Carry out a simple search on the Internet and you’ll come across innumerable success stories of the so-called pro sports bettors having the time of their lives! So, how easy do you think it is to achieve consistent profits in any sports betting endeavour?! A sports betting analyst named Joseph Buchdahl carried out some research into this and evaluated more than 100 tipsters during his long career. Let’s go over the answers that he found. Are sports betting winners often overestimated? What do you think?
So when you carry out the search on the Internet for these types of stories about betting performances, it may seem that losers are actually a rarity! Majority of these successes can be seen going on and on about their betting profits!
Put in ‘sports bettors’ into the Google search engine and it will return innumerable results about the famous sports bettors living amazing lives, list of the top 10 most influential sports bettors on Twitter and a large number of techniques, methods and guides for becoming a successful sports bettor.
No one talks about failure, barring a few articles telling you why most gamblers or sports bettors lose. Even in them, the main argument is that the reason for their losses is poor money management and not poor picks.
If you look closely you’ll realise that majority of sports bettors start out with negative expectations owing to the fact that there is a bookmaker’s profit margin in play, and they normally don’t have sufficient forecasting ability to overcome that. Poor money management does nothing more than magnifying their losses.
Anyone can be forgiven for holding the wrong belief that making a livelihood from sports betting is pretty easy and all bookmakers are about to go broke. Frankly speaking, that’s far from the truth. So, what do you think is missing? Simply put, the stories of losers are rarely told. It is because of that we’d like to go over the concept of survivorship bias in this write-up and why it may be best for you to avoid getting fooled by it.
It’s the winners who write the history books!
Apparently, history is always a result of the positive experiences of winners. Losers are always ignored, simply because no one likes seeing them. Their stories are far less interesting or are the kinds which elicit cognitive dissonance. Why no one likes seeing them is also because they disappear quickly from the public view, or just because of the fact that no one remembers counting them in. After all, it’s far easier to get impressed with successes, if that’s all that you get to see.
In his work ‘Fooled by Randomness,’ Nassim Taleb narrates the fantasies of monkeys who attempting recreation of Homer’s poetry on a typewriter. In his opinion, he’d rather be impressed with the Iliad writer if there were 5 monkeys in a game, to the extent that he’d suspect him to be the reincarnated form of the ancient poet. He’d be less impressed in case there were 1 billion to the power of 1 billion monkeys…
As per a study carried out at the Harvard Medical School, on almost 8 million bets, worth more than € 60 million, they found that no more than 13% of all the bettors had returned some profit.
When we talk about survivorship bias, it is basically a logical error wherein we concentrate on things or people that managed to survive some process while unintentionally overlooking the ones that didn’t, owing to their insufficient visibility. This bias can result in overestimation of success chances because of ignorance of failures.
The names survivorship bias was first introduced in the Second World War when a freethinking mathematician named Abraham Wald managed to solve the problem of the place where additional armour plating must be put on allied bombers who were experiencing major losses.
At start, the engineers made an assumption based on an examination of bullet holes of the returning aircrafts, that it was the areas that showed maximum concentration of bullet holes, specifically the fuselage and wings, that required extra reinforcement. Obviously, that didn’t work.
Instead, the holes were a reflection of areas where the planes were actually the strongest, as those were the ones that were returning. No one paid heed to the planes that got lost. Counterintuitively, as per Wald’s advice, the engineers put some extra armour plating on the areas where there were no bullet holes, and got immediate results!
The cause-and-effect illusion
Whenever you try measuring the chances of success in some highly uncertain environments such as sports betting, you shouldn’t only study the samples which succeed. By doing so, you may risk turning the causality on its head! Instead of supposing that success is a result of skill, the survivorship bias makes sure that we view winners as successes only because they have managed to be successful.
Michael Mauboussin, the author of ‘The Success Equation’ explains in his work that the problem actually lies in the inference drawn from the results, and not in the forecasting processes per se. Wherever luck is believed to play a significant role in the happenings, there is very tiny connection between the actual results and the forecasting process.
If all you focus on is the results, you become vulnerable to drawing erroneous conclusions. Rather, you shouldn’t only study the winners, in order to understand what caused their wins, you must also study forecasting process in order to find out whether those causes resulted in consistent successes.
What experts learn from tipsters’ evaluations?
Having been regularly involved in verification of sports tipsters, some experts became pretty familiar with how survivorship bias influences their decisions. After carrying out the evaluations of around 120 cases having pre-existing track records, their pre-verification performances combined together yielded the following result – 24,725 picks resulted in a profit over 17.4% turnover.
On the contrary, 90,451 picks which were verified thereafter registered only 1.1%. We didn’t have any valid reason to frown upon the credibility of earlier histories. Why do you think that so many tipsters showed the tendency of regressing towards the mean? The experts were simply treated to survivors in whose case the previous winnings had largely been due to good fortune. The less fortunate tipsters had already disappeared from the scene, and there wasn’t any point asking them to be verified if they weren’t tipping any longer.
About the actual chances of success
Studying only the winners would reveal that it’s pretty hard to get a reliable idea of how much hard work it takes to succeed in the field of sports betting. A Harvard Medical School team attempted finding some answers related to this question. It carried out an analysis of betting histories of more than 40,000 customers who had registered and played with a well-known online sports bookmaker in the year 2005.
All those customers collectively bet more than € 60 million and the number of bets placed by them was close to 8 million. No more than 13% of them returned any profit, with their aggregated losses being in the range of -10% for the entire group, which was very much in line with the typical margins of bookmakers.
Only 245 bettors out of those 40,000 return profits of more than € 1000. Quite obviously, for a large majority of sports bettors, the betting activity amounts to slightly more than casual guessing. Calculating from the first principles, it was found that any unskilled sports bettor placing around 200 even money bets at any off-line/online bookmaker (with 10% margin) would normally have no more than 10% chance of making a profit. The probability of this profit would drop down to a very low 1 in 1000 after 1000 same priced bets. The longer that an unskilled sports bettor bets for, the lower will be his chances of coming out as a winner.