Most Ironic Case of Gambler's Fallacy?

[Southwind17]

From BBC News 4 August 2016:

Ladbrokes profits up strongly on 'bookie friendly' results

Ladbrokes has reported a £25.2m profit for the first six months of the year compared with last year's £51.4m loss.

The bookmaker says this strong performance is in part due to "sporting gods" being on its side.

It cites a run of "bookie friendly" results, like that of the European Championship, where England and Northern Ireland exited early.

Ladbrokes, which plans to merge with rival Coral, says a run of "customer friendly" results will follow.

The results show that customers are responding positively to the company's new strategy "at a time when the sporting gods have generally been on our side and we've enjoyed some helpful bookmaker friendly results", said chief executive, Jim Mullen.

"History would strongly dictate that such a run of results in our favour would see customer staking suffer, but encouragingly these numbers firmly buck that trend and combine strong staking and a good margin."

"However, 130 years of experience in sports betting has shown us that we will endure a run of customer friendly results and margins will normalise," he added. [emphasis added]

Notwithstanding the obvious incidental question over the integrity of reporting company profits seemingly subject to huge sways driven by luck, has Mr Mullen ironically fallen foul of a logical fallacy that forms part of the bedrock of bookmakers' [long term] success? I suspect the 130 years of experience that he refers to may well demonstrate that Lady Luck will look equally favourably on both booky and punter over that period, thereby 'normalising the margins', but I'd bet the farm (if I had one?!) on it not showing that a run of customer friendly results will necessarily endure.

 

[shemp]

I'm sure Mr Mullen knows better. I'm sure he also knows that telling potential customers that luck is on their side is good for business.

 

[The Atheist]

...but I'd bet the farm (if I had one?!) on it not showing that a run of customer friendly results will necessarily endure.

There are two different uses of "endure" in play. The bookie isn't saying it will last, just that we know statistically that runs happen and one just did.

 

[Babbylonian]

There are two different uses of "endure" in play. The bookie isn't saying it will last, just that we know statistically that runs happen and one just did.

Exactly. One may endure a bout of diarrhea that is not enduring.

 

[Emily's Cat]

Notwithstanding the obvious incidental question over the integrity of reporting company profits seemingly subject to huge sways driven by luck, has Mr Mullen ironically fallen foul of a logical fallacy that forms part of the bedrock of bookmakers' [long term] success? I suspect the 130 years of experience that he refers to may well demonstrate that Lady Luck will look equally favourably on both booky and punter over that period, thereby 'normalising the margins', but I'd bet the farm (if I had one?!) on it not showing that a run of customer friendly results will necessarily endure.

I would suspect that the odds don't balance. If it were break even, they wouldn't be in business as bookies . The house always wins.

I'm sure Mr Mullen knows better. I'm sure he also knows that telling potential customers that luck is on their side is good for business.

I'd bet you are correct!

 

[JoeB]

Lady Luck will look equally favourably on both booky and punter

My understanding is that sportsbooks usually just lay in the cut. Unless they think they have a really good read vs the public just split the bets and collect their juice.

 

[The Man]

I would suspect that the odds don't balance. If it were break even, they wouldn't be in business as bookies . The house always wins.


I'd bet you are correct!

Exactly, the margins will indeed normalize over time but are always in the bookmakers favor (or suppose to be). So the goal of the house is to just keep 'em playing. In sports betting the goal of the bookie is to get bets on both sides to even out. Making their money just by the commission, vig or margin and thereby minimizing risk on their part. If the imbalance in betting gets too much then the bookie needs to "lay off" some of the action*.





*I only picked up most of this by watching the "The Sopranos"



Honestly.


ETA;

What JoeB said in the proper parlance.

 

[Emily's Cat]

*I only picked up most of this by watching the "The Sopranos"

You're doing better than me I get the concepts, but I'm woefully lacking on jargon.

 

[Babbylonian]

You're doing better than me I get the concepts, but I'm woefully lacking on jargon.

As long as you bet only for occasional entertainment that which you can afford to lose, then the details are pretty irrelevant. I think it's enough to know that reputable bookmakers aren't out to screw their customers; they'll usually settle for a percentage point or two in their favor over time so that the bets keep coming in.

Now, casinos that feel they have to put double-zero on their roulette wheels? They're obviously out to screw their customers.

 

[JoeB]

As long as you bet only for occasional entertainment that which you can afford to lose, then the details are pretty irrelevant. I think it's enough to know that reputable bookmakers aren't out to screw their customers; they'll usually settle for a percentage point or two in their favor over time so that the bets keep coming in.

Now, casinos that feel they have to put double-zero on their roulette wheels? They're obviously out to screw their customers.

Yeah, Good ones are usually just facilitators who take a small cut. You're actually betting against some other random person, the book is just taking a fee from both of you.

 

[The Man]

As long as you bet only for occasional entertainment that which you can afford to lose, then the details are pretty irrelevant. I think it's enough to know that reputable bookmakers aren't out to screw their customers; they'll usually settle for a percentage point or two in their favor over time so that the bets keep coming in.

Now, casinos that feel they have to put double-zero on their roulette wheels? They're obviously out to screw their customers.

Yeah, Good ones are usually just facilitators who take a small cut. You're actually betting against some other random person, the book is just taking a fee from both of you.

Yep that's the key difference between sports betting and casino type gaming. The latter you play against the house while the former you bet against other players. Texas hold'em and poker tournaments being the exception of the latter. Hosted by the house (and I'm sure they get some cut) but gaming against other players.

 

[The Atheist]

Hosted by the house (and I'm sure they get some cut) but gaming against other players.

They certainly do, which is why casinos love the game - it's no-lose for them.

Every now and then a big punter will hit a streak and casinos lose millions in one hit that can impact their bottom line. Can't happen with poker.

 

[The Atheist]

Yeah, Good ones are usually just facilitators who take a small cut. You're actually betting against some other random person, the book is just taking a fee from both of you.

You're dead right once the book opens - it's simply a case of adjusting the odds to reflect the bets.

The hard part is setting the odds, because it's a judgement call and bookies aren't always in possession of all the information.

We had a superb case here in the past couple of months where the bookies didn't hold a key data point in setting odds for the jump jockey title and let the eventual winner (paid out 6 weeks early!) open at 50:1. They got slaughtered and lost over $1M on that one option.

 

[shemp]

They certainly do, which is why casinos love the game - it's no-lose for them.

Every now and then a big punter will hit a streak and casinos lose millions in one hit that can impact their bottom line. Can't happen with poker.

Yeah but as long as they have the capital to withstand such streaks, they will still win in the long run. Other people's losing streaks will balance it out, it just takes time.

 

[The Atheist]

Yeah but as long as they have the capital to withstand such streaks, they will still win in the long run. Other people's losing streaks will balance it out, it just takes time.

Sure, but if you've just lost $20M to one bloke, it takes a lot of $2 punters to get it back and share prices even get whacked for a while.

There have been examples of casinos going broke from streaks.

But Archie Karras still went bankrupt in the end.