Why I gamble

I love making small bets with friends. If we’re watching Fear and Loathing in Las Vegas and I’m sure the main character is Johnny Depp and you disagree? Well, let’s put a dollar or two on it and check in imdb after the movie. (I was right. Pay up.) If we’re bullshitting about populations of countries and I think Vietnam is in the top ten most-populous countries in the world and you don’t, well, let’s put another dollar on it. Maybe we negotiate some odds, depending on how sure each of us is, the size of the pool of likely correct answers, and the victory conditions. (Oops, Vietnam is #13. I owe you)

The money itself generally doesn’t matter. It’s more fun to keep a running tab, anyway, because it gives bragging rights to the leader and motivation to the underdog. The whole point is that it’s too easy to have a wrong opinion, voice it, and never really feel the pain for being wrong. Putting trivial sums on the line sharpens your reasoning, and helps you remember the facts. I’ll never forget Vietnam’s 2009 population, and now I have confirmation that it really was Johnny Depp. Win-win.

Last year, I plunked down $60 on Intrade.com, a site where you can buy and sell “contracts” based on verifiable future outcomes in politics, weather, business, entertainment, etc. I figured that if I enjoyed betting on facts with friends, then I ought to enjoy betting on future outcomes with strangers, right? Besides, $60 isn’t all that much in the grand scheme of things. To date I’m down about $11 because of some terrible bets on the public option, and I’m currently all in betting long on Obamacare passing before June. But if I win, then I think I’ll just take my winnings, use it to help pay rent, and get out of the online betting business altogether.

The problem with Intrade is that it’s not just a simple up-or-down bet with a friend on a fact that is already known. You can’t decisively win or lose right now on Intrade. It’s a ‘prediction market’, with fluctuating prices based on new information. When you’re betting on the future instead of a fact, you can’t just bet and forget. You have to keep checking on the odds, stay on top of the stories, and make trading decisions on a regular basis. That’s way too much like work.

And then if you lose, what’s the moral of the story? What did losing teach you? Only that based on the knowledge you had when you made the bet, you overestimated the odds. But how is that going to help you in the future? The same situation never really comes around twice in life. Knowing the population of Vietnam in 2009 gives me something definite about the world to hang on to and use later. Knowing that I overestimated the likelihood of a public option passing in 2009 only tells me that I didn’t know enough to be right in 2009.

So from now on, I’m sticking with small-stakes, friendly bets on facts amongst friends. It’s fun, and it helps validate and correct my knowledge … which is more than I can say about Intrade.


3 Responses to “Why I gamble”

  1. 1 moses485 March 15, 2010 at 10:17 am

    So would you say that people who bet on future events of public opinion like those on intrade automatically become spectators instead of participants of society?


  2. 3 david(p) March 16, 2010 at 12:28 am

    I bet you’ll be back next time you think you’ve really got a unique angle on something.

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This is a group blog. JSC5 currently writes from the US. JSC7 writes from behind the Great Firewall of China.

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