The facts are pretty stark – over 98% of people who gamble lose money overall. That’s pretty shocking – it means very few people actually have anything to show from their betting activity and some people have sadly made huge gambling losses.
And yet millions of people around the world still carry on betting, many of them on a regular basis.
So what’s going on? Why do so many people lose money gambling and is there a way to join the elite 2% who make an overall profit?
We’ll take a look at these questions below.
“The House Always Wins”
You’ve probably heard the popular phrase “The House Always Wins.” It is usually used in reference to casinos, who have an in-built edge on all games they offer.
What it means is that whilst you may have a lucky evening occasionally and come out having won some money, over the course of the millions of bets placed each year the casino is statistically guaranteed to make a profit.
This in-built edge is often referred to as RTP, which means “return to player” and can be quantified so you can see exactly how much of a disadvantage you have against the casino on each game.
If we take roulette as an example, imagine you are betting on red. There are 18 red numbers, 18 black numbers and one green number, 0. So your chances of winning are 18 in 37, which means the house has a 2.7% edge over you.
And that’s only on European roulette – in the US there are two zeros so the house edge is even bigger at over 5%. So for every £100 bet, the casino takes an average of £5 profit.
The house edge varies by game, with the house having only a 0.28% advantage in Blackjack to over 5% in Caribbean Stud Poker.
In sports betting, the house edge is normally called the “overround.” In football it tends to be around 5% when comparing the best odds across the market but in horse racing can be even worse, often over 20% when looking at starting prices.
On popular sporting events on the exchanges you will often see a very low overround of less than 1%. But you have to factor in commission which will eat into your winnings. Commission can be as high as 5% with Betfair.
What all this means is that unless you are able to identify instances where the odds are wrong – often referred to as “value” – then the more you bet, the more likely you are to lose. Ouch!
And of course if we are talking about casino games then the odds are fixed so there is no chance to find value – quite simply the more you play the more likely you are to lose money (unless you happen to get very lucky and hit a jackpot or defy the odds of course).
So taking all this into account, it really isn’t surprising that most gamblers lose money. The house has have an in-built advantage that means over time they will win and punters – overall – will lose. It’s a mathematical certainty. You have probably heard the phrase “you never see a poor bookie.” Well, it’s pretty accurate. Just for the record, Bet365 made £682m profit last year, whilst Paddy Power Betfair made £473m. That’s all money they took from us, the punters.
But then at the same time, there are some people who do make money gambling. A select few make a lot of money – Patrick Veitch, for example, apparently took £10m off the bookies in 8 years and figures like Alan Woods and Bill Benter have made hundreds of millions from betting.
So what’s going on? Why do some people make money whilst the rest of us lose?
Let’s have a look at these questions below.
What Type of Gambler Are You?
When looking at why people lose money betting, it is necessary to break people down into different categories of bettors, depending on their behaviour and goals. We would say there are essentially four categories of gamblers.
1. The Pro
This is the elite 2% of gamblers referred to earlier who actually make a profit from their betting. They approach their betting like a business, are cool-headed, disciplined and devote a great deal of time and effort to finding value. They keep meticulous records of all their bets, refine their strategy over time and are always trying to make sure they have an edge over other punters.
2. The Recreational Gambler
This type of gambler sees betting as a bit of fun, something to make a match they are watching more interesting or to have some banter with their mates down the pub. They normally just bet a fiver or tenner and don’t spend much time researching form or studying stats. For them it’s just a form of entertainment – something they do occasionally and don’t really expect to make a profit from overall. That’s fine with them though – the odd win here and there keeps them happy and they are only risking a tiny percentage of their income on betting, so even if all their bets lost it wouldn’t be a problem for them.
3. The Addict
This type of gambler suffers from an addiction and is always looking for the next opportunity to gamble. They tend to bet on a whole variety of things from casinos to slots and bingo, scratch cards and any number of games of pure luck, hoping the next win will be the big one that makes back all their previous losses.
