The Hummingbird Blog

A Series of Insights Into Savings, Personal Finance and Behavioural Science

Part 3 - The UK’s gambling Problem

According to recent numbers, approximately two million people are at risk of developing a gambling problem in the UK. Of those, 400,000 are at serious risk of developing an addiction. Now, it should be said that we’re not talking about those individuals who play poker in the back room of a bar or who blow large amounts of money at a casino. Here, we are talking about regular people who take money from the paycheque and sink it into lottery tickets, bingo or any form of online gambling. Perhaps the worst part of all is that most forms of online gambling don’t require a great deal of money to get started. Therefore, it’s easy for individuals to get hooked on them without noticing how much money they are truly spending on them.

Consider this classic example:

Lots of people consistently play the same lottery numbers or late numbers (numbers that haven’t come up in a long time). This means that every time they purchase a lottery ticket, they play the same numbers.

The reasoning behind this strategy comes from the law of averages. In short, you are under the impression that if you play the same numbers long enough, the likelihood of them resulting in the winning ticket increases over time. They feel that if they play long enough, they’ll eventually win. In reality, lottery draws have no memory and the chances are always the same, over and over, on every single draw. It doesn’t matter if number 45 hasn’t come up in a year. The chances of it being drawn are always the same. Likewise, the chance that our “special numbers” will come up are also always the same and do not decrease over time. In essence, if we played random numbers on every single draw, the odds would still be the same.

People are victim of flawed logic and, more specifically, of the “gambler’s fallacy”. In other words, the player is led to believe that a particular outcome is more likely because it has not happened recently, of (conversely) that because a particular outcome has recently occurred, it will be less likely in the immediate future. Remember this, the odds of winning the Jackpot at the National Lottery with a single ticket are 1 in 45,057,474 in every single draw and they cannot chance depending on the numbers you play.

Ask yourself. If I tossed a coin, what is the probability of getting tail? You would probably have answered 50%. Now ask yourself, why should the probability change if I was going to toss it again? Now you understand the principle behind the gambler’s fallacy. We are led to believe that if I had 3 times tail as a result, it is going to be more likely to have head in the next toss. But the chances are still 50/50.

Eventually, yes the possibility of winning is there. However, the amount of time and money it takes to eventually make any strategy work is considerable.

As for the estimated cost of gambling addiction, £1.2 billion is no laughing matter. This is money that gets lost in debt, fees, and other associated costs that come with engaging in these types of gaming activities. It is incredible to think how far £1.2 billion could go if invested in productive activities. Collectively, this is money that would be much better suited if saved.

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