Sports betting simulation in the math classroom

Back in February 2021, the University of Tennessee’s Haslam College of Business formed a partnership with the Wall Street Journal (see this article for the headline) that gave all students, faculty, and staff of the university a free subscription. Since I trade stocks, I figured it’d be a great idea to sign up, and I began reading WSJ’s newsletters on a regular basis, and also participated in their annual stock-picking contest this year.

One day, I saw that the WSJ released a sports betting simulation (which you can check out here if you have a WSJ account), that was really a thought exercise in gambler’s psychology and percentages. Here’s the idea: you start with $100 in virtual money, and can bet any amount of money up to what you have on a baseball team winning their game, which happens with a 57% probability, and this probability remains constant. This is done 10 times, or until you run out of money (which can happen if you bet too aggressively!). The goal is to make as much virtual money as possible. Afterwards, the article explains an optimal strategy, which identifies what is the theoretically best amount of money you should bet to maximize winnings in the long run. However, I don’t want to focus on the best strategy, and the formula isn’t something I’d care for my students to memorize for their next exam. Rather, I want to highlight some of the concepts that surrounded my class discussion before and during this activity.