Patterns

Games and gambling

Rather than working for a coal mining corporation or getting my hands oily fixing cars, I thought that perhaps I could make a living betting on horses instead. If I studied the subject comprehensively there might be a way. There was a way, but it meant limiting the bets to about ten races a year when the odds are in my favour - small fields, no jumps, non-handicap, top racecourses, and good ground. What I found was that the pundits and the punters were good at selecting the winners. Too good, and as a result the skill of the punters lowered the odds the bookmakers offered on the horses that were most likely to win.

I want to talk about overround as I spent a lot of time on it, and it feels a shame not to write something on the subject. It makes the difference between making a profit – which very few do, making a small loss – a fee for the entertainment and losing lots of money. Bookmakers have an overround, casinos a rake and lotteries take a massive slab for worthy causes.

A coin flip, two possibilities, heads, or tails. I bet on heads and receive double the stake - if it comes up heads. If it comes up tails I lose. You could bet on both heads and tails and come out losing nothing, winning nothing. Equally you could place proportional sized bets on every horse in a race. Whatever horse wins you will get a set sum back. Unlike the fairness in the head or tails game, the racecourse bookmakers are not so kind-hearted. To win ten no matter which horse wins, the total of all the bets on each horse totals more than ten. You may have to stake twelve. That extra two is the overround. The higher the overround the less you get when you win.

In general, the more runners there are in a race the higher the overround. It is easier to hide the size of the overround when there are more horses in a race. Seven is the point where it begins to get very unfavourable for the punter. Prestigious racecourses tend to set a lower overround. At low-ranking events you have more low-income hapless people placing tiddly bets hence the overround needs to be high to make it worthwhile for the bookmaker to stand there all day. A handicap race is designed to even out the field. That is not at all good for a professional punter. Jumping over hedges is exciting but too much good money is lost when horses you back pull up or throw the rider off. All in all, the market for making money is limited. The same can be said for stock markets. You need to be picky to reduce the losses. To make a profit one needs to bet a few times a year on very specific races. Namely prestigious events, with a small number of runners and on horses that are on form.

People claim to have systems that turn a profit. None have been shown to work. The classic system: keep raising your bet each time you lose to cover the last string of losses suffered. This works if you have billions in the bank and the bookmaker will accept the huge bets. Believe me you can get long losing runs, 50 in a row. That is the thing with randomness, it can produce long strings of the same number or long strings without a number.

What do we have for those that want a dream, a wish to escape the drudgery and are far too lazy to build it? We have the lottery. We insist on giving it a shot, even though we know that in any given week we can be a hundred times more likely to perish than win. Saying ‘you have to be in it to win it’ gets more to play and ramps up the top prize.

People assume all card games are gambling. How wrong they are. Luck will be intertwined with skill, but over the long course of play those with the most skill and patience lose the least. Some can profit from it, enough to service a good lifestyle. They are few and far between though. People exaggerate their wins. Few keep an honest tally of their losses and expenses.

The fruit machine effect is a huge trap. You keep feeding it as you believe it will pay out soon. The more you put in, the closer you think you are to getting a jackpot. Every spin costs you a certain amount, typically about 20% depending on how shrewd the machine owner is. These machines work in the same way as you might wait and wait for a bus, clenching to the hope that one will turn up. You find yourself wishing that you had walked instead.

The steal and share game. If one person selects steal and the other share, the thief gets it all. If both choose to steal, they both get nothing. If both elect to share, they split it. Those that opt to steal are faced with all or nothing. Those that opt to share are faced with half or nothing. Bad people focus on all or nothing. That is far more inviting that half or nothing. Those that think the world ought to be fair, just, and decent are happier with the half or nothing option. They walk away pleased with themselves. They believe that good will overcome evil eventually. It will, but not in our lifetime.

If you only get the chance to play this steal or share game once, you may act differently to when you get to play once a week. If you play regularly, the co-operation strategy can be fruitful. An array of strategies are on offer. Some entail reprisals, others ignoring times when you are a sucker. Most people do not operate by logic; they use emotional attachments and gauge the trustworthiness of the other players. They will share in some circumstances and not others. The idea of using such games for study is fundamentally flawed by the complexities of human nature. The problem with running models on behaviour is that dreadful assumptions are made. We overlook the issue of converting an idea to a number. Five people are not five people, one is obese, one is blue eyed, one has an arm amputated, one is pregnant the other is normal like me. If the sign states, maximum 6 persons, and the lift has five massive people in it, are you tempted to take the stairs this once?

People enjoy sharing. They enjoy doing one another favours. People like helping. Do they help others so that they get something in return. Maybe, but not always. Nor is it always a subconscious duty. People usually feel good when they are kind, caring and generous. Co-considerational selfishness. People do not always consider that being a sucker is detrimental. Many animals including humans find that helping one another is rewarding, sometimes more so than helping yourself. People will say, “I got more enjoyment from giving it away than I ever would spending it on myself.” Selfishness is a double-edged sword with the greater gain made when giving in so many cases. Some people make you feel appreciated. Others less so. Occasionally, helping out lands us in trouble. When we lose out from helping, it can be a bit off putting but nevertheless we tend to keep on doing it. We may have to co-operate to survive, but in most cases, we co-operate because it is joyous. You can’t place a number on the joy you get from being a fantastic person. Silly scientists put numbers on human behaviour. They are silly, silly, silly. I give. I get reward. Not money, but a chemical reward in my head. I don’t give, I feel guilt, or not. Or a little awkward and embarrassed. Or shamed. Or whatever. Only a very silly person will put numbers on our actions and compute game theories.