Psychological Edge in Football Gambling

What makes a gambler bet and go to casinos? Many bettors believe it's fun and worth losing the money, but most believe they have an edge over the house and believe they can profit with their predefined strategies. Gamblers that bet on the roulette for example, might study the roulette and figure out that some numbers are called more than others thinking the wheel is not leveled. Blackjack player who count cards can spot when the deck is in their favor and make larger bets at this point and smaller bets when it is against them. Whichever the game, a good gambler sticks to a proven strategy and does not let his/her emotions affect decision making.

Human Emotions are Your Worst Enemy
Before I started putting real money on NFL games, I spent two years gathering data, analyzing different systematized strategies, and making gambling decisions in real time, but not with real money. It was easy sticking with what the computer said since my emotions and biases were not playing a role. After finding a methodology that was statistically robust, I decided it was time to put my emotions and decision making to test in the real market.

NFL gambling is somewhat similar to trading. One follows historical data and available information to make decisions that win and lose money. Due to this environment, people tend to distort their perception of reality and suffer from what psychologists call cognitive biases. Here are some biases that affected me at the time of placing a wager and deciding on the amount of money to place:

  • Outcome bias: Judging a decision (after the fact) by its outcome (win/lose) rather than by the method and quality at the time the decision was made

  • Recency bias: Weighing recent data or outcomes more than the earlier ones

  • Anchoring: Relying too heavily, or anchor, on a specific piece of information

  • Herd Effect: To believe what the majority believes

  • Small sample effect: Drawing unscientific conclusions based on limited information

Even with the systematized gambling system I had been working for so long, at the time of truth, I suffered from the above biases.

Outcome Bias
After my first week of betting, I covered only 1 of 3 bets. In a Seattle @ Cleveland game, my model predicted Seattle to cover and at the current spread and model prediction, in 10 years of data, keeping this strategy would have earned 60% of the time. The circumstances were good, no key players injured or absurd weather. Unfortunately, after this outcome I decided to change my strategy completely only to begin to see my money decrease (fortunately only slowly). Good strategies result in losses, that is the natural game of probability, but doubting your strategy and changing behavior because of these recent outcome will in the long run affect you negatively.

Recency Bias
Making a decision based on how an NFL team has played in the past game or two is one of the biggest mistakes you can make. Take the New England @ Baltimore game on week 12. In the previous two weeks, Baltimore lost to Cleveland by 3 and San Diego by 18, New England beat Philadelphia by 3 and Buffalo by 45. What will you do with a spread of 23? Baltimore is worst than Buffalo so you bet New England cover? These two games are not sufficient to make a decision (small sample effect discussed below) and recent outcomes should be looked at with the same magnifying glass as previous games. Use ALL the information, find the trend, and make your bet.

"Anchoring is the tendency for people to rely too heavily on readily available information when making a decision involving uncertainty." (Curtis Faith, Way of the Turtle) Take an NFL game where a team is favorite by 10 points. You look at the historical data and notice that this team has never been favorite by this much, is that sufficient information to place a bet? Only when you are anchoring. Using one piece of information to gauge the relative strength of a decision will lead you to use false information. If you really think that one piece of information is useful, why not use it every week? It is unlikely that one statistic will determine a profitable strategy in NFL gambling. Combine the factors, systematize your strategy, test, and keep your emotions away.

Herd Effect
Following the NFL spreads opening and closing lines for these years has convinced me to just ignore them. I researched the NFL gambling literature on this topic and found a paper that looked at 10 years of data. The conclusion of the paper was that betting the opposite way of the line move yields 54%. Is 10 years enough? Is this statistically significant? They claim it is, but it is rather close to braking even. Before reading that paper (and learning of these biases), I would check the betting percentages on to make sure my strategies coincided with other gamblers. If they didn't, I would hold off on amounts or the bet completely. To make the story short, I lost good opportunities because of the herd effect on me.

Developing a strategy, testing it, sticking with your proved system regardless of the present consequences is smart gambling or like I like to call it investing. After reading The Way of the Turtle (great book, I recommend it) , I realized I was hurting my strategy due to these cognitive biases. Then putting all emotions apart, I stuck to my guns and after a 2-4 ATS week I came up big in the last few weeks of the season and during the playoffs. The only loss in the playoffs was last week's Green Bay bet. Although my loss was low because my wagering amount is proportional to my percentage of confidence, I am sticking with my system and continuing to finding opportunities in the NFL spread.