Also known as the Monte Carlo fallacy, it is the mistaken belief that if something happens more frequently than normal during some period, then it will happen less frequently in the future, and vice versa.
This one is one that we have all heard at some point. Take a coin, you have the same chances of having face or tails appear upon flipping. Say you flip it 10 times and it comes out as tails, at the eleventh flipping, the probability of being tails is 50%, but we will think that heads is long overdue, so we bet on heads.
Nassim Taleb would say the probability out of 10 straight tails in coin flipping is that the coin is tricked and we are getting robbed. Smart man.
How it is exploited:
Loaded dice, broken games where the same result come out every time and giving the illusion of fairness.
Casinos in some way make the most of this bias by clouding judgement and the senses.