Regression to the mean
What does "regression to the mean" mean in sports betting?
The tendency for an extreme result to be followed by one closer to average, because luck helped make the first one extreme.
Francis Galton named the idea in 1886 in a paper titled "Regression Towards Mediocrity in Hereditary Stature." He found that children of very tall parents were tall, but usually not as tall as their parents, and children of very short parents were usually taller than their parents.
In sports, a hot shooting week or a cold month often reflects real skill plus some luck. The skill tends to stick around. The luck doesn't. When you price a player or team, start from the long-run average and move off it only for a real change, like a new role or an injury.
Example
A player is a true 40% three-point shooter. The chance he makes 12 or more of his next 20 by luck alone is about 5.7%, so over a long season it will happen. If he does go 12 for 20 (60%), the best guess for his next 20 is still about 8 makes, not 12.
Related terms
Player prop
A player prop is a bet on an individual player's stat line, such as passing yards, points, rebounds, strikeouts or shots on goal, rather than on the game result.
Expected value (EV)
Expected value (EV) is the average amount a bet would win or lose per play if you could make it many times. Positive EV (+EV) means the price is better than the true chance.
Gambler's fallacy
The mistaken belief that a random streak has to even out soon, so a result is 'due' after it hasn't happened for a while.
Hot hand fallacy
The belief that a player or team on a streak is more likely to keep it going than the numbers support.
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