Survival Trend: Why the Profit of Bets is Reduced to the Average Value?

The stories of success and happy life of professional players from bookmakers can be found all over the Internet, but is it easy to earn stably on sports betting? The answer to this question is known to Joseph Buchdahl, who during his career as an analyst in the field of betting conducted an evaluation of the activity of more than 100 tipsters. Is it possible that the winners are overestimated? Read on and find out the answer to this question.

On request in Google “Players making sports betting” you will find information about well-known well-off players, information on the 10 most influential people in this area on Twitter, as well as many guides and materials on methods and techniques for placing bets that will allow you to become a successful player. Information about misses is almost completely absent, except that you can come across several articles on the reasons for the losses of the majority of players, and each of them says that the failures are caused by inefficient money management, and not errors in forecasts, which is the main cause of the defeats.

In reality, most players bet with negative expectations, which is explained by the availability of the bookmaker margin and the inability of the players themselves to predict the outcome of the event, which would allow them to bypass the bookmakers, and because of the inability to effectively manage money, losses only increase. People can forgive their belief that, first, they can make a living by making bets, easily, and secondly, that all bookmakers are on the verge of bankruptcy.

Obviously, this is not the case. But what then is the matter? Simply put, the history of defeats remains untold. In this article, the notion of “survival trend”, introduced earlier by Mirio Mella, is again considered, and it also talks about the reasons why it should not be influenced by it.

History is written by winners

History, it seems, is always written by the winners. And the losers remain in oblivion, because we prefer not to notice such losers (because their stories are not so interesting or cause cognitive dissonance), we do not find them in our field of vision, or simply do not bother to pay attention to them. Success, if any, is easier to assess.

In his book Fooled by Randomness, Nassim Taleb tells a fantastic story about monkeys trying to type Homer’s poem on a typewriter.

“If five monkeys participated in the game, I would be very impressed if one of them could print the Iliad, and even could believe that this monkey is the reincarnation of the poet of antiquity. But if the number of monkeys was estimated to be a billion to a billionth, it would have made me much less impressed”.

According to a study conducted by the Harvard Medical School and considering nearly 8 million bids amounting to more than 60 million euros, only 13% of players were able to profit from their investments.

The trend of survival (or the systematic error of the survivor) is a kind of logical error that consists in the fact that people tend to focus on the “survivors”, inadvertently ignoring those to whom it has not been possible and of which nothing is known. The impact of the survival trend may lead to a reassessment of the chances of success, since failure data are not taken into account.

The name of this phenomenon first appeared during the Second World War, when Abraham Wald, a free-thinking mathematician, found out in which places it was necessary to strengthen the armor on the Allied bombers, which suffered huge losses.

Initially, the engineers decided to study the remaining holes from the shells of the returning aircraft and decided to add more armor in those places where the greatest concentration of bullet holes was observed, in particular on the wings and the fuselage. Of course, this did not work.

It turned out that the armor in those parts of the hull where there were more holes was the strongest, as evidenced by the fact that the planes with damages in these places returned safely. Nobody thought about those bombers that did not return. Despite the fact that it seemed illogical, the engineers followed Wald’s advice and strengthened the armor in places where there were no bullet holes, which instantly gave results.

Illusion of cause and effect

When trying to measure the likelihood of success in the face of the high degree of uncertainty that is characteristic of sports betting, it would be incorrect to examine the data of those who have succeeded. By doing so, we run the risk of making a mistake in determining the cause-effect relationships. The trend of survival does not indicate that success is due to the skills of the player, but it influences the formation in us of the feeling that the successful winner is really a professional.

In his book The Success Equation, Michael Mauboussin explains: the problem here is that the conclusion is based on results, not forecasts. Where luck plays a decisive role, the forecast and result are almost not interconnected.

If you are only interested in the results, your conclusions may turn out to be erroneous. And vice versa. In order to understand what caused success, do not focus only on the winners. Study the whole process of forecasting in order to understand whether this success is stable.

What are the real chances of success?

If we study data only on winners, we can never really assess how difficult it is to be successful in sports betting. In 2005, in an attempt to find an answer to this question, the team of researchers at the Harvard Medical School analyzed the success stories of more than 40,000 registered customers of the leading betting company that accepts online sports betting.

Only 13% of players who placed almost 8 million bids in excess of 60 million euros were able to profit from their investments, and the aggregate losses, which amounted to approximately – 10% for the group as a whole, largely coincided with the size of the bookmaker margin.

Only 245 players made a profit of more than 1000 euros. Of course, for most bookmakers’ clients, sports betting is practically the guessing of the result. Calculations from the first principles allow understanding that the probability that an inexperienced player making 200 one-to-one bets with a 10% bookmaker margin will be able to make a profit, usually will not exceed 10%. However, after 1000 bets with the same amount, this probability will decrease to 1 to 1000. The longer an inexperienced player bets, the lower his chances of winning.

You can improve your chances of winning if you bet at a bookmaker that offers a lower margin. In this respect, Pinnacle is the industry’s unchallenged leader, since its margin is only 2%, and sometimes even less.

Under such conditions, the chances of an inexperienced player to make a profit after 1,000 one-to-one bets will be 1 to 4. In addition, Pinnacle seeks to educate its customers through articles on bets that also deal with strategies, forecasting methodologies and player psychology, which further increases the chances of customers to succeed.