When betting, there is never any such thing as a guaranteed win. But using a betting system might be the closest there is guaranteeing coming out on top against the house. One such betting system that is very popular is the Kelly criterion. But what is the Kelly criterion, how should it be used, and does it even work? Our guide to the Kelly criterion will tell you everything that you need to know – so read on!
What Is The Kelly Criterion Betting System?
The Kelly criterion is a betting operation that works on probability theory and intertemporal portfolio choice. Sometimes referred to as the scientific gambling method, the Kelly criterion betting system has a high public profile with a lot of people using it in their gambling. The Kelly criterion betting system has a lot of history behind it. Used by many experienced bettors for more than 50 years, the Kelly criterion betting system is not just used for gambling. As legend has it, the plan has been used by a host of top investors such as Warren Buffett over the years. Sports betting is among the uses for the Kelly criterion too, with the aim of the system to create the perfect balance between risk and reward. By using the Kelly criterion, it should be possible to vastly reduce the chances of losing an entire bankroll, while boosting the chances of making a profit against the house. So how should players use the Kelly criterion betting system?
How To Use The Kelly Criterion Betting System
The Kelly criterion betting system involves using a mathematical formula. By doing this, players can work out the optimal amount of their money that they should use as a stake for a bet. A player’s existing bankroll is used to calculate the ideal bet level, so those who have more money to spend on gambling will likely see larger bet stake recommendations as a result. Naturally, predicting the outcome of sports is very unpredictable. Even when a team or a player seems certain to win their match, the win is not necessarily guaranteed. Sports history is littered with instances, where a massive shock has chances of happening against the odds.
Successfully using the Kelly criterion betting system involves being able to accurately predict the chances of something happening. Obviously, this is easier said than done! The formula for the Kelly criterion betting system is as follows: (bp – q) / b = f. Of course, you need to know what each of these letters means to use the system for a bet.
Unpacking The Formula For The Kelly Criterion Betting System
In the formula for the Kelly criterion betting system, ‘b’ refers to the multiple of your stake, which you can possibly win from the proposed wager. The letter ‘p’ is the probability that the proposed wager wins, while ‘q’ is the probability that the proposed wager turns out to be a losing bet. At the end of the formula is ‘f’, which is the solution. What this figure does is provide the player with the suggested percentage of their bankroll they should bet on the proposed wager. Initially, this approach might seem a little complicated and confusing, but once people get used to the Kelly criterion betting system, it does not take too much time to work through the formula ahead of a bet.