Roulette wheel

The Hot Hand Fallacy

Taxonomy: Logical Fallacy > Formal Fallacy > Probabilistic Fallacy > The Hot Hand Fallacy

Sibling Fallacy: The Gambler's Fallacy

Forms
A gambler has had a streak of good luck.
Therefore, the gambler is "hot" and the good luck will continue at a probability greater than chance.
A gambler has had a streak of bad luck.
Therefore, the gambler is "cold" and the bad luck will continue at a probability greater than chance.

Exposition:

This fallacy is committed every day in casinos around the world, whenever a gambler thinks he's "hot". When gamblers are on winning streaks, and keep betting or increasing their wagers to take advantage of their good luck, they commit this fallacy. Despite it's name, gamblers also commit this fallacy when they think that they're "cold", and stop betting or decrease their wagers because they're on a losing streak. This is still the "hot hand" fallacy, because the logical mistake is the same.

The fundamental error is the same as in the gambler's fallacy, that is, the failure to appreciate statistical independence. Just as a fair gambling device does not remember its own past, it also does not remember a gambler's past. So, a gambler's odds of winning a current bet are not affected by whether the gambler has won or lost previous ones. Roulette wheels and dice do not have memories.

Exposure:

Source: James Sundali & Rachel Croson, "Biases in Casino Betting: The Hot Hand and the Gambler's Fallacy", Judgment and Decision Making, Vol. 1, No. 1, (7/2006).

Although Hot Hands are a phenomenon prevalent in Poker, it is actually a fallacy that Texas Holdem is all luck. Skill will negate short term variance and trump the effects of luck in the long run, whether you are challenging faceless players for money or playing live in Las Vegas.

No one is safe from being a victim of this fallacy. Even players who play on mobile casinos such as the ones found on casinojuggler.com are sure that if luck struck once and they won a game, they're more likely to win again in the next game, and vice versa. It seems that this fallacy transcends the medium one uses in order to play casino games. However, it can be avoided by being aware of it and changing one's thought process while gambling.

If you'd like to experience this first hand, but in a safer state, CasinoKiwi probably offers the best casino bonuses in 2014. But never deposit real money if you expect to win!