Study shows Gambler's Fallacy can help Hot Players win more

Think gambling hot streaks are all just the result of positive variance? Well you might want to reconsider after checking out the results of a recently published study in Cognition.

According to researchers, the gambler’s fallacy can actually cause hot players to keep winning their bets. Sound strange? Of course, because the gambler’s fallacy is, after all, a fallacy. This is the misguided belief that future bets can be affected by results in the past, whether they be good or bad. But the Cognition study showed that the gambler’s fallacy actually causes people to bet differently based on how their previous results have been going.

Researchers made this interesting finding after looking at 565,915 wagers from 776 online spots bettors. They found that the average bettor had a 48% chance of winning any single wager. But during a hot streak of 2-6 wins in a row, this figure shot up to a 49% – 76% chance of winning. The latter range is especially amazing, given that people would love to win this often.

As for what created this phenomenon, researchers point to a heavy belief in the gambler’s fallacy. Players who were on a winning streak believed that they were more likely to lose their next bet due to previous success. So they chose sports bets with higher average odds of winning. In this study, the average odds turned out to be 3.60:1 for players on a hot streak. On the other hand, average odds for a normal wager were a riskier 7.72:1.

The gambler’s fallacy also played a part during losing streaks too. The reason why is because players coming off of losses thought that they had a better chance of success on their following bet. So they chose riskier bets and usually got burned, with players who’d lost six bets in a row only having a 23% chance of winning the next wager.

What’s interesting in all of this, though, is that, despite winning more frequently, the hot players didn’t really outperform losing players too badly in the profit department. The simple reason why is due to the fact that they chose safe bets with lower odds since they expected to lose. Meanwhile, losing players were choosing wagers with high odds under the assumption that they were “due” for a win.

So in the end, the psychological effect created by the gambler’s fallacy really only causes more frequent wins for hot players – not more overall profits.