You’ve seen the clip of yesterday’s Jeopardy! episode – the last one featuring Naperville’s conquering hero James Holzhauer. After weeks of earning big and betting it all, he ends with a wager of $1,399 and ending up in second place.

WHY?! Why didn’t he risk it all and hope for the best?!

First, here was the situation.

Emma – $26,600
James – $23,400
Third Place Guy – $11,000

SO how does a wager of $1,399 make sense?

Because by betting low it hedged his bet.

James knew — correctly — that Emma was going to bet enough to cover his all-in bet. In fact, she bet 20,201, which gave her 46,801 ($1 than double Jame’s score). It was also a pretty safe bet that Emma, a librarian at UIC would get the literary-themed question correct, which she did.

OK, now that his chances of winning the game are very low, how does he guarantee second place, but also give him a chance to win in case Emma answers incorrectly? By betting exactly what he did.

In the event he answered the question wrong, his wager of $1,399 would give him $22,001, exactly one dollar more than if Third Place Guy doubled his money — which is exactly what happened. AND, by betting low, he would guarantee a WIN in the event Emma answered incorrectly, since he knew she was going to bet big.

James did an interview with The Action Network – a sports betting radio network based in Vegas explaining the decision.

Holzhauer is so adept at assessing risk and predicting the probability of outcomes it is mind-boggling. Even when things look weird at best and downright shady at worst, he knew exactly what he was doing to maximize his chances of taking home the most money.

And it worked to perfection.