Betting on the black swan or how to predict a sensation.

In the Middle Ages, it was believed that black swans did not exist. In those days, this term was widely used to name something unreal. Nowadays, the expression is used in betting; studying betting is impossible without understanding the basic terms. So, the word is used now thanks to the American economist Nassim Taleb, who published a book with the same name.

The use of the works of an American writer in betting allowed us to draw interesting conclusions. In that book, he described unpredictable phenomena in the economy. By the way, even pandemic was mentioned in this book, which happened way after the book was published. Let’s talk about this in more detail.

Black swans in betting

Looking at it from a global perspective, one of the most unpredictable results was the victory of the Greek team at Euro 2004. The bookmakers set a coefficient of 1000 for such an outcome. It was quite an interesting case when a Greek user bet 1000 dollars on the national team’s success and eventually won a million.

It is worth looking at the incredible victory of Leicester in the Premier League 2015/2016. Such long-term bets are sensational. They are rare. Managers of the betting establishments assure that such bets are no more than 3% of all money. It turns out that black swans should be looked for at the lower levels, where bookmakers set high odds.

The loss of Bayern in the German Cup on a visit to Borussia M is a real sensation. Of course, it could happen that the club makes a mistake, and the team can lose in this case. But it was impossible to foresee that the game would end in such a lopsided score.

This game is a vivid example of a black swan. Real Madrid lost to the Ukrainian Shakhtar reserve team. Then, during the Covid-19 pandemic, the almost entire team had to quarantine. Most believed that the success of the Spanish was guaranteed. No one could have imagined that the Ukrainian team would win. And it is not the only case. Sensations happen in the football world. Betting opens up excellent opportunities, and players can win a decent amount at high odds from time to time.

Difficulties forecasting black swans

Experienced bettors identify three key reasons that prevent promising events from being worked out. Let’s have a look at the factors of influence.

Filter bubble

On the vastness of the internet, you can find hundreds of resources offering event forecasts. Forums, where bettors discuss and analyse particular events, are pretty popular. Such resources provide essential information but, at the same time, can be confusing.

​​Scientists have long proven that people easily follow the majority’s opinion, even if at first they had a different position. This factor is commonly known as the crowd effect.

If many agree on one decision, it doesn’t mean that it is the right one. Under pressure, many bettors, especially beginners, give up their position. Often they deeply regret their decision. Let’s look at the earlier mentioned game between Real Madrid and Shakhtar. Then the resources unanimously assured that Shakhtar’s defeat was inevitable. The team did not play with the main squad, and the Spanish were in good shape in their home arena. The situation seemed obvious. But the filter bubble played a cruel joke. In betting, such events which destroy all patterns and assumptions can occur from time to time.

​​As you can see, the information bubble can be confusing. While analysing, it is worth considering data from different sources, but never believing it 100%. Always leave some room for your position, even if it is radically different from the experts’ opinion.

Statistics in forecasting

In statistics, players often look at the numbers and try to find the key to victory. In fact, you shouldn’t follow it blindly. For example, FC could lose the last two rounds because part of the leading team could not participate in the game. The team will solve their problems by the next match, and the primary team will play. The bettor can ignore the reason for the loss and make an erroneous bet. If we are to focus on statistics, then it is always worth checking and rechecking the basis for just such numbers. Don’t trust the numbers blindly.

That insidious hindsight analysis

A bettor might see a familiar situation and, for some reason, decides that the outcome will be the same as previously. Of course, it could happen. But one shouldn’t blindly believe such an outcome without additional signals. There are several parameters that can cause a similar result.

Let’s take football, for example. Often the meeting of the game of the leaders ends in a draw. To verify the validity of such a position, two conditions must be met:

• The difference between opponents should not be more than 3 points. With such a difference, each team acts especially carefully. The club that loses is trying to hold its position and, in every possible way, prevent the gap from enlarging. Leading FC will make every effort to keep their positions. In simple terms, teams will try not to lose their positions and get ahead. If the difference reaches 4 points, the laggards will be forced to take more risks and move forward. Such meetings are often very productive.
• Both teams are in good shape. To implement it, you will need to analyse the current situation and determine the prospects for yourself.

For example, the game often ends in a draw when two leaders meet. However, due to laziness or typical self-confidence, the player did not analyse the current situation. If they had done the analysis, they would know that one of the teams was in a stronger position. This is likely to change the situation on the field radically.

How to find black swans

You should realise that not all players are ready to take risks and place bets at high odds on events that are difficult to predict. If you are prepared to take risks, you should understand how to insure yourself. Never bet on a team that is guaranteed to lose at odds of 15. Choose a more benign option, for example, F (+2.5) for 1.8-2.

Look for options with high odds. Let’s say you will search within the (P1, X, P2) outcomes. In this case, look at the following parameters:

• The crisis of one of the leaders, but analysts inertially set a low coefficient.
• The favourites played an emotional match and won. In football, often, a big victory over a strong opponent is followed by a defeat. From the psychological point of view, this phenomenon is explained by the lack of emotions.
• Loads of a favourite champion. When everyone predicts a 100% victory, there are very high risks of losing or drawing. It would seem completely illogical, but such a phenomenon is too frequent. Please note that psychologists and experienced bettors explain this phenomenon through team self-confidence. When success is prophesied to the team, the players relax to some extent and partly give the opponent a chance to win.

Atlético played with such an outcome at a home meeting with a championship outsider. There were a minimum of victories, a large number of goals conceded, and it would seem that a crisis was inevitable. In a similar situation, you can choose one of the options:

• Place a bet on a positive handicap of a potential outsider based on the Flat strategy.
• Make a bet on the victory of an outsider at a 12-13 coefficient. In such a situation, it is worth applying the catch-up strategy. A significant coefficient will allow you to raise the bet gradually. The most important thing is to choose events based on the above three factors.

Still sceptical about the possibility of making big money searching for black swans? We cannot argue that it is complicated to predict the result of events, especially if you take a risk and bet on apparent outsiders. The key to success in such actions is regularity. While playing at high odds, there will always be a chance to win a large enough amount to cover the failures. Note that beginners in the field of betting should not take significant risks. But even if all the experts unanimously say about the fiasco of some team, and you have found signs of a possible win, it’s worth the risk. Don’t be influenced by the crowd.

Black swans are real in betting. Those who learn how to look for them will be able to earn crazy amounts on bets. But never forget that the risk is too big. If you are not experienced enough and are not ready to take risks, it is better to consider more traditional strategies.