Short Term Volatility versus Long Term Predictability
So far we’ve talked about randomness, independence of events and house advantage and concluded that all of these factors help ensure that the gambling operator will make money over time. On the other hand, it is always possible to win on any single bet. Gambling operators know that, in the short term, a player can win (short term volatility), but if someone continues to gamble, it becomes more and more likely that the overall results (cumulative) will be a loss (long term predictability).Consider the following chart showing the odds of being behind or ahead when betting on red or black in roulette (single zero roulette wheel):
As you can see, some players could be ahead after 1 or even 100 spins (about two to three hours of play). After 1000 spins, less than 1 in 5 players would still be ahead. After 10,000 spins, not even 1 in 100 players would still be ahead.
Short term volatility means that you might win the next bet. Long term predictability means that over time, it’s almost certain you will have lost money.
It’s difficult for most players to view their gambling results in the long term – most people are more interested in how they’re doing right now. That’s one of the reasons in favour of keeping a long term record of your gambling. That way, you can look back at the amount of time and money you’ve spent and decide if it’s something you wish to continue.
Law of Large Numbers
Closely related to long term predictability is a mathematical concept called the Law of Large Numbers. In gambling, it basically means that, over the long term, your actual overall results (cumulative) will tend to drift toward the long term average results for that game. For example, if you flip a coin continuously for days on end, the overall results will tend to drift towards 50% heads and 50% tails, even though each and every flip is random and independent of all other flips.