Avoid The Outcome Fallacy: Win At Sports Betting
The Gambler’s Toolkit: Outcome Fallacy
The media likes to report on success stories. These often downplay the role of luck and negate the possibility of other decisions leading to better results. For example, we are all familiar with self-made millionaires who are lauded by the press and peers as business geniuses because of their success. Everyone loves a good ‘midas touch’ story, however disappointing the reality. Many of these ‘gurus’ have made more bad decisions than good; however, all it takes is one good (or lucky) decision to hit the jackpot. I call this the outcome fallacy.
It is human nature to equate good outcomes to good decisions, and poor outcomes to poor decisions. Football commentators do this all the time. When the striker misses a chance in the penalty area, we are told that ‘he should have squared it to his team-mate’ (implying that the miss occurred because of bad decision making). Yet when he elects to pass to his colleague (who sclaffs his shot into the keeper’s arms), the commentator scolds the striker’s lack of selfishness.
Rarely do we hear the commentator say ‘although he scored, he really should have played in his team-mate instead’, or ‘although his colleague was screaming for a pass, I think he chose the right option to go it alone. Missing was unfortunate’. Untangling decision making and outcomes is not something that comes naturally.
As we have established, the sports betting world is a minefield for gamblers. Only a tiny section is deft enough to swerve the hazards and plot a way to victory. Consistently beating the bookies is possible, but it requires uncommon levels of discipline.
One of the most common mistakes found in gamblers is also one of the hardest to self-diagnose. It requires the sort of detached perspective and analysis that does not come easily; put simply, although they may be able to appraise others, most people have a blind spot when it comes to themselves.
If you flipped a coin over every decision, you would lose long-term but still have some winning streaks. If you let a blind monkey place every bet for you, variance would ensure that you catch some winners too. In other words, not every winner is down to good decision making. Not every loser is down to poor decision making.
One of my best bets this year was securing a fantastic price on Cardiff City to draw at home to Spurs. Unfortunately for Cardiff (and for me!), Spurs sneaked an injury-time winner. However, the decision to place the bet was excellent, as I spotted value in the market, and upon reflecting on the bet, I am able to disassociate good decisions from good results.
Profitable gamblers recognise that value is the name of the game. Value is often found in decisions that go against the norm. That is why a sharp punter will instantly become suspicious of the type of betting service that boasts of remarkable hit rates. It doesn’t matter if nine of your last ten bets were winners, if they were all odds-on favourites that didn’t offer any kind of value.
In poker, decision making is made easier by the existence of pot odds. The maximum price that you should pay to see the next card is quantifiable. As such, deciding whether to chase a draw is a binary decision; you are either getting the right price, or you aren’t. If only sports betting offered such guidelines. Value is an arbitrary concept, in that there is no single, inarguable tipping point at which good value becomes bad value. Let’s consider a hypothetical fixture between Liverpool and Man City.
You might back City at even money, believing that they are odds-on to win the game. I might believe that the price is too short, and that they only have a 45% winning chance. Instead, I back the Liverpool win at 5/1, given that I think they have a 25% winning chance.
Note that you and I both believe that Man City will win more often than Liverpool. However, I found value in the away win, and you found it in the home win. Let’s say that City go on and win 1-0. Should I regret my decision not to back them (particularly when I receive your gloating text message!)?
Absolutely not. If I did not believe there to be value on the City win, then I made a good decision in giving them a swerve. And I cannot regret my Liverpool bet either, given that I anticipated them to lose the game 3 times in 4 but found them going at 5/1.
Those who can disassociate the quality of their decisions from the outcome of the bet are the most likely to be profitable sports bettors. Losing a bet doesn’t make you wrong, and winning a bet doesn’t make you right. Just remember: even a broken clock is right twice a day.
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