Life lessons from gambling

In a break from our usual programming, some useful unspoken truths we all learn from gambling

Something a little different this time. Normal two-footed industry criticism will return in short order don’t worry…

Eight Things I’ve Learned From Gambling

What you think is not very important

I’d say this is one the fewest people manage to learn. I am not even sure if I am one of them to be honest, because the phrase “wisdom of crowds” makes my teeth itch, but I know there is an enormous amount of truth to it.

You might be absolutely certain you know what the true price of a bet is, what the correct decision is post-flop or that red is just absolutely due on the next spin, but if everyone else disagrees with you the chances are you are wrong. You’d be better off spending your time working out why you might be wrong than trying to persuade everyone else they are.

Over the course of your life you will meet a lot of people with much deeper and more specialised knowledge than you. They might not know everything you do, but they know a hell of a lot more about each specific issue than you ever will. Listen to them. Take their views on board and change yours as a result if needs be.

The best gamblers are open minded, humble enough to know it’s all just the chase for a number and finding the right one is more important than being right about which one it was. Knowing the limitations of your ability is everything, and that means coming to terms with what you think really not being that important…

But backing your own judgement is

Ultimately in gambling you are the only person responsible for your decisions. If you’re not prepared to back your own judgement then don’t expect to ever win much. Once you’ve done the work, taken on board a range of inputs and come to a firm conclusion on something then don’t be afraid of backing yourself. The worst that happens is you fail and sometimes you will because…

Everything is a range

I spent a lot of time in the poker world during the late 2000s. The boom and bust years of the online poker game when everyone was winning and everyone was good at poker. In reality, of course, we were all just slightly less terrible than some of the newer players and eventually most of us got found out.

But during that time the way people approached playing a hand shifted from looking at what cards they were holding to looking at what cards they thought their opponent was holding to what range of cards their opponent could be holding. It’s come on at least two levels since then but let’s not overcomplicate things.

The end point was you no longer looked at your specific situation in a vacuum and you started looking at how this situation would play out if you ran it a number of times in a number of different ways. You looked at a range of hands, and as a result a range of outcomes. And honestly there is no better way to approach life.

Everything is a range. What you’re confronted with, be it a business decision, a big life decision or just what route to take on a car drive, is a range. There are always several valid approaches. And as a result…

There is rarely a “right” decision

That doesn’t mean you can never make a wrong decision. I can assure you from personal experience you can definitely make wrong decisions. Some outcomes are extremely unlikely, or possibly even zero probability, and you can waste all kinds of time and energy going after them.

On the other hand the situations in life where there is a clear “right” decision are vanishingly small. Most of the time you’re faced with a number of possible outcomes with varying probability attached to each of them. If you’re smart you can maybe work out the correct probabilities of each and go with the “best” decision each time.

But life rarely works like that. We don’t usually have the luxury of time or perfect information to work these out. Most of the time we go with our gut, and attach a confirmation bias to the results. Naturally confident people remember when they got it right and vice versa.

Honestly though most of us are just guessing most of the time about most things, because there isn’t really a valid alternative. And that’s fine. Because…

Unlikely things happen all the time

An 80% chance of winning means you lose 20% of the time. That may sound inane to you, but it’s astonishing how hardwired into the human brain it is to ignore the second part of that sentence. A very good chance of winning means you lose one in every five times you play. That’s….not right is it?

“There was a 10% chance of rain so why did I get wet?” Well it turns out 10% is quite a lot of the time. Even 0.1% is a lot of the time if you do something every day of your life. But most people are naturally optimistic, and expecting the worst to happen every day is no way to live your life really so ignoring the low probability bad outcomes isn’t a bad way to be.

But the value of gambling isn’t that it teaches you to be a pessimist. It’s that it teaches you to not get upset when things don’t work out how you expected. Things you didn’t expect to happen will happen to you every day of your life. Because unlikely things are usually not really that unlikely after all. And our brains struggle to deal with this paradox, which is why…

Gambling can be harmful

No, not specifically and in a very limited way. Gambling can be harmful in a broad and general way, to a large number of people. That’s not to say a majority, or even a large minority of people, are at risk of becoming problem gamblers, but it does mean there are risks, dangers and impacts that go beyond that leading edge of harm.

You will often hear numbers quoted around 0.3% of UK adults being problem gamblers, which equates to around 170,000 people in total. Firstly that is a lot of people. But it’s also a small minority of gamblers. Most people who gamble are not going to be problem gamblers. But that’s not the end of the story.

It’s worth noting, however, that as a percentage of active gamblers it’s a significantly higher percentage. As a percentage of regular gamblers the numbers of problem gamblers are actually reasonably high, and that’s just those at the highest level of potential harm. This isn’t people who have struggled to pay the bills, felt too stressed to work, had a massive row with their mates or any of the other negative impacts.

Gambling is fun because it can hurt. It’s fun because of the risk, because of the soul crushing defeats and near misses. And that brings with it some inherent dangers and risks that we can’t just pretend aren’t there because it’s inconvenient to acknowledge them. People stressed out, angry and upset because of gambling are a facet of the industry that we can’t and shouldn’t just ignore.

In fact we should do a better job of making everyone understand that…

Losing is a part of life…and losing doesn’t make you a loser

You are going to lose a lot of the time, at everything to everyone. You can lose a bit less by being risk averse and only taking very low-risk decisions all the time. But you are still going to lose an awful lot over the course of your three score and ten and an ability to put this in context and not dwell on it is an incredibly valuable asset.

The flip side of this is hardened professional gamblers are probably a little too numb to losing, and in certain situations can be far too risk tolerant. Losing should be something you embrace with no fear, but not something you think has zero consequence and it shouldn’t feel the same as winning.

But losing definitely shouldn’t be something that carries too much weight. It shouldn’t matter so much that you can’t look past it to your next possible win. And with that in mind, we come to perhaps the most important point..

The long-term is long (lol sample size)

I’d say this is the biggest lesson of all. And the most easily forgotten as we all constantly get swept up in short-term trends and the latest breakout success and “obvious” failure. The short-term is often just variance and the long-term is on such a distant horizon you’re probably not even looking at it.

How many iterations of something do you normally need to run to be sure what happened was judgement over luck? It’s certainly more than the one that most of us get in our personal and professional lives. The certainty we attach to stuff is a defence mechanism and our way of making sense of the chaotic and unpredictable world around us, but it is…to use an old fashioned English expression….bollocks.

A small sample size is all we normally have to go on, which means we normally don’t really have much to go on at all. And that’s really, honestly, fine. You just keep making the best decisions you can with the information you have available to you and you treat the outcome as the mix of luck and judgement it undoubtedly was.

Anything else is just punting. Although let’s be honest it’s usually more fun to just spin the wheel and see what happens anyway isn’t it….