Psychologists and gaming experts have estimated that only about one out of every one hundred gamblers are profitable. So why do the other 99 keep gambling? There are many reasons but as statisticians we’re going to focus on one so that we can avoid falling into the same trap.
Ignoring the psycho-babble that says losing makes people feel more alive, we believe that people continue to lose because they believe they’re winning. This is primarily because of the high standard of deviation and the low delta needed to make or break the typical sports better. (Most, if not all, popular gambling relies on the standard of deviation to fool losers into believing they can win).
In order to avoid falling into the same trap, we have to be able to set realistic expectations and then analyze our actual results to determine if they are in the same statistical population as our expectations. If every casino that had a losing day shut down, there would be no casinos. If every loser never had a winning day, there would be very few losers. We have to use statistics to determine whether we truly have a positive expectation.
To that end we have written a program to generate statistics for each our picks for each week. We will begin reporting this along with our weekly picks beginning in Week 4, we have back-calculated it for weeks 1 – 3. Our results are within expectations, though indication is that we are slightly on the lucky side of expectation value for the season.
Week 1 – 9 units bet – 55.6% expectation – 105.7% ROI (10% juice) – 38.7% odds of losing for the week – Actual return 67% (probability of 67%+ was 40.2%)
Week 2 – 13 units bet – 58.4% expectation – 110.9% ROI (10% juice) – 33.7% odds of losing for the week – Actual return 69% (probability of 69%+ was 38.6%)
By the way, there is a place for gambling for entertainment. That is not our focus here. If it seems like we’re taking the fun out of gaming, that’s intentional. When we go to the horse track (for now) we make small bets just for fun expecting to lose and grateful when we win. When we spend hours or days coming up with picks that often go against our better intuition, our intention is to win money (and to help our readers win money). This is not about hunches, fun, entertainment, etc. If that’s what you want just bet on your favorite teams.