Variance in games of chance and skill games
This article will be talking about the difference in variation between those games that are pure games of chance, and those games that have some decision-making involved. For example, roulette players will be constantly exposed to random chance and nothing else, while a person who bets on football and searches for betting tips and predictions will be able to possibly gain an edge over the bookmaker. They can do that because the outcome isn’t totally random, there are many variables involved and a clever punter may give extra importance to variables that matter.
Games of skill
The most well-known game of skill in gambling is poker, and skill is so important here that most people don’t even consider it gambling, even though it’s a game which is often played in casinos, you can win or lose money, and the outcome of the hand greatly depends on the random shuffling of the cards. This is a thing that can be done professionally and a good player can continue winning even when the hands aren’t good for him, so this is definitely a game of skill.
Some people consider betting a game of skill to, insofar that they refuse to use the term “gambling” for placing a sports bet. This is also true, as all sports punters are trying to gain an edge over the bookmaker by gathering better information that will hint at who will win. In this case, the punter is trying to “beat” the bookmaker, who set the odds one way or another, often in an attempt to lure the punter into placing a certain bet. Psychology matters a lot here, and although it seems straightforward, it takes a very complex effort to actually beat the bookmaker.
What games of skill – the ones we mentioned and the ones we didn’t – all have in common is reduced variance. Since you can gain an edge over the opportunity you’re presented with (a hand in poker, or odds on a football game), you can greatly reduce the probability of a long losing streak. In pure games of chance long losing streaks are brutal as they depend on random chance alone, and all hell can break loose when you only got randomness and nothing else. In games of skill, you control your own destiny to a large extent, the probability of losing is smaller, and therefore the chance of a long losing streak is much smaller. Like, two to three times smaller, perhaps even more.
Games of chance
If we take roulette for example, as the most well-known game of chance, we’ll quickly realize that long losing streaks are not only possible but very probable. For example, if each side of the black/red bet has a chance of 48.60% (because of the zero), then the chance of a losing streak of five spins is over 3%. If you’re playing martingale or one of the other betting systems, you’ll already be placing a large bet on your sixth spin – and will be unpleasantly surprised that the chance of losing on that spin is still 51.40%, just like on every other spin before or after that.
Choose your variance carefully
It’s vital to your profit on gambling – choose your variance carefully and be well aware of it before you start playing. You don’t want to be playing a game of random chance while thinking you can affect the outcome with your decision. That would be a road to bankruptcy.