How to Treat iGaming Like an Investment

Posted by Harry Kane on Monday, December 28, 2020

Online gambling is a huge financial entity, and one that’s worth £5.6 billion in the UK alone. Interestingly, figures suggest that most operators in the market rely on a relatively small number of high-rollers for their core revenue stream, with these players focused on achieving high returns and large-scale profits.

Because of this, high-rollers often approach their wagers with an investor mindset. But what are the factors that link gambling and the investment of cash, and how can you adopt a similar approach when accessing your favourite online casino?

Understanding the Links Between Gambling and Investing

If you’ve ever associated with gamblers in a social or corporeal setting, you’ll probably have heard somebody claim that “investing in the stock market is just like gambling at a casino”.

Initially, this may sound like an absurd suggestion, but there are actually a number of factors and elements that unite these activities and create a common mindset amongst participants.

Let’s start with the basics; as both require participants to risk a predetermined amount of capital in the pursuit of a future profit. This introduces the fascinating elements of risk and choice, which will ultimately dictate the outcome of your bet (or investment) and the amount of money that you bank in the process.

Of course, these similarities contrast sharply with the fundamental differences that exist between gambling and investing, with the former largely associated with short-term gains and outcomes.

Similarly, there’s a negative expected return to gamblers, with no single casino game or vertical offering a return-to-player (RTP) rate of 100% or more.

Conversely, investing in assets such as equities, commodities and even currencies tends to carry a positive expected return on average, particularly over an extended and sustained period of time.

Still, there’s no doubt that games such as blackjack (which has multiple iterations and an average RTP rate of 99.58%) and the emergence of advanced betting strategies have blurred the lines that separate gambling and investing, while simultaneously building on the similarities that exist between these entities.

The risk-and-reward balance is also central to both gambling and investment, particularly when you approach the former with a professional outlook.

For example, both gamblers and investors need to decide how much money they want to risk, with this typically set as a percentage of their bankroll or capital holdings.

On average, traders will typically risk between 2% or 5% of their capital base on any particular trade, while gamblers will vary their percentage more wildly depending on the prevailing RTP rate, the odds in question and the type of wager under consideration.

Diversification may prove as crucial to gamblers as it is to investors, particularly over an extended period of time.

More specifically, seasoned and knowledgeable gamblers will often look to distribute their bankroll across a number of different and diverse verticals, just as investors spread their own capital across different markets and asset classes.

How to Develop an Investor Mindset When Gambling

With these core similarities (and differences) in mind, you can begin to see how an investor mindset can impact on your gambling activity and the way in which you approach individual wagers.

Below, we’ve prepared some tips that will help you to develop and implement this type of mindset when gambling, in the hope of generating higher and more reliable profits over time. So, let’s get started!

Choose the Right Games and Verticals

As any investor will tell you, choosing the wrong asset or equity is always likely to deliver losses, particularly when you must assume ownership of the underlying financial instrument.

The same principle applies to gamblers, and in this respect, it’s important that you choose the right games and verticals to help optimise your returns.

As a starting point, you’ll need to prioritise games of skill over disciplines of chance, as the former afford you some sort of control when it comes to influencing outcomes and minimising risk. Of course, all casino games and wagers are governed by chance to one degree or another, but disciplines such as roulette, poker and blackjack at least require one or more rudimentary skills.

In the case of blackjack, for example, the best players tend to boast numerical ability and the capacity to make informed decisions in real-time, while detailed betting strategies can also be deployed to reduce risk and manage your bankroll according (we’ll go into a little more detail on this later in the piece).

The same can be said for roulette, while online poker requires players to process and analyse data pertaining to their opponents and identify potential behavioural trends from the decisions taken by others during games.

With some of these games, you can also refine your choice according to the number of iterations available. Let’s take blackjack, for example, which as we’ve already said boasts an average RTP rate of 99.58% (and an associated house edge for the operator of just 0.42%).

This will vary slightly between different variations, however, with the best RTP rate associated with blackjack games that feature a minimum number of decks. So, try to select blackjack titles that feature as few decks as possible, while paying attention to the unique rules that impact on the typical return on offer.

