Understanding the Gambler’s Fallacy and How to Overcome It

Posted by Harry Kane on Wednesday, June 23, 2021

When you gamble responsibly, there’s no doubt that the iGaming market can deliver a fun, secure and genuinely immersive experience.

However, part of becoming a responsible gambler is recognising the numerous pitfalls that can contribute to poor or compulsive decision-making online, including the so-called “gambler’s fallacy” and the way in which it influences the way in which players think.

But what exactly is a gambler’s fallacy, and what steps can you take to ensure that you don’t fall foul of this during the course of everyday gameplay online?

What is the Gambler’s Fallacy?

In simple terms, the gambler’s fallacy refers to mistakenly believing that a specific event is more or less likely based on a series of previous events and outcomes.

For example, let’s say that you intend to toss a coin 10 times, with this landing on tales after each of the first four spins. At this stage, you may believe that you’re statistically more likely for the coin to land on heads after the next toss, according to the premise of the so-called “law of averages” and the fundamental belief that such results will even themselves out over time.

However, this belief overlooks the fundamental role of chance when determining coin toss outcomes, while negating the fact that the odds of landing either heads or tails remains 50/50 prior to every single spin.

Therefore, it’s statistically just as likely to land 10 heads or 10 tails rather than a mixed bag of outcomes and failing to recognise this basic fact represents a clear example of a gambler’s fallacy. In this respect, the fallacy also ignores basic principles of chance and probability, which are fundamental to every gambling experience when wagering online.

Interestingly, the gambler’s fallacy may also refer to as the Monte Carlo fallacy, after a particular casino in Las Vegas where it was initially observed way back in 1914.

It’s also just as common online as it was in brick-and-mortar casinos throughout the 20th century, while it remains one of the single biggest reasons why players lose money and make ill-judged decisions on a daily basis.

How Can You Avoid Falling Victim to the Gambler’s Fallacy?

OK, we hear you ask, but how can you avoid falling victim to the classic gambler’s fallacy when wagering online?

We’ve outlined some practical steps for you to consider below, as we consider tangible manifestations of the gambler’s fallacy and how they can impact on your everyday iGaming experience.

1. Understand the Games Where the Gambler’s Fallacy is Most Prevalent

Let’s start with the basics; as the classic gambler’s fallacy is considerably more prevalent in some games and iGaming verticals than others in the digital age.

For example, poker players are less likely to fall victim to the gambler’s fallacy, not least because this game requires a significant level of skill and therefore enables you to achieve greater control over hand management and specific outcomes.

Conversely, games of chance such as roulette create a scenario where outcomes and results remain completely out of each individual player’s control, with the wheel underpinned by random number generator (RNG) software that’s fair, transparent and ultimately unpredictable.

As a result, players may be inclined to seek an advantage by believing that they can pre-empt specific results ahead of time, perhaps by identifying potential patterns and adapting their in-game decisions accordingly.

This is a clear and specific example of a gambler’s fallacy, as it encourages players to formulate a betting strategy based on erroneous beliefs and a randomised set of historic results rather than the fundamental odds associated with specific bets and your real-time probability of winning.

Clearly, games of chance are most susceptible to the gambler’s fallacy, as the desire to seize a march on their rivals can encourage players to foolishly analyse a set of random outlooks in the quest to identify possible sequences and informative patterns.

This is definitely something to be wary of as a player, particularly as not all casino games or verticals have been created equal in the digital age.

2. Winning and Losing Sequences – The Peril of Chasing Losses

In broader and more general terms, there’s a fundamental inclination amongst new and inexperienced gamblers to buy into the notion of winning and losing streaks when wagering online.

Of course, it’s true to say that winning and losing streaks do exist in the high-octane iGaming realm, but what many players fail to recognise that each of these is driven by chance and not necessarily indicative of logical patterns that will be sustained and repeated over time.

For example, let’s say that you’ve won three consecutive roulette spins after wagering on the single number seven on each occasion. The odds of achieving this are incredibly slim, but despite this, players can mistakenly believe that their odds of sustaining such a run are increased over time and that they should maintain their existing betting strategy.

This is a total fallacy and indicative of completely flawed logic, while it can also cause you to lose any gains that you may have accrued during previous spins.

Similarly, the gambler’s fallacy may encourage you to chase recent losses in the belief that your luck is bound to turn around in the near-term.

Once again, this is based on a fundamental misunderstanding of the law of averages and its application in the iGaming market, while it also ignores that fact that a run of losses (or wins) doesn’t alter your probability of winning the next hand, spin or card draw.

3. Calculating Odds and Probability in Real-time

Perhaps the best way of warding of the gambler’s fallacy is to ensure that you understand its nature and potential impact, while also carefully calculating the specific odds and winning probability associated with every wager that you place.

This is especially important in the diverse realm of sports betting, where odds can vary wildly and factors such as handicaps can be introduced to create more favourable odds without overly compromising your chances of winning.

Even the process of comparing or evaluating odds and calculating potential stakes and returns can be highly beneficial, as it causes you to focus on the details of specific wagers and move away from the notion of winning runs, losing sequences and the idea that you can seek a defined and tangible advantage when playing games of chance.

Without this type of approach, you’ll run the risk of losing your hard-earned bankroll and making ill-informed decisions that fail to deliver a viable return.