Most people bet with their hearts, not their mind. Here are 5 reasons sports fans chose to support their favorite them, despite them losing.
Two events in the last few years have catalyzed a sharp rise in sports betting in the United States. The first came with the Supreme Court’s 2018 decision that expanded the legality of sports betting well beyond Nevada, and the second was the Covid-19 pandemic.
Casinos were closed and Americans were no longer budgeting for eating out and entertainment. Companies like DraftKings and FanDuel did for the sports gambling industry what RobinHood did for retail stock traders—made access to their respective industries easy.
For many, this became a harmless recreation, a way to make games more enticing and connect with friends. For others, it was a financial disaster. In an interview with NBC, one sports bettor claimed to have emptied his 401k and chased his losses with high interest loans, eventually losing over $200,000.
He is not alone. Aggregated sports betting losses totaled $209 million in 2018, a number that is expected to balloon to $7.5 billion by 2030 as regulations relax nationwide. So, the question arises: why do fans keep betting on losing teams? Here are 5 psychology-based reasons.
#1 Sunk cost fallacy
Maybe you’ve known someone who had been stuck in a fruitless relationship for years. You know they are unhappy, but they might say something like, “I’ve already invested 5 years into this relationship! If I back out now, It’s all for nothing!”
The sunk cost fallacy was popularized after a groundbreaking study revealed that we tend to attach greater value to losses than to gains. This mechanism is as true in love as it is in sports betting. When we suffer an irreversible loss, we may irrationally decide that we should “chase” our losses with another gamble.
#2 Unrealistic optimism
Unrealistic optimism, or hope, is typically not a bad thing when it is grounded in reality. However, chronic gamblers have a tendency to assimilate their reality to their hope as a kind of self-therapy.
Perhaps a sports bettor desperately needs money to pay off debt. Feeling trapped, they conjure fantasies of making one decisive bet that will eliminate all their financial ills. This fantasy becomes so powerful a tonic for reducing their real-world stress that they begin to believe that it’s not only possible, but likely, even destined, despite statistical realities suggesting otherwise.
#3 Tribalism and community belonging
A top-flight soccer match in Mexico was suspended in the 62nd minute as fights broke out in the stands between fans of the Queretaro home team and the opposing Atlas team. The videos of the brawls are brutal, and 22 were injured before the violence ended.
Your commitment to your sports team might not be so visceral, but if you continuously bet on a losing team out of loyalty, you are effectively operating under the same psychological laws that lead to opposing fan base brawls. That is to say, you are disregarding rationality in favor of community belonging.
#4 Illusion of control
Have you ever blown on a pair of dice before you roll them? This innocent habit is a manifestation of our tendency to believe we can control an outcome that is uncontrollable, called the illusion of control.
Some sports bettors have a lucky charm or a ritual that they associate with increased luck. In fact, pathological gambling has been shown to be highly associated with the illusion of control. Unfortunately, as far as we know, hot breath on dice doesn’t improve your outcome at the craps table, and is more likely to result in a gambler rationalizing bigger and riskier bets.
#5 Gambler’s fallacy
Say you bet on a coin flip. The coin has landed on heads three times in a row, so you bet that it will land on tails on the fourth flip. Of course, with your luck, it lands on heads a fourth time and you lose your money.
The gambler’s fallacy is the propensity for gamblers to believe that the frequency of past events affects the likelihood of their future occurrence. For example, the chances of a coin landing on heads is 50/50 each time it’s flipped, that doesn’t change just because it landed on heads three times in a row.
A 2010 study of 776 online gamblers found that those on a winning streak were more likely to win again because they typically chose safer odds than before, while those on a losing streak were more likely to lose again because they often chose riskier odds than before.
The logic, or lack thereof, of the losing gamblers was that their luck must eventually reverse, so they should bet more since every loss brings them closer to a win. This fallacy applies as much to coin tosses as it does to sports betting.
In summary
Sports betting isn’t going anywhere. 20% of men participate in sports betting in the United States alone, most aged 30-44. Sports betting revenue amounted to $1.55 billion in the United States in 2020, and the legality of gambling continues to expand.
As the industry expands, it will become ever more important for people to understand their own cognitive biases in order to keep a fun hobby from becoming the author of their financial ruin