They are probably in denial about how much money they have lost and don’t keep records of their bets. They gamble in a scattergun way, betting at random and compulsively. For this group it would be best to stop gambling altogether and seek help, as it is unlikely they will ever make a profit from betting and risk suffering considerable harm by continuing.
4. The Apprentice
The fourth category is made up of those who understand most of the basics around gambling such as the concept of value, the bookies’ overround, how markets work and so on. They could, with the right attitude and by applying themselves, become profitable at gambling but at the moment there are things holding them back and tripping them up. It is on this group that we want to focus our attention now.
Where It’s Going Wrong
For those in the “Apprentice” group, there are some classic mistakes they tend to make that contribute to them losing money. We have made many – if not all – of these mistakes ourselves so know how easy it can be to fall into them. But learning to spot them and to avoid repeating them is the key to moving out of the Apprentice group and into the Pro group.
Mistake #1: Jumping From System to System
This is one of the most fundamental mistakes aspiring gamblers make. Whilst recognising that following an expert could help them become a better gambler, they go about it in the wrong way.
Rather than picking a tipster (or group of tipsters) and sticking with them, they hop about from one tipster to another, giving up on each one as soon as it hits a losing streak. What this means is that they are consistently losing money, because they never stay long enough with a tipster to see it succeed in the long run. After a losing week or month they give up, taking an incredibly short-term approach to their betting.
This sort of mentality is very damaging and greatly inhibits the gambler’s chances of becoming profitable. They are psychologically unable to deal with losing runs and without changing their mindset to a more long-term one are unlikely to ever make money from gambling.
Mistake #2. Wanting to “Get Rich Quick”
In a similar vein is the gambler who is looking to “get rich quick.” This person gets roped in by the alluring promises of riches made by the sales pages of online betting systems, with stories about how some “ordinary bloke” discovered a brilliant betting strategy that lets him live the life of his dreams with flash cars, exotic holidays and the like.
These betting systems almost always turn out to be duds and not only has the buyer had to fork out for the system, but they have lost a fair amount of cash from following it too.
The sad fact though is that rather than learning from the experience, they will get roped in again not long after by another system making the same promises of untold riches.
Mistake #3: Not Having a Big Enough Betting Bank
This is perhaps the most common mistake the aspiring gambler makes. Having discovered a promising strategy, they don’t allocate a big enough betting bank to following it, staking far too much money on each bet and therefore not having enough money to withstand the losing runs.
Inevitably a downturn will hit at some stage and they will either get wiped out completely or be so dispirited they give up on the strategy, even if it was a long-term winning one. Had they allocated a more sensible bank and smaller stakes, they would have been able to withstand the losing run and to enjoy the long-term profits that would ensue.
Mistake #4: Not Keeping Records
There is no prospect of identifying where your weaknesses are and improving unless you keep detailed records of all your bets. Even worse, you may not have an accurate picture of what your overall profit/loss figures are. Gamblers can be guilty of self-delusion at times, only remembering the wins and forgetting the losses. That thought-process can be damaging, potentially hiding the extent of a gambler’s losses.
Mistake #5: Not Spreading Risk
Any system or strategy has its ups and downs, no matter how good it is. Putting all your eggs in one basket and following just one strategy is risky. Much like in the stock market where people don’t just put all their money into one share but instead spread it around a of portfolio of different shares, so it can pay to do the same with betting. Picking a portfolio of tipsters and systems and allocating a suitable bank to each of them can help to spread the risk and allow for the ups and downs of individual tipsters to be smoothed out across the portfolio.
The Mistakes – Summary
These are just five of the main mistakes that gamblers make but of course there are many more like chasing losses or risking more money than you can afford to lose. Those are ones we would associate more with the “addict” rather than the “apprentice” though and it is these five that are the most common with gamblers who have the potential to make a profit but just aren’t doing so at the moment.
