Once upon a time there was a gambler. Let’s call him Mugsy. Loads of us have a mate like Mugsy. You’d know if Mugsy had a good day as he’d be buying the first round for everyone. You see, Mugsy does an accumulator every week and every once in a while, he actually wins the thing. The problem is, most weeks he doesn’t win but he quickly forgets those occasions. He’ll latch on to the occasional big win as proof that he is the world’s greatest gambler and conveniently forget all the weeks he has lost this same bet. He laps up all the praise from his friends. When they ask him ‘Are you up overall?’ he will say he is either ‘definitely up’ or if he is feeling modest, ‘I’m around even’. Both statements are probably a lie because he doesn’t track his bets and probably doesn’t realise how much he’s lost.
Mugsy suffers from a recency bias. This new win feels so fresh to him that he has forgotten all the times he has lost before this. This effect will carry on for a while, even if he loses his next 10 accumulator bets. He also probably says to himself each time he loses, that it was only a small bet (maybe just a few bucks) and so he doesn’t feel it as a big loss each time. However, the small losses do add up over time. I remember when I was working for a bookmaker and one customer used to place lots of bets at minimum stakes (50p or 1 pound). Over 3 years, he had actually lost over £2,000! Over that time though, he had a few big wins that he thought had made up for earlier losses but that just wasn’t the case.
Mugsy probably also suffers from the gambler’s fallacy, sometimes also known as the Monte Carlo fallacy. This is the mistaken belief that if an event happens occurs more frequently than normal during the past it is less likely to happen in the future (or vice versa).
Gambling targets a neurotransmitter in our brain called Dopamine. Dopamine is released whenever we do something enjoyable (think eating, sex and drugs and if you’re lucky, a combination of all three!). We want our time spent betting to be worth it. We want that instant pay off for a small bet to generate hundreds of times its value. That’s why it feels so good to hit that big odds winner as it gives us a confidence boost and a rush of excitement to know we have some extra money coming our way. But that feeling can also be addictive and the release of dopamine isn’t constant. Something that would have been a big win might eventually not feel so good anymore. For some people, that can lead to problem gambling, staking far higher than is recommended just so they get this new dopamine rush.
Bookmakers rely on the theory of operant conditioning to lure punters into spending vast sums of money with them. In simple terms, operant conditioning is about rewards and punishments. If you get rewarded just enough, you want to continue a particular behaviour (in this case betting). If you keep getting punished for doing something, then you’ll stop that behaviour (this is what a punter would do if they just kept losing consistently). Take an example of a casino slot machine. These are designed to pay out at random intervals but on average, for every $100 you bet, you would lose at least a few dollars. But the machines trick you into thinking you’re winning more than you actually are and that a bigger win is around the corner. Let’s say you are staking $1. You might get some spins where the machine tells you you’ve won 50 cents. Lights will go off and sounds will be made, all of these signals are trying to tell your brain that you’ve done well and are being rewarded. Think again. You’ve staked $1 and only got 50 cents back. You lost money on that last spin but the machine is trying to make you think otherwise.
In fact, many casino slot machines entice punters with million dollar jackpots and huge prizes, but these slots actually have the worst return to player averages. The unglamorous older machines won’t pay you out huge prizes but you will be less likely to lose your starting pot and pick up lots of much smaller wins. If we look at how this works in sports betting, take a look at the example below and tell me what’s wrong here?
You can see that I staked £5.72 on this bet. I ‘won’ £5.36 including my stake. Did I make a profit? No! But SkyBet have given me a bet slip in a lovely green colour (the colour of money and in trading terms, profit) to try and trick me into thinking I had made money on this. If I keep doing this, they’ll probably give me some loyalty points or free bets too (another form of reward).
Lots of tipsters are renowned for exploiting our desire for big wins. They can selectively highlight winning slips to promote their service and ignore the losing selections. People want to find a service that can make them big money and make it fast.
‘If you bet £100 on each of our tipster’s selections, you would have made £2,500 last month’.
That might be true, but how many people can afford to bet £100 on each selection? If that tipster had a losing month, how much money would that person have lost?If I can only afford£10 on each selection, I would have made £250. That’s still good and it’s still a profit but it doesn’t sound as good as that big £2,500 number before!
‘Make wins of £773, £641, £533’
In the same way as the other example, this all depends on how much you are staking. You might win these bets but then you might have lost the 10 selections before this one too.
The professional gambler’s mindset is about maximising your edge and finding as many opportunities to exercise it as possible. Professionals will usually take lots of small, consistent wins to ensure they are profitable in the long run. The Trademate software is an excellent example of how this works in practice. You can make a steady profit by placing lots of bets at value, even if the odds and payouts are not always the biggest. Mugsy’s accumulators are not valuable at all and will lose you money in the long term. So in conclusion, think about your own betting habits. Are you getting value for your big odds selections? If not, you might want to consider a bigger volume, smaller win approach.
Written by Neel Shah
Neel has a Postgraduate Psychology degree and has previously worked as a Psychology teacher. He is now a full time Sports Trader and content writer for Trademate Sports.
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