You may have been bored with so many Super Bowls last night (at least this year's excellent team won). Some football fans I know are It's going to be Led Zeppelin Instead, it was a documentary (they rave reviewed).
But neither the game nor the story of Zep's origins was the biggest story of last night. Rather, the most interesting aspect of last night was gambling. Sports betting at Super Bowl LIX (2025) was estimated at over $1.5 billion. This is a 15% increase compared to 2024. This football season saw the $35 billion American bet forecast in Legal Sportsbook. Overall, sports gambling is currently worth around $150 billion a year.
Why are sports fans and gambling junkies coming back and throwing good money into the game? Attractive new research suggests the answer. Wall Street Journal We discussed this.1 BusinessWeek I've entered the social aspect of gambling.
But the important academic point is this:
Sports bettors usually expect even future bets to break even if they have lost money consistently in the past. The average gambler predicts they will break, but in reality they lose 7.5 cents for every dollar they bet.
Despite evidence from their recent track record, gamblers retain a misguided optimism. They ignore many of the mathematical truths about bets and maintain many false expectations. Generally, participating gamblers:
– I believe they have an edge, despite their P&L showing that they are not.
-deny (at least itself) the deep advantages the house holds.
– Claim to do this for entertainment.
This is more than just excessive optimism. It also reflects an industry that is very skilled in exploiting human psychological compositions.
Investors share many of the same abilities. Despite the obvious evidence to the contrary, they are overconfident in their abilities and ignore the benefits of simply being a home (indexing) rather than trying to defeat the house (alpha). I enjoy not only the money I play, but also the money I'm really enjoying.
It's an old, but true story. We assume we are investing when we are guessing what we actually do often…
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A few years ago (2015?), I was on a panel at a Salt Conference in Las Vegas. It was held at the Bellagio Hotel & Casino. I will never forget my experience at check-in. They had famously bought many valuable artworks held at the on-site gallery. However, it's not flashy enough for Vegas, so they did a big deal about displaying two of Monet's works on the lobby wall. They set up velvet ropes and recently encouraged the lines they form to see the pieces at a price of around $40 million.
After checking in, I wandered to work to see it. I will never forget the exchange between the couple in front of me. These tourists were intrigued by the work. “ah, HoneyThe husband told his wife, “Win Monet. ” At the time, I thought he was pun about the similarity of artist names and general words for cash.
In hindsight, I was wrong – I now realize he is seriously dead…
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“Is it possible that we are completely misunderstood for our own great damage?”
It's worth asking yourself questions about the various odds surrounding money, including risky capital, gambling bets, speculation…
sauce:
Do sports bettors need consumer protection? Evidence from field experiments
Matthew Brown*Nick Grassley Mariana Guido
Stanford University†January 23, 2025
Sports bettors are far more confident than they should be
By Nick Fortuna
Wall Street Journal, February 9, 2025
I bet $10,000 every Sunday
By Charlie Locke
BusinessWeek, February 6, 2025
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1. summary:
“Reflective policies in the sports betting market are motivated by concerns that demand may be skewed by behavioral bias. We are exaggeration and self-control regarding financial returns and self-control for sports betting demand. To measure the effects of two biases on issues, we conduct field experiments using frequent sports bettors. We find that there is widespread and over-prevalence of financial benefits. The average participants predict that even they will break, but in fact they lose 7.5 cents for every dollar they bet. We also find evidence of serious self-control issues, but these are overloaded. It is smaller than the one. We estimate a biased bet model and use it to evaluate some correction policies. Our estimates show that the surplus maximizing correction excise tax on sports betting is a general one. It suggests that it is twice the magnitude of the tax rate. Estimates substantial heterogeneity in overall bettor bias. This means that targeted interventions that directly eliminate bias can improve taxes. However, it is difficult to eliminate bias. It shows that the two bias correction interventions that the gambling industry likes are not effective.”
Please pre-order on March 18th, 2025
