This is a discussion on Kelly Criterion within the online poker forums, in the Cash Games section; Can you apply the Kelly Criterion (aka Kelly Formula) to poker? I was reading about the system and it seems like it might work but
Using the Kelly system in practice does have drawbacks. When a