Getting It Right
By identifying the most common mistakes aspiring gamblers make it allows us to identify what people could change so they can get it right and start making a profit. Here are some suggestions in that direction:-
- – Don’t jump about from system to system and give up as soon as you hit a losing run. It is advisable to follow something for at least 3 months before judging its performance. That is our minimum review time on this site and we often run reviews for 6 months before passing judgement – and then continuing following services for years after that. Find some good tipsters and systems and stick with them, don’t give up at the first hurdle.
- – Avoid big bold sales claims promising you fantastic returns. The old phrase “if it seems too good to be true it probably is” contains a lot of wisdom. If something claims to make thousands of pounds per month in profit, ask yourself why the author is selling it for a fraction of that. Wait to see if the system stands up to testing from a trusted third party like a review site, or if its results aren’t independently verified anywhere then just avoid it – most likely it’s a scam.
- – Make sure you have a big enough betting bank. It is easy not to allocate a big enough betting bank to following a tipster or system. Often the tipster themselves won’t even advise a big enough bank. But if you have a suitable bank it will make it a lot less stressful to follow the tipster and those drawdowns will be much more bearable. A rule of thumb is look at the advised betting bank and then double it – that will probably be more appropriate.
- – Compound your winnings. Using a bigger betting bank will mean smaller stakes, but you can grow those stakes by compounding the winnings or using a fixed percentage of your bank (e.g. 1%) on each bet. Einstein called compounding “the eighth wonder of the world” and if you allow your bank to grow in this way then the rewards can be quite amazing.
- – Don’t place random bets. When there’s a big sporting event on with lots of hype around it, there is a temptation to put a bet on to make it more interesting. Other times you may be bored and fancy a wager. Don’t do it – professionals never would.
- – Keep records of all your bets. This will allow you to keep on top of all your betting and see where you are going wrong – and right, thus facilitating improvement.
- – Spread your risk. Decide how much money you have to invest, then split that investment between say 5-10 different tipsters or systems, making sure of course that each one has a sufficient bank allocated to it.
If you follow these simple guidelines then chances are you will be well on your way to improving your betting.
Conclusion – Joining the 2%
The simple fact is that most gamblers lose money because bookies have an in-built advantage. This is called the “house edge” and can be anywhere from 1% up to 30%. So in other words, for every £100 that is bet, the bookie takes £1-£30 in profit. In the case of exchanges, you must pay commission of around 2% – 5% on all your winnings, which you must also overcome if you want to make a profit.
That means unless you are able to identify value bets – instances where the bookie has put up the wrong odds for a selection – then the more you bet, the more you are likely to lose.
There are some types of gambler who are never likely to overcome the house edge – what we term the “recreational gambler” and the “addict” – because of their own flaws.
There are other gamblers however who have the potential to become profitable – or at least to improve their performance – if they took the kinds of steps we have listed above.
Overall it is about a change of mindset from one of wanting to “get rich quick” to approaching betting in a more professional, measured way. If you were running your own business, you would keep records, remove unnecessary expenses, analyse which things are making the most profit, invest carefully and so on.
That is the same approach to take in betting and it is the approach that the elite 2% of gamblers who make money take.
Ultimately of course, making money will also rely on having a profitable strategy. If you have the time and skills to develop your own strategy, then great, with the approach we have identified above you could turn that strategy into a valuable source of income.
If not, there are a number of strategies we have found – listed on our Winning Systems page – which could help give you the edge over the bookies. There is matched betting of course, which if done right can guarantee you a profit over the bookies, but there are also some very good tipsters like those at Betting Gods and trading strategies like Exponential Bet that have proved their edge over the long term.
If you choose any of these systems or indeed choose your own strategy, we hope this article has given you some understanding of why most gamblers lose money and how you can avoid being one of them. And most of all, please make sure you gamble responsibly and only risk money you can afford to lose.