The Gambler's Fallacy: Past Events Impacting Future Chances

The gambler’s fallacy is a cognitive bias commonly associated with gambling, sports betting, and coin tosses. Gambler’s fallacy occurs when the player convinces themselves that a certain outcome will happen based on a series of events. For example, a player believes the next dice roll will be six because there were rolls with fewer landings on sixes. However, past outcomes don’t necessarily predict future outcomes, resulting in poor decision-making.

What is the Gambler’s Fallacy?

A gambler's fallacy is otherwise known as a cognitive bias. The player believes each event is influenced by previous outcomes. This line of thinking doesn't suggest the player is right and will win the event. Gambler's fallacy is typically incorrect because it doesn't change the probability that these events will occur.

Is this the same as the “Monte Carlo Fallacy”?

Yes, gambler's fallacy is often known as Monte Carlo fallacy. According to a study by the University of Wisconsin, it was named after Casino de Monte Carlo in 1913.

Gambler's fallacy doesn't just occur in gambling. Investors and traders sometimes fall into this trap when they believe a stock will rise or fall after a series of similar outcomes, wrongly assuming that the next event will be influenced by the previous ones.

Understanding independent vs. dependent outcomes

It’s important to understand the outcomes between independent and dependent events. Two events are independent if the outcome of the first does not affect the second. Events are dependent if the first event influences the outcome of the second.

Examples of independent events:

Choosing a card from a deck, shuffling the deck, and choosing another card
Flipping a coin or rolling a die
Flipping a coin or rolling a die twice

Examples of dependent events:

Choosing a card from a deck and then choosing another without replacing the first card
Choosing two poker chips from a bag that contains ten black chips and ten red chips without putting either one back in the bag
Choosing which slots to play at a certain time, regardless of a winning streak

Gambler's fallacy can cause poor decision-making and financial problems. This can be dangerous for individuals who struggle with gambling disorder. To avoid this line of thinking, individuals must realize that each event is separate and not affected by previous events. Logic and probability trump gambler's fallacy.

How the Gambler’s Fallacy Can Lead to Problem Gambling

Gambler's fallacy can affect logic and decision-making, especially in individuals who struggle with problem gambling. It impairs their thinking and encourages them to take more risks after a series of losses. The individual will end up chasing losses, which is a sign of problem gambling.

There are several reasons why an individual might experience the gambler's fallacy. For example, they might not like the randomness that comes with gambling. They rely on gambler's fallacy to rationalize the random events and their gambling.

The individual might also use past experiences that are similar to future gambling events. They believe the results are an outcome of their skill. They could increase their wages to win the event.

However, the gambling frequency doesn't indicate whether someone has a problem. Someone who gambles periodically could still face emotional and financial consequences from gambler's fallacy and gambling. Problem gambling occurs when the individual is so preoccupied with gambling that it impacts every aspect of their life.

Problem Gambling resources & treatment options

Various treatment options for problem gambling are available. The most common are cognitive behavioral therapy (CBT), group therapy, family counseling, and psychodynamic therapy. Counseling teaches individuals about problem gambling and how it impacts them and their inner circle.

Treatment might also include medication and self-help support groups. Gamblers Anonymous offers help for those with a desire to stop gambling. A national helpline is also available, and many states have their gambling helplines with free information and resources. There is no FDA-approved medication that treats problem gambling. Some medications could treat co-occurring mental health conditions, such as anxiety or depression.

Birches Health offers virtual treatment for gambling addiction. Individuals will undergo an assessment, where they receive an official diagnosis. They will work with a licensed clinician, who is knowledgeable in the area of gambling addiction. Virtual treatment allows individuals to resume normal activities as they seek treatment in the comfort of their own home.

There are several options for taking the first step toward recovery with Birches Health:

You can also simply call 833-483-3838 or email hello@bircheshealth.com to get in touch directly with the Birches team.