The Holzhauer Destruction May be Only Just Beginning
All games of chance have been forever changed by the great statistical revolution in how we think about variance and risk. Serious gamblers are familiar with the concept of EV, or expected value. Every time you make a +EV decision, it will pay off in the long run. This is the fundamental, golden rule of gambling. You may lose that single poker hand going all-in with aces preflop, but in the long run, you’ll win 80 percent of the time.
Consider the NBA. The Golden State Warriors have changed basketball by emphasizing something deceptively simple: in a vacuum, three-pointers are much more valuable than twos. Think about it like this: let’s say I’m an elite shooting guard like Steph Curry who makes 50 percent of his twos and 40 percent of his threes. If I were to shoot a million hypothetical shots, each three would be worth 1.2 points per shot. Each two would be 1.0. (Qualitatively, it’s obviously a little more complicated than that.)
Golden State recognized this for a market inefficiency. They pioneered a spacing-based offense that creates openings for their murderer’s row of talented shooters. Every time they shoot an open three, it’s +EV. They’ve won three of the past four NBA titles and are a heavy favorite to do so again this year.
Now James Holzhauer has brought the concept of +EV to its last frontier: Jeopardy! In a way, Holzhauer’s “Jeopardy!” reign was inevitable. The remarkable thing is that it took 35 years for someone to figure it out.
Holzhauer’s true genius arguably isn’t his trivia ability, although it’s first-rate. Nor is it his buzzer timing, the trickiest part of the game. Instead, his bludgeoningly aggressive style, betting more money on Daily Doubles and Final Jeopardies than anyone in the show’s history, has revolutionized the game as we know it. It was only a matter of time before a professional gambler with his acumen set his sights on Jeopardy! The show will never be the same.
Holzhauer’s intentionally plays the Jeopardy! game board in reverse, starting with the hardest questions. Partly, this is a concession to the fact that the caliber of trivia on Jeopardy! is actually not that tricky. Most of the time, all three contestants know the answers. (Having appeared on the show in 2011, I can personally attest to this.) “Jeopardy!” is, foremost, a game about buzzer skills. The best of the best differentiate themselves by reaction times, but returning champions also enjoy an enormous home-court advantage. Every time you watch an episode of Jeopardy!, the person on the left has just won. They tape five shows a day, two days per week. Most of the time, that champion is only minutes removed from their last win. Momentum matters.
The optimal way to play this game is via wild, unchecked aggression
But there’s another crucial aspect to Holzhauer’s style: the Daily Double clues, three out of 60, are vastly more valuable than a generic answer, and likelier to appear in those high-value rows. Many successful contestants have realized this. Holzhauer is the first to defy convention, embrace variance, and bet eye-popping amounts of money on them, irrespective of category or value. A successful Daily Double wager doesn’t just earn you money, it eliminates opportunities for your opponents to catch up. It can also bankrupt you, but if you’ve built up a Holzhauer-sized bankroll by racing through those $2000 clues, it may be immaterial.
Jeopardy! producers politely encourage contestants to start at the $200 level and work their way down. They’re making a TV show, after all, and linear continuity is easier for the audience to follow. Holzhauer has proven that they’re full of shit. The optimal way to play this game is via wild, unchecked aggression. You have to maximize those inflection points if they occur, and quickly amass as much money as possible if they don’t.
This isn’t another Moneyball. There’s an astounding amount of risk inherent in Holzhauer’s betting, and it will eventually fail him, as surely as Steph Curry will clank an important three in the NBA Finals. Yet there’s no downside to his strategy.
Like any serious sports bettor, Holzhauer is intimately familiar with leveraging small edges for maximum profitability over time. A sports bettor needs to win more than 55 percent of the time to beat the 10 percent juice on every bet; even the sharpest bettors strive to achieve a 60 percent winrate. Thus far, Holzhauer has missed Final Jeopardy once. His FJ bets–like a whopping $60,000 in his record-setting game–only seem large because there seemed to be a logical upper limit to how much one could win. We now know that there might not be.
The smartest thing a Jeopardy! contestant can do is to try to ensure a runaway entering Final Jeopardy: a lead that more than doubles the nearest opponent, putting the game out of reach. Holzhauer has proven a subtler point, though: the second smartest thing a contestant can do is make a gigantic FJ wager after all that Daily Double aggression has paid off. As long as you’re coming back for the next game, shoot for the moon. Thus far, he’s had runaways in all but one game. He broke the million-dollar mark on his 14th game on Tuesday, a per-game average nearly as high as the pre-existing single-game record.
The scariest part of this is not that he’s obliterated so many records, but that he hasn’t yet had to make any truly difficult decisions. Given his background, it’s clear that he has intellectual weapons yet to be deployed. The James Holzhauer Era feels like it’s in full swing, but it may not have even truly started.