The relationship between ‘skill’ and ‘luck’ is a fascinating topic in the world of sports betting.
Let’s conduct a simple experiment: Picture two empty jam jars. Jar 1 represents ‘skill’ and Jar 2 stands for the ‘luck’ factor.
We place three balls in each jar. One ball is drawn from each jar, with each ball having a specific value:
In Jar 1 (‘skill’), the values are 0, +1, and +2, indicating no skill, some skill, and high skill, respectively.
In Jar 2 (‘luck’), the values are -3, 0, and +3. Here, ‘-3’ indicates extreme bad luck, ‘0’ is neutral, and ‘+3’ means great luck.
Combining the values of the balls gives a total score. A score above zero indicates a win, while below zero implies a loss.
Drawing balls from these jars can reveal insightful conclusions, just like Michael J. Mauboussin’s examples in ‘The Success Equation – Untangling Skill and Luck in Business, Sports and Investing’ about the interplay between ‘skill’ and ‘luck’ in sports betting scenarios.
Suppose you’re a highly skilled bettor, consistently drawing +2 from Jar 1.
Now, when drawing from Jar 2, you could pick -3, 0, or +3. Sounds promising, right? But, alas! Today, luck isn’t on your side, and you draw -3, resulting in a total score of -1—a loss. That’s unfortunate, especially if you’ve done your analysis correctly.
However, there’s only a 1/3 chance of drawing the -3 ball from Jar 2. The other 2/3 of the time, you either get 0 or +3, resulting in a total score of +2 or +5—a win. A significant one, at that.
But sports betting is unpredictable; in your next draw, you might again get -3 from Jar 2, leading to another loss. Bad luck can be repetitive, with a losing streak being a possible outcome.
Still, every time you draw from Jar 2, there’s a 2/3 chance of a positive outcome if you’re a skilled bettor. With a higher ‘skill’ value from Jar 1, we can expect better results. In essence, skill plays a crucial role in sports betting.
Now, let’s reverse the scenario.
Imagine assigning our grandmother the ‘0’ ball from Jar 1. She’d probably agree with that since she knows nothing about sports betting. She lacks ‘skill.’
Yet, surprisingly, even she can profit from betting! All she needs is to draw the ‘+3’ ball from Jar 2, and voilà, she’s in the green. She might get lucky again and again. Impressive, right?
It’s intriguing how luck can play such a role. However, sports betting is a marathon, not a sprint. Over time, pure luck runs out, especially since bookmakers have a return to player (RTP) rate below 100%.
That’s why bettors emphasize sample size. Fifty bets might not reveal much about one’s expertise—perhaps you’ve just been lucky with your draws from Jar 2.
However, if you’re winning over 2,000 bets, it’s improbable that luck is the only factor. More than likely, it’s because you consistently deserve the +2 ball from Jar 1. Over time, no matter what you draw from Jar 2, if you play skillfully, you’ll fare well in the long run.
