Sports Betting-How To Use The Kelly Criterion

Like many rules in the gambling business, the Kelly Criterion should just be a guideline. If you're new to statistical betting, you may want to follow it almost blindly until you get the hang of it but over time you'll develop your own skills that will allow you to take the Kelly Criterion into consideration but to use it as one of several different ways to weigh the information at hand.

Unfortunately, the Kelly criterion is far from perfect. Like any type of system in which a mathematical construct is used in place of human reasoning, there will be cold hard numbers used as the sole guide, rather than the "guts" and "intuition" factor that people bring to the table. That's why we advocate so strongly to use the Kelly Criterion ALONGSIDE your own experience and intuition. At first, you may want to use the Kelly Criterion solely but as you gain experience, you'll rely on it less and less until you look to it as a reference before formulating your own decisions.

Some of the problems with the Kelly Criterion include:

- The Kelly Criterion assumes that it can bet on fractions of a penny when, in reality, the smallest unit of currency on which you can place a bet is likely $5 or so. The solution to this is to simply round it up or down, where appropriate.

- The Kelly Criterion assumes that you are willing to do whatever it says, no matter what, even it continues to suggest that you increase your betting amounts more and more beyond psychological thresholds you may have. The solution is to recognize your psychological thresholds and use the Kelly Criterion to overcome them while at the same time balancing that with the realism that your gut may tell you not to bet more while the Kelly Criterion tells you otherwise.

- The Kelly Criterion can only calculate what it receives. It's the old principle of "input equals output". As long as your numbers (including probability and value) are accurate, it will churn out accurate numbers. If you input inaccurate numbers, you'll get an inaccurate result. Solution: Put all of your statistical algorithms into a spreadsheet so you're not finding the numbers, inputting them, AND calculating them. That last step is the largest spot for errors. Simply input them and let the spreadsheet do the work.

- The Kelly Criterion can maximize your bank growth over a period of time however it does not have upper or lower limits - no "ceiling" or "floor" if you will - which means it can make calculations that can completely wipe out your bank. The solution is to use the fractional Kelly Criterion to reduce the numbers you have to work with at one time so you don't wipe yourself out in just a couple bets.

- The Kelly Criterion has an interesting effect with odds: the shorter the odds, the more dramatic the change in percentage. This can lead to volatility in your betting and possible volatility in your bank. The solution is to use smaller fractions when the odds are shorter and to avoid backing favorites.

This has been an excerpt from Robert Thatcher's flagstaff manual, the Statistical Betting Guide.

Sun Tzu said: "If you know the enemy and know yourself, your victory will not stand in doubt". Making money with sports betting has nothing to do with gambling. Do you want to learn the secret methods successful bettors apply each and every day?

Robert Thatcher explains in easy words how to make money with sports betting. Download your copy at http://www.statisticalbettingguide.com.

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