That gamblers do indeed have “winning” and “losing” streaks has been proved scientifically, reports The Economist (5/10/14). Research by Juemin Xu and Nigel Harvey at University College, London find’s that what is widely regarded as the “gambler’s fallacy” is fact, not fiction. The classic gambler’s belief is that good luck builds upon itself, while a spate of bad luck inevitably “reverts to the mean,” and reverses losses. Most sensible people agree that both beliefs are delusional.
“Using the power of the internet to round up a huge sample, the two researchers examined 565,915 bets made by 776 people,” and studied “winning and losing streaks up to six bets long. The probability of a first bet winning was 48%, and that of a follow-up winning again was 49%. After that, the streak took off. The third bet won 57% of the time. The fourth, if the third had won, won 67% of the time, the fifth 72% of it and the sixth 75%.” If the first bet lost, however, the “second slipped to 47% and thence held at 45%.”
The explanation, according to the researchers, has nothing to do with “lady luck … Rather, as winners’ winning streaks increased in length they started choosing safer and safer odds, which led them to win more often, though less profitably. In contrast, those who had experienced a losing streak went for ever riskier bets, making it more likely the streak would continue … Hot hands, then, are real. But they are created by a gambler’s behavior rather than by fortune’s wheel.”