In the case of roulette, you should know that the American and European versions of this game are widely available in the UK. As the US version has an additional zero on the roulette wheel, this offers a hefty house edge of 5.26%, while the corresponding number for the European iteration is as low as 2.7%.

So, be sure to select a version that offers the best possible return, while paying attention to the various factors that we’ve already discussed.

Create a Viable Betting Strategy

At its core, an investor mindset demands that you focus on making decisions that optimise your potential profitability.

However, risk-averse investors can also operate in a way that seeks to minimise losses, particularly when seeking incremental terms within a given timeframe.

The good news is that gamblers can adopt a similar approach when playing their favourite games, thanks to the diverse array of betting strategies that are currently available across disciplines like roulette and blackjack.

These can be split largely into two different categories: namely negative and positive progression strategies.

The former is tailor-made for high-rollers with a healthy appetite for risk, as it requires you to set an initial betting unit before increasing this incrementally with every consecutive loss. Although this requires a hefty bankroll if you’re to fund it successfully, it also optimises the value of each individual win.

Conversely, a positive progression strategy asks you to increase your stake after each win. This suits largely risk-averse players with a smaller bankroll, as you won’t have to spend huge amounts during lengthy losing sequences.

The are many variations of these strategies available to players, depending on your circumstances and the precise game that you’re playing.

However, it’s crucial that you deploy at least some form of betting strategy, as this enables you to organise your priorities as a trader and ensure that you wager in a way which makes it easier to achieve these.

At the very least, you’ll need to establish an initial betting unit, which should be relatively modest and set as a percentage of your overall bankroll. Even if you look to simply bet this amount consistency over time, this will at least allow you to manage your spend in accordance with the size of your bankroll.

In the case of sports betting, you’ll most likely adopt a strategy that sees you tailor the size of your stake according to the specific odds in play.

For example, wagering on an outcome that’s high likely and boasts relatively short odds should prompt you to increase the stake size and the percentage of the bankroll that you commit.

Conversely, betting on less likely outcomes at lengthier odds offers potentially higher returns, so in this instance, you could consider committing a lower percentage to achieve a healthier risk-reward balance.

Ultimately, the precise betting strategy that you deploy will depend on your own unique outlook and preferred games. However, creating some form of strategic plan is central to any investor mindset, especially if you want to minimise losses and make the most of your bankroll.

Avoid Emotive Decision Making

On a final note, both investors and gamblers must be wary of emotive and knee-jerk decision making.

Make no mistake; this can cause heavy and sustained losses in any scenario, which can quickly eat into your capital and leave you facing a mounting pile of debt.

This can be particularly prevalent in the world of sports betting, where punters often wager on the favourite teams or participants. Remember, 76.8% of all football fans wager on live action as it unfolds, with most of these wagers being placed according to partisanship rather than genuine insight.

The issue here is that ill-informed bets can lead to sudden and short-term losses, and as these mount you may be encouraged to increase your stakes in order to recoup some of this cash.

Clearly, this can be an incredibly damaging scenario, and one that investors are well aware of (especially in volatile markets such as the foreign exchange).

While casino gambling may not incur such tribal loyalties, there are a number of common fallacies that can encourage ill-judged and emotive wagering.

For example, there’s one fallacy which involves a theoretical coin toss, suggesting that flipping a single coin 10 times is likely to see you land a similar number of heads and tails during this time.

Statistically, however, there’s just as much chance that you’ll land 10 consecutive heads in this scenario, as the odds of each outcome never change from one spin to the next.

Despite this, some players are inclined to perpetually chase losses after enduring a particularly poor sequence of results, in the mistaken belief that a win is sure to be just around the corner. Remember, the outcomes of online casino games are completely random, so it’s always wise to stick to a disciplined betting strategy and treat both wins and losses with the same consistent mindset.

As we’ve already touched upon, the use of a wagering strategy can also help to minimise the underlying risks associated with specific games, creating a scenario where losses are kept to a minimum in the first instance!

The takeaway here is that emotive wagers are both ill-advised and potentially loss making, and the use of discipline, careful bankroll management and an underlying betting strategy are crucial if you’re to avoid falling into this trap.

These also happen to be key components of any investor mindset, and fully appreciating these can lead to more sustained betting wins and lower losses over an extended period of time!