The Psychology of Gambling – Myth 3

I have already looked at two common myths in gambling, that it is possible to turn £10 into £1000’s and that bookmakers use inside information so you can’t beat them.

Today I am going to look at another myth:

The favourite has the best chance of winning so my best chance of profit is by betting the favourite

This could not be further from the truth, well the last part anyway. Generally speaking it is true that the favourite has the greatest chance of winning. This is because a betting market is also a very predictive market.

As it is a very good predictive market the odds are usually a very good indication of the chance of winning. It then follows, of course, that the favourite is going to have the greatest chance of winning. The first part of the myth is then true.

When will the favourite not necessarily have the best chance of winning? Usually when there is a lot of hype surrounding the event and a particular participant, runner or side in the event. An excellent recent example is the World Cup England vs Germany match. England was the favourite to win on UK betting exchanges at ridiculously low odds.

While I wanted England to win the match, a statistical analysis showed that Germany was actually more likely to win the match but because nobody in England wanted to think about that, we forced England to be the favourites even though they shouldn’t have been.

Assuming that this doesn’t happen very often the confusion in the myth we are tackling today is between two words. Those words are ‘winning’ and ‘profit’, by putting them in the same sentence it is easy to get confused.

We have established that the favourite in an event, I shall use horse racing as the example from now on, is the most likely to win the race. Does this mean that it is the most likely to make us a profit? Certainly not, in fact it is usually one of the hardest runners to make a profit on.

The difficulty in making a profit comes from the fact that everybody knows the merit of the runner, which is why it is favourite. This means that the runner is usually over bet and the odds are actually slightly lower than they should be, i.e. the horse is slightly less likely to win than estimated by the odds.

If you bet in this situation then you may be winning a high percentage of your bets but you will steadily be losing your bankroll. When I first became involved in betting on a professional level I found that it was easiest to find horses between 10/1 and 20/1 who had several very strong reasons to bet them. Of course there was always something that stood out as being bad about the runners but if this was countered with a few good points then I would place a bet.

Usually these horses are under bet and so win slightly more often than their odds suggest which means that we can make a good profit. The difficulty in this situation is being satisfied with a lower strike rate and managing your bankroll properly through the highs and lows becomes vital.

If you are beginning to take your betting seriously then stay away from favourites and look at horse’s with slightly higher odds and you may find that it is easier to profit than you originally thought.