James Holzhauer made TV game show history when his total earnings on Jeopardy! topped $1 million on a show that aired yesterday. In the show's 55-year run, he's only the second contestant ever to do so. He won $118,816 in that game, a single-game record that blew right through the previous single-game record of $77,000 a decade ago. The strategy he used to win is something we can all learn from, whether we're good at trivia games or not.
What makes Holzhauer so incredibly successful at this game? There are a few answers to that question. First, he's very serious about being a game show contestant (he previously was equally successful on the show The Chase). In fact, he promised his late grandmother he would compete on Jeopardy! someday. So he's studied a lot of trivia over the years, much of it by reading children's books, which he says is a great way to learn about something you may not be all that interested in.
Next, he studied up on how to use Jeopardy's notorious buzzers, and then practiced the technique. Timing your buzz just right is a perpetual challenge--you have to wait long enough to have understood the question (or "answer," in Jeopardy's world), but you also have to buzz your buzzer before either of your two competitors buzzes theirs.
Those two tactics explain why Holzhauer is good at the game, but not why his winnings are so incredibly huge. That has nothing to do with Holzhauer's trivia skills and everything to do with his day job--he's a professional sports gambler.
Jeopardy! doesn't test just your trivia knowledge, it also tests your ability to take calculated risks, which is an ability all successful entrepreneurs need. Questions have a value that ranges from $100 to $1,000 (presumably, the higher-priced ones are tougher). If you answer correctly, you win that sum; if you're wrong, you lose the same amount. The vast majority of contestants, including the previous million-dollar record holder, Ken Jennings, proceed down the board from the lower-priced questions to the higher-priced ones. Holzhauer takes the opposite approach, starting with higher-priced questions, with the goal of getting an unbeatable lead over his opponents.
Heading straight for the bigger numbers also gives Holzhauer a better chance of finding the game's three concealed Daily Doubles, special questions that allow you to bet any or all of your winnings to that point. The Daily Doubles are a true test of risk tolerence--if you bet big you either double your money or lose it all, but you can also bet a modest amount and avoid either of those outcomes. They also test your confidence, because you have to bet before you know what the question is.
That's where Holzhauer's gambling experience really gives him an edge. Throughout his winning streak (thus far) he's consistently bet big on the Daily Doubles. That's led to big earnings but also at least one big loss. In one game, Holzhauer told ESPN, he bet $8,400 on a Daily Double and lost it all on a question about the Tour de France. Still, he explained, he knows that he'll win the Daily Double more often than he loses it, so it's a smart strategy to bet big on those questions. When the next Daily Double came in after that big loss, he went for it all over again, betting $7,200. "I knew it was the right play to go all-in again, and so I just did it. Not everyone's going to be able to come in with that game plan, and fewer still will be able to execute it."
Most of us hate to lose, including me. The first and last time I played a slot machine, I put in a single quarter on a whim, and eight quarters dropped out on my first play. "If I stop now, I'll always be ahead," I said, and that's what I did.
Successful gamblers, like successful entrepreneurs, understand that if you want to win big, you have to risk losing big. And if you do lose big, you have to shake it off, come right back, and risk it all again, just as Holzhauer did.
His next game airs tonight, and the nation will learn whether his streak continues or his strategy of betting big finally brings it to an end. Either way, though, he's a winner.