Sports Betting and the Green Lumber Fallacy

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It would almost be a no-brainer to suggest that the #1 trait of a quality sports gambler would be to have an in-depth knowledge of every single team, player, stat, and trend whether it’s the NFL, MLB, or EPL that they are betting on in order to take advantage of the best offshore betting sites. Well, the green lumber fallacy suggests that’s not true at all.

The green lumber fallacy comes from the book ‘Antifragile’ from Nassim Taleb based on a theory that humans tend to cloud the factors that are unimportant with the ones that are most relevant when it comes to decision making. The ‘green lumber’ name comes from a successful lumber trader named Joe Siegel that remarked one day that he didn’t know why people paid premium prices for lumber that was painted green.

“Green” lumber of course isn’t called that because it’s painted green, it refers to the wood being freshly cut instead of kiln-dried. The fact that Siegel could move record numbers of lumber without actually knowing the properties of it means there are other things that he focused on (order flow, price action) instead of the product itself – and it worked.

  • Green Lumber and Sports Betting

Can the tale of the lumber guy (or another anecdote about a Swiss franc trader who made millions trading the currency despite not knowing where Switzerland was on the map) translate to sports betting? Is looking at line movement, public betting percentages, and market share, more important than injuries, stats, and trends.

Something very important to note is that even the most diehard stats geeks and team fanatics still don’t have as much information about a game as the Vegas oddsmakers do. Point spreads are set what they are at because of injuries, a team’s win/loss road record, or their history performing at a certain stadium or city.

What the experts or sharp, bettors do is take the sports information they know about a game and compare it to the corresponding point spread. Therefore you really do need to have knowledge of sports to be good at betting on it long term, because you have to know what factors are playing into the corresponding point spread.

  • Reading the Spread and Not the Game

Expert sports bettors already have set their own point spread based on their scientific models before they look at what oddsmakers have released. When the numbers don’t match up, this can identify a trap – or a point spread that is designed to reel in public bettors who see an easy wager.

Something else that seasoned bettors look at is the percentage of the public that is on a particular side and how the line is moving as a response. Everybody taking one side but the line not adjusting means that Vegas is smiling because their trap worked. It’s also important to note that the line may not be moving simply because the sharps – or the big money – are on the other side as sportsbooks generally like the money action to be about as 50/50 as possible guaranteeing them a win since every losing bet pays 10% on the vig.

  • Is the Green Lumber Fallacy Real?

Over time it’s possible that a person could be successful betting on sports even while knowing nothing about the game and just reading the point spread movement, but why wouldn’t you want to know everything about your wager? The green lumber trader may have had success going just off the numbers, but it also makes you wonder how much more profitable he would have been had he known what his product actually was?

 

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