight losses, their chance of winning dropped to twenty-three per cent. The losing streaks should be familiar to problem gamblers and can be explained by another well-worn theory called the gambler’s fallacy. If you’ve ever called heads on a coin flip, seen the coin land tails up, and then called heads again because “heads is due,” you’ve been caught up in the gambler’s fallacy.
Winning and losing streaks had no correlation with the skill or risk aversion of the gambler. Xu and Harvey examined the over-all payoffs of gamblers across three currencies and found no significant difference between hot-streakers and cold-streakers.
What the research did find was that gamblers on streaks—good or bad—acted under the influence of the gambler’s fallacy. Winning bettors began placing more prudent bets because they assumed their luck would soon run out. Losers began placing bets with longer odds because they wanted to win big when their luck finally, inevitably changed.
What this means is that streaky gamblers who win do so because they expect to lose, and streaky gamblers who lose do so because they expect to win. Or, more simply put, when you’re losing, you’re wrong, but when you’re winning, you’re also wrong.
Xu and Harvey’s study was commissioned by the Responsible Gambling Trust, an organization funded by casino companies which seeks out ways to prevent problem betting. The headlines on articles about the research, which include “Are ‘Lucky Streaks’ Real? Science Says Yes,” and “The ‘Hot Hand’ of Gambling Is No Fantasy,” might suggest an ulterior motive. For the most part, the articles written about the study will eventually clarify the nuances of the researchers’ argument, but Xu has come across a few sites that used the research as proof that God loves some bettors more than others. She sent e-mails politely asking for corrections. “I certainly don’t want people to think that if you’re winning that you’re more likely to win and eventually you win, win, win,” Xu told me. “That’s absolutely not the case.”
I e-mailed the results of the study to a collection of professional and semi-professional gamblers whom I’ve known for the past five or so years. Within seconds, I received a series of chat messages from one of these gamblers that read:
(!!!)
Dude.
YO!
I advised this particular gambler to read past the headline. Within two minutes, order was restored. The old mantras settled back into place.
Xu, for her part, believes in these old ways. She said, “If there’s one idea to take away from the study, it’s this: just don’t gamble.”
