The Kelly formula is considered incredibly important in financial investment and football betting. Simply put, bettors use
betting tips and predictions and formula to significantly improve investment performance over time. In this article, Wintips will provide you with detailed information about this unique betting formula. Let's dive right in.
An Overview of the Kelly Method
The Kelly Criterion is the brainchild behind a method for calculating the betting odds of an event to determine the level of risk in each specific bet. There are several variations of the Kelly criterion, with the simplest formula being: (B x P – Q) / B. Here's what the variables stand for:
B represents the decimal odds.
P is the actual probability.
Q=1 – P.
For example, if you apply this formula to a match between Teams A and B:
Team A's probability of winning is 58.5%, with decimal odds of 1.71.
Team B's probability of winning is 27.4%, with decimal odds of 3.65.
The probability of a draw between Team A and Team B is 30.8%, with decimal odds of 3.25.
To calculate the odds of Team A winning around 65%, according to the Kelly formula: P=0.65; B=1.71 – 1=0.71; Q=1 – 0.65=0.35. Therefore: (0.71 x 0.65 – 0.35) / 0.71=15.7%.
The Kelly Criterion suggests that based on the provided betting odds and an evaluation of the actual probability at 0.65, one should bet 15.7% of their account balance. While this percentage might seem high to some, in reality, it's reserved for those familiar with this formula. Occasionally, the suggested percentage might reach 20% or 30%.
History of the Kelly Formula
John Kelly, who worked for Bell Labs at AT&T, initially developed the Kelly formula to aid AT&T in addressing issues with long-distance telephone signal noise. This method was introduced in 1956 under the title 'A New Interpretation of Information Rate.'
However, the gambling community soon discovered this formula and recognized its potential in football betting. It allowed players to maximize their bankroll over a long period. Consequently, many still use it today as a comprehensive money management system for both betting and investment.
Overview of the Entire Kelly Formula in football Betting
In 1956, the Kelly formula was developed to ensure optimal growth of the betting fund. As mentioned earlier, it was originally devised to assist AT&T. It later expanded and crossed over into other fields as an efficient financial management approach.
This formula demands careful, meticulous calculation and patience for long-term usage to yield effectiveness. After several alterations, the current form of the Kelly formula in football betting is: Bet Amount=((Odds Ratio x % Chance of Winning) – 1) / (Odds Ratio – 1) x 100.
Advantages and Disadvantages of Using the Kelly Criterion in Betting
Below
best betting tips app with advantages and disadvantages of the Kelly Criterion. Specifically:
Advantages:
Every formula has its own set of advantages. What makes the Kelly Criterion in betting so intriguing? Let's explore:
Efficient bankroll management before and during betting.
Careful and rational calculation of betting amounts based on loss ratios and bookmakers' odds.
Minimization of risks, allowing players to earn more from bets.
Providing a broader overview of a match before deciding on which team to bet on.
Simplifying statistical analysis and strategizing for oneself.
Disadvantages:
Alongside the mentioned advantages, the Kelly Criterion in betting also has some drawbacks that need addressing:
The accuracy of managing bets through this formula cannot reach 100%.
It requires determining the win probability for the match you intend to bet on.
Guidance on how to apply the Kelly Criterion in betting.
This capital management formula is used in various gaming genres and at different bookmakers. For example, in a match between Teams C and D with the following information:
Total wagered amount: $100
Winning odds for Team A: 60%
Betting odds: 1.93
The Kelly Criterion in football betting for the player will be: Betting ratio=((1.93 – 60%) - 1) / (1.93 – 1)) x 100=16.99%.
Note: If these odds are negative, it might indicate that the winning odds for the match aren’t too high. In such a scenario, there are two options:
Bet on the opposing team.
Abstain from betting on that match.
Find out more :
what's an asian handicap bet Conclusion:
The aforementioned information from Wintips aims to provide you with the latest insights into the Kelly Criterion in betting. It is hoped that by utilizing this formula, individuals can gain a clearer understanding of its history, accurate calculation methods, and subsequently enhance their own winning odds.
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