Journal of Gambling Studies

, Volume 31, Issue 1, pp 73–89 | Cite as

Delusions of Expertise: The High Standard of Proof Needed to Demonstrate Skills at Horserace Handicapping

  • Matthew Browne
  • Matthew J. Rockloff
  • Alex Blaszcynski
  • Clive Allcock
  • Allen Windross
Original Paper

Abstract

Gamblers who participate in skill-oriented games (such as poker and sports-betting) are motivated to win over the long-term, and some monitor their betting outcomes to evaluate their performance and proficiency. In this study of Australian off-track horserace betting, we investigated which levels of sustained returns would be required to establish evidence of skill/expertise. We modelled a random strategy to simulate ‘naïve’ play, in which equal bets were placed on randomly selected horses using a representative sample of 211 weekend races. Results from a Monte Carlo simulation yielded a distribution of return-on-investments for varying number of bets (N), showing surprising volatility, even after a large number of repeated bets. After adjusting for the house advantage, a gambler would have to place over 10,000 bets in individual races with net returns exceeding 9 % to be reasonably considered an expert punter (α = .05). Moreover, a record of fewer bets would require even greater returns for demonstrating expertise. As such, validated expertise is likely to be rare among race bettors. We argue that the counter-intuitively high threshold for demonstrating expertise by tracking historical performance is likely to exacerbate known cognitive biases in self-evaluation of expertise.

Keywords

Horse racing Expertise Monte Carlo simulation Self-assessment Statistics Performance-monitoring 

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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  • Matthew Browne
    • 1
  • Matthew J. Rockloff
    • 1
  • Alex Blaszcynski
    • 2
  • Clive Allcock
    • 2
  • Allen Windross
    • 3
  1. 1.Institute for Health and Social Science ResearchCQUniversityBranyanAustralia
  2. 2.School of PsychologyUniversity of SydneySydneyAustralia
  3. 3.Balmoral Consultancy ServicesSydney, ThornleighAustralia

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