The theory is quite simple and easy enough for even beginners to get started with.
you’re free to calculate all the integers above except for p theprobability of winning.
This is a figure based on how likely you are to win your bet.
However, this is a number that is extremely difficult to predict.
You will have to come up with some percentage of winning, or expected value.
Such as predicting that Barcelona has a 65% chance of beating Real Madrid in the next El Clasico.
In blackjack, it will require card counting.
But to be perfectly accurate, running count is not enough.
You will also need to check how many decks are left and have get lucky with the shoe.
Predicting Your Probability of Winning
Casino games aredesigned to give the house an edge.
The chances of winning each bet, and the payout are not perfectly aligned.
This rules out using the Kelly betting system, as you need apositive expected value.
In all casino games, theRTP is always under 100%.
Therefore:
A negative number basically means don’t stake any money.
The running count can be put into a formula to count theTrue Count.
What you want is a positive count which means more 10s and Aces left in the shoe.
A positive true count gifts players the advantage, roughly at +0.5% for each +1 in the count.
A count of +2 gives a player an advantage of around +1%.
With a true count of +2, the Kelly Criterion would have you betting 0.1% of yourblackjack bankroll.
They use software and metrics to figure out the chances of a bet winning or losing.
Butsports statistics and datacan only cover so much of what may or may not happen.
Stats don’t use psychological factors, or take into account any external forces that can influence the outcome.
This is where your keen sports knowledge can come into use.
To effectively use the Kelly, you oughta look for bets that have extremely good value.
Such, that you see an opportunity to win money.
Now, let’s look at an example where webet on a soccer game.
Manchester City hosts Real Madrid, and the oddsmakers reckon home advantage will hurt Real’s chances.
Instead, you think Real Madrid has a 60% chance of beating Manchester City.
In the Kelly formula, b would be 2.3 (3.3-1).
The winning and losing probabilities would then be 0.6 and 0.4, respectively.
It is quite a bold assumption, as you think Real’s chances are double what the house reckons.
The Kelly formula states you should play over 40% of your bankroll on the bet.
If it pays off, you are coming out with a tremendous profit.
Should you use a Half Kelly, just add K = 0.5.
Just take the blackjack example, where your true count is +2.
Half Kelly would have you betting 0.05% of your stake.
The Kelly Criterion formula as it iscuts your mathematical chance of losing.
Like, say if you are a bit hesitant about Madrid to beat City.
And experienced blackjack players know the gambler’s remorse of not taking full advantage of a good shoe.
Concluding Kelly Criterion and Alternatives for Casino Games
Kelly Criterion is perhaps best applied to sports betting.
There will be more discrepancies, but more importantly, you have more time to make your calculations.
In blackjack, you cant really stop a game for 2 minutes to quickly calculate how much to bet.
Speed and quick decision-making are key to success.
Now we have ruled out Kelly Criterion betting for casino games.
However, there are loads ofuniversal betting systemsthat you might use in these games.
Daniel has been writing about casinos and sports betting since 2021.
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