Profile of a degenerate gambling addict
A profile of a degenerate gambling addict can be seen here. When “professional” gamblers are profiled, I always take a look at certain characteristics that the losing ones have in common. It’s fairly odd in that a lot of characteristics that exist with sports books also exist when people trade stocks. Just replace the word “bet” with “trade” and it’s a close analogy.
I will dissect this article.
Lines such as:
He mostly bets on instinct.
… anybody betting on instinct will lose. End of story. You just have to look at the person taking the bet from the other side – he is certainly not maintaining his book on instinct, he’s trying to hedge against multiple bettors and skim the profit in arbitrage. Since sports betting (or betting of any sort) is a zero sum game, this guarantees that the crowd will lose as a whole. It also means that your level of prediction has to be better than what the bookmaker takes as a spread. (Spread is a finance term; “juice” is what bookmakers call it).
“The way I look at it, the less you know the better”
… Not a good thing to be saying. Instead, people should be asking themselves what they don’t know. They should be actively seeking what they don’t know – it’s just as important as knowing things. They should also be asking what the bookmaker knows that they don’t. Is the bookmaker playing with better information than you are?
Between Dec. 1 and Dec. 19 last year, Clay placed 106 bets with an online sports book and won 23. He risked $3,206.87 and his return was $2,269.64.
… The “degenerate gambler” part of this is not the fact that he lost nearly a thousand dollars in 18 days of gambling, or that he had a 22% win ratio. Win ratios are actually irrelevant in betting – what matters is getting proper value for your bets. The degenerate part is that he placed 106 bets. There is no way that you can possibly have an edge up on the market when you place so many bets since you are spreading too much of your brain around. Just as a mental exercise, do you stand a better chance being positive if you put $3200 on a single hand of blackjack, or are you more likely to be up if you bet $32 on a hundred hands? Hint: We don’t care about your statistical expectation (which will be the same), we care about the skew and kurtosis.
Here’s a further hint: Instead of dealing blackjack, let’s say we were flipping coins. The coin has a 49% chance of landing heads and you are forced to bet heads for 1:1 money. If you bet $3200 on a single coin flip, you have a 49% chance of doubling up. What is your chance of still being up if you make 100 $32 bets? Less than or greater than 49%?
Clay said he has lost more than money. A long-term relationship, personal property and, at times, his dignity have been casualties of his betting.
… Anytime you let gambling wreck a long-term relationship, personal property or your dignity, then you’ve got serious problems. It shows that you’re betting too much and/or spending too much mental capital to maintain a life other than betting.
Clay admitted his mood is volatile, reflective of the ups and downs of winning and losing.
… For degenerate gamblers, mood swings from made bets or lost bets usually result in more betting. If you win: gotta bet more. If you lose: I have to bet more in order to make it up. Instead, one should always be concentrating on fishing for value instead of just betting for the sake of betting. This is difficult to do when you make 103 bets over an 18 day period. Even if you forced me to make 103 bets over an 18 day period, I would guarantee you that I would lose money. You can’t determine whether you are getting better than fair value for your money in such circumstances.
And when you get up you are so inclined to double it because if you lose it it’s nothing.
… which proves my point in the previous quotation. Anytime an amount of money becomes “so insignificant” that you can blow it off in another bet, is a good sign that you’re dealing with a degenerate gambler. Made $2000 in the NFL and want to put $500 on horse 3 to win on Race 9 at Belmont Park right after? That’s a good sign that there’s no capital management in place at all, let alone knowing whether horse 3 is any good or not.
Every loss, no matter how insignificant should hurt and should be analyzed to see if you made mistakes making the bet.
One of the biggest mistakes people get into (and I have observed this from people in Las Vegas) is that when they are up significantly on a game, they don’t set proper “stop loss” parameters. If they have racked up a thousand bucks on the craps table, there is always this mentality that they are “playing with house money” and that they can lose that thousand dollars of chips they have in front of them and still “be up”. Wrong.
The stock market analogy is that you bought a stock for $10 and it is currently trading at $30. You let the stock drop down to $10 and then sell it, saying that you “broke even”. While this might be correct in the eyes of Revenue Canada, it is absolutely incorrect from a capital management perspective – some of those shares as they were ascending should have been sold off unless if you had a really really good reason to believe the subsequent descent was not warranted. Most people I know never talk about making partial sales. It’s always a binary “gotta sell the whole thing or nothing” proposition.
I always find reading these degenerate gambler articles interesting since I am so utterly grateful that I do not have those genes. Gambler, maybe, but degenerate gambler, never.