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## The Kelly Betting System

The Kelly betting system, also called Kelly criterion, Kelly strategy, Kelly formula, or Kelly bet, is an advanced mathematical betting system that can help players calculate exactly how much money to wager on each hand for optimal wins.

This can be a tricky system to master because of the mathematics involved. It is especially difficult to calculate while in the middle of a blackjack game. But once these techniques are firmly in your grasp, you can ride out the inevitable fluctuations between wins and losses without a large risk of ruin or being eliminated in tournament play.

The Kelly formula is used to determine what fraction of your current bankroll you should wager on each hand.

• f* is the fraction of the current bankroll to wager
• b is the net odds received on the wager (that is, odds are usually quoted as “b to 1″)
• p is the probability of winning
• q is the probability of losing, which is 1 − p

This is the most basic version of the formula, and is good for wagers with only two simple outcomes. Blackjack is more complicated than this, but the Kelly criterion still offers a good guide.

## Limitations of the Kelly Betting System

The first thing to keep in mind when using Kelly is that it does not guarantee wins. It is a money management system designed to help players bet the optimal amount based on the rules of a game, helping players maximize their profits through mathematics.

Kelly is not flawless. In fact, many believe that the number given by the Kelly bet formula is too high. While the Kelly criterion offers good results in the long run, smart strategies tell us that it is better to underbet rather than overbet, so some players reduce the final figure by several percent in order to play things safe.