Know Kelly’s Criteria and How to Apply It to Poker

The game of poker is synonymous with betting. In the same way, it is characterized as a game of skills rather than chance. For this reason, some scholars and adepts to betting, have devised several strategies that optimize and manage efficiently and consciously earnings. Such is the case of one of the most recognized betting systems currently, called Kelly’s Criterion. His name was taken from the same person who created him in 1956, John Kelly.

The main objective of this system is to maximize the increase of the bankroll for bets but in the long term. In this way, you can count on the advantage offered by it, which is to manage funds in a more efficient way compared to other systems. So if done properly, it is possible to prevent a bad run from taking the entire bankroll. In this sense, the risk of undesirable bankruptcy is almost completely eliminated. However, the good functioning of the system depends to a large extent on the true capacity in the percentage.

The game of poker is synonymous with betting. In the same way, it is characterized as a game of skills rather than chance. For this reason, some scholars and adepts to betting, have devised several strategies that optimize and manage efficiently and consciously earnings.

Such is the case of one of the most recognized betting systems currently, called Kelly’s Criterion. His name was taken from the same person who created him in 1956, John Kelly.

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The main objective of this system is to maximize the increase of the bankroll for bets but in the long term. In this way, you can count on the advantage offered by it, which is to manage funds in a more efficient way compared to other systems.

So if done properly, it is possible to prevent a bad run from taking the entire bankroll. In this sense, the risk of undesirable bankruptcy is almost completely eliminated. However, the good functioning of the system depends to a large extent on the true capacity in the percentage.

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Use of Kelly’s criterion

In general, Kelly’s criterion is applied mostly in sports betting. However, it has also been very well taken advantage of by professional poker players; this was evidenced the night that took place the box office fight between Mayweather and McGregor, wherein Twitter poker discussions were observed among players who focused on the bets they made about the event.

Some openly mentioned that their bets were a fairly large portion of their funds, while others talked about betting strategies. In the latter, there was a common factor, the term “Kelly”, accompanied by “average Kelly”, “quarter Kelly” and other more related. Below we will explain everything about this curious and effective method of betting.

What is Kelly’s criterion?

The Kelly Criteria is a formula used by high-ranking professional gamblers to determine how much of the funds available in the bankroll should be allocated to a bet. The general concept of this criterion is that to ensure long-term profitability and the player reduces the danger of falling into ruin, it is necessary to resort to a series of risk management procedures.

In this sense, John Kelly through his method, says that the response to particular problems is usually framed in relation to percentages with respect to the bank account.

The formula of Kelly’s criteria is:

[(B x P – Q) / B] x 100

Where:

  • B = decimals -1
  • P = probability of success
  • Q = probability of failure (i.e., 1-p)

An example would be the following: a Kelly calculation will advise that if you have a 40% chance of winning and you get 2 to 1 on the bet, you should continually bet about 10% of the capital to increase the assets over time, at the same time that the danger of bankruptcy is minimized. Unquestionably, if the first bet is lost, it will be imperative to bet a lower value sum if a similar bet is made again; whereas if you are successful in the first bet, you can run a bet for a higher amount.

Actually, the details of the procedure involve much mathematics to be explained in this article. The reason that it is a criterion mostly applied in sports betting, is simply because for the calculation the parameters of a bet that have clear results of winning or losing are used. On the other hand, with respect to its use in poker, a wide set of variables in the game are presented that confuse the results, and therefore, the Kelly Criterion is applicable only in a more extensive sense.

Applying the method

Many of the things that happen during a poker tournament, is that not always the player decides on his own how much he will bet. This is because they often do so in response to the bets of their opponents. However, this is not entirely true when it comes to the selection of games in general; because the general philosophy of Kelly’s Criteria should provide a type of guidance.

It is somewhat rational for players to train to watch the purchases of games or cash tournaments as a percentage of the general capital, this being something simple to do. The complicated thing with regard to the selection of games is in what refers to the adaptation; since some players, at some point will act and will want to advance in the bets, and from that moment, will bet on a buy-in average of $20 instead of $10 online, although I could jump to the $5 game between $10 instead of the $2 between $5.

Drawbacks of Kelly’s criterion

The drawback to these players are subject, is that once they have risen in the bets, having to go down again because a session was lost is something that goes against intuition, so it is very complicated that adjustment. Because what would be the benefit of buying in a $5 tournament after it has been uploaded? If you go back in bets because you crossed the personal limit with respect to the bankroll, and do not lower yourself again when you are below that limit, to begin with, the player never set rules.

For this reason, it is necessary to maintain a flexible point of view regarding the management of capital. In this sense, the Kelly Criterion theoretically states that tournament purchases should be treated as percentages of the general bankroll, and not as a specific kind of games that have not been authorized to play. That is why adaptation is essential for survival during a game of poker, and the swings in the bankroll do not differ.

Choice of place in the game

Many times a difficult decision while developing a poker game, may suggest that the Kelly Criterion is irrelevant. However, it can really be helpful, as it teaches the value of being able to place other participants at risk in a tournament. In this way, there is the possibility of forcing them to spend a large portion of their resources, while the player does not risk much of their funds, which is a very important advantage.

In this sense, the term “leverage” begins to be applied. This is that you can place a bet, raise or bet 3 times. In this way, the opponent would be forced to make a double-sided decision. So a small portion of the chips will be used to press the opponent; which according to Kelly’s standards, the considerable increase of the player’s resources when the bet is successful, will suffice to make up for the losses when going through an opposite situation.

Tournaments

On the other hand, space is broad to discuss possible contexts in poker tournaments according to Kelly’s parameters. An example is to imagine a situation where a river bet is being considered and this is evaluated according to the rewards of the opponent’s use. Thus, it could be thought that almost the whole game plus EV could be making a bet of the river with a higher value.

In this way, you will get a greater profit when you have the best hand, in exchange for wasting more chips at times when you are behind. Certainly, this could be the superior EV alternative, so it should be taken. Although another choice will be to allow a similar EV to be obtained and risk a minimum portion of the capital when it has gone wrong.

Avoid risks

In this way, this will allow the player to avoid the risk of participation in the tournament. In such unusual cases, the player’s desire is to avoid posts where an important portion of resources is endangered by an imperceptible income; which would encourage them to change their orientation and subjugate the volatility of the game in favor of stronger growth.

Likewise, one of Kelly’s most effective approaches to poker tournaments is an offensive betting maneuver prior to 3 bets. In this way, small parts of the funds are risked to execute lucrative bets, with the expectation that the adversary may be used to expose larger portions of his capital in positions that bother them.

Guidelines instead of rules

To conclude, it is important to remember that just as there are other theoretical changes in gambling that are not related to poker, the use of these tactics that have been suggested are simply guidelines. To begin with, Kelly’s criterion is nothing more than a guide or advisory, for those who opt for more immediate deductions. That is why the tendency of people who adopt approaches such as half Kelly or quarter Kelly, which consist of betting less than what an offensive tactic of Kelly points.

The excellence of this method applied to poker has still been examined in depth. However, by broadening the mental horizons towards them, the understanding of how poker works also extends. In this way, new concepts that can be linked to poker experiences for a long time are allowed to take root.

Use of Kelly’s criterion

In general, Kelly’s criterion is applied mostly in sports betting. However, it has also been very well taken advantage of by professional poker players; this was evidenced the night that took place the box office fight between Mayweather and McGregor, wherein Twitter poker discussions were observed among players who focused on the bets they made about the event.

Some openly mentioned that their bets were a fairly large portion of their funds, while others talked about betting strategies. In the latter, there was a common factor, the term “Kelly”, accompanied by “average Kelly”, “quarter Kelly” and other more related. Below we will explain everything about this curious and effective method of betting.

What is Kelly's criterion?

The Kelly Criteria is a formula used by high-ranking professional gamblers to determine how much of the funds available in the bankroll should be allocated to a bet. The general concept of this criterion is that to ensure long-term profitability and the player reduces the danger of falling into ruin, it is necessary to resort to a series of risk management procedures.

In this sense, John Kelly through his method, says that the response to particular problems is usually framed in relation to percentages with respect to the bank account.

The formula of Kelly's criteria is:
[(B x P – Q) / B] x 100

Where:

  • B = decimals -1
  • P = probability of success
  • Q = probability of failure (i.e., 1-p)

An example would be the following: a Kelly calculation will advise that if you have a 40% chance of winning and you get 2 to 1 on the bet, you should continually bet about 10% of the capital to increase the assets over time, at the same time that the danger of bankruptcy is minimized.

Unquestionably, if the first bet is lost, it will be imperative to bet a lower value sum if a similar bet is made again; whereas if you are successful in the first bet, you can run a bet for a higher amount.Actually, the details of the procedure involve much mathematics to be explained in this article.

The reason that it is a criterion mostly applied in sports betting, is simply because for the calculation the parameters of a bet that have clear results of winning or losing are used. On the other hand, with respect to its use in poker, a wide set of variables in the game are presented that confuse the results, and therefore, the Kelly Criterion is applicable only in a more extensive sense.

Applying the method

Many of the things that happen during a poker tournament, is that not always the player decides on his own how much he will bet. This is because they often do so in response to the bets of their opponents. However, this is not entirely true when it comes to the selection of games in general; because the general philosophy of Kelly’s Criteria should provide a type of guidance.

It is somewhat rational for players to train to watch the purchases of games or cash tournaments as a percentage of the general capital, this being something simple to do.

The complicated thing with regard to the selection of games is in what refers to the adaptation; since some players, at some point will act and will want to advance in the bets, and from that moment, will bet on a buy-in average of $20 instead of $10 online, although I could jump to the $5 game between $10 instead of the $2 between $5.

Drawbacks of Kelly’s criterion

The drawback to these players are subject, is that once they have risen in the bets, having to go down again because a session was lost is something that goes against intuition, so it is very complicated that adjustment. Because what would be the benefit of buying in a $5 tournament after it has been uploaded?

If you go back in bets because you crossed the personal limit with respect to the bankroll, and do not lower yourself again when you are below that limit, to begin with, the player never set rules. For this reason, it is necessary to maintain a flexible point of view regarding the management of capital.

In this sense, the Kelly Criterion theoretically states that tournament purchases should be treated as percentages of the general bankroll, and not as a specific kind of games that have not been authorized to play. That is why adaptation is essential for survival during a game of poker, and the swings in the bankroll do not differ.

Choice of place in the game

Many times a difficult decision while developing a poker game, may suggest that the Kelly Criterion is irrelevant. However, it can really be helpful, as it teaches the value of being able to place other participants at risk in a tournament.

In this way, there is the possibility of forcing them to spend a large portion of their resources, while the player does not risk much of their funds, which is a very important advantage.In this sense, the term “leverage” begins to be applied. This is that you can place a bet, raise or bet 3 times. In this way, the opponent would be forced to make a double-sided decision.

So a small portion of the chips will be used to press the opponent; which according to Kelly’s standards, the considerable increase of the player’s resources when the bet is successful, will suffice to make up for the losses when going through an opposite situation.

Tournaments

On the other hand, space is broad to discuss possible contexts in poker tournaments according to Kelly’s parameters. An example is to imagine a situation where a river bet is being considered and this is evaluated according to the rewards of the opponent’s use.

Thus, it could be thought that almost the whole game plus EV could be making a bet of the river with a higher value. In this way, you will get a greater profit when you have the best hand, in exchange for wasting more chips at times when you are behind.

Certainly, this could be the superior EV alternative, so it should be taken. Although another choice will be to allow a similar EV to be obtained and risk a minimum portion of the capital when it has gone wrong.

Avoid risks

In this way, this will allow the player to avoid the risk of participation in the tournament. In such unusual cases, the player’s desire is to avoid posts where an important portion of resources is endangered by an imperceptible income; which would encourage them to change their orientation and subjugate the volatility of the game in favor of stronger growth.

Likewise, one of Kelly’s most effective approaches to poker tournaments is an offensive betting maneuver prior to 3 bets. In this way, small parts of the funds are risked to execute lucrative bets, with the expectation that the adversary may be used to expose larger portions of his capital in positions that bother them.

Guidelines instead of rules

To conclude, it is important to remember that just as there are other theoretical changes in gambling that are not related to poker, the use of these tactics that have been suggested are simply guidelines. To begin with, Kelly’s criterion is nothing more than a guide or advisory, for those who opt for more immediate deductions.

That is why the tendency of people who adopt approaches such as half Kelly or quarter Kelly, which consist of betting less than what an offensive tactic of Kelly points.The excellence of this method applied to poker has still been examined in depth.

However, by broadening the mental horizons towards them, the understanding of how poker works also extends. In this way, new concepts that can be linked to poker experiences for a long time are allowed to take root.