James Holzhauer, a 34-year-old professional sports gambler, is blowing up the traditional "Jeopardy!" style of play — and taking home mad money as a result. Even if you're not competing on a game show, though, experts say you can take something away from Holzhauer's aggressive, and successful, strategy.
Holzhauer became the second person in the show's history to surpass $1 million in winnings in nontournament play.
The only other contestant to cross that threshold is Ken Jennings, who topped out at just over $2.5 million over 74 games. Earlier in his run, Holzhauer set a single-show record of $131,127. At this rate, experts say, he'll easily surpass Jennings as the reigning "Jeopardy!" champ.
For the record, Jennings is a fan, though he has also taken the opportunity to tease Holzhauer on social media.
The key to his success, Holzhauer has said, is that he bets big. Typically, contestants start with the first, lowest-dollar-value answer in a column and complete all of the clues in one column before moving on to the next. It sets a certain flow and rhythm to the game familiar to viewers and other contestants.
But Holzhauer starts with the highest-value clues along the bottom of the board, the answers worth $1,000 or $2,000 each, to build up his total. Then he homes in on the Daily Doubles, which allow a contestant to wager as much money as they have amassed on answering correctly.
Typically, contestants play it safe: FiveThirtyEight calculates that they have bet less than $2,500 on average since 2001. At one point in his run, Holzhauer's average was just under $10,000, and he had wagered $25,000 twice.
This allows Holzhauer to accumulate a fairly large total going into the more lucrative segment of the show, Final Jeopardy, where, again, he bets larger amounts than most contestants.
He told Wired his strategy is to "get some money, hit the Daily Doubles, bet big, and hope I run hot."
It helps that he has encyclopedic trivia knowledge, which allows him to get most of the questions right, and that he has mastered the skill of buzzing in before the other contestants, "Jeopardy!" experts say. Largely, though, he is distinguished by his attitude toward taking chances.
Holzhauer is so successful in part because he doesn't evaluate risk the same way most people do, Benjamin Soltoff, a data scientist and lecturer in the computational social science program at the University of Chicago, tells CNBC Make It. Soltoff wrote a blog post about the so-called Forrest Bounce, a tactic popularized in the '80s by "Jeopardy!" contestant Chuck Forrest that Holzhauer has adapted during his run.
While the Forrest Bounce is typified by players who seek out the Daily Doubles first, Holzhauer makes the most of it by building up his total before he finds them. That allows him to bet more and, ultimately, win more: According to FiveThirtyEight's calculations, he had found over 83% of his games' Daily Doubles, and answered them correctly over 91% of the time.
"If you look at most contestants, they tend to wager pretty small amounts even when they have a pretty sizable lead over their opponents," says Soltoff. "They tend to be risk-averse — they don't want to risk losing this money. James' approach is, 'Hey this is only money.'" So he bets it all, or more than what your standard contestant would be comfortable losing.
That can be an important mental shift to make if you want to win big. Typically, Soltoff says, if a contestant has won, say, $15,000, the player might be more conservative with future wagers to keep as much of it as possible — they don't want to lose what they think they already have. This is a phenomenon behavioral economists call "loss aversion," in which it's normal to be more scared to lose than excited to gain.
But Holzhauer isn't viewing that $15,000 as "his" to lose. He's viewing it as a means to make more money.
And, as Soltoff notes, because Holzhauer has done his homework, he's confident he'll usually know the right answer. That means he can safely embrace risk, rather than run from it.
Soltoff tells CNBC Make It there's something everyone can take away from Holzhauer's run.
"He's accepting risk pretty optimally, he's considering the true risk and reward in this situation," he says. "People are bad at assessing the probability of things in general."
Learning to assess risk — studying past data, looking for patterns — can help with a broad array of things, from investing to choosing between two job offers, Soltoff says.
That's not to suggest you should go out and invest in the next money-making scheme you can find. But you can likely make better-informed decisions by taking the time to actually assess what the benefits and drawbacks are in every situation, and then not being afraid of taking a chance.
"You need to actually think through, what are the gains and benefits, what's the probability of these things actually happening," says Soltoff. "If you think about incorporating that into your daily behavior, you should be able to produce better life outcomes."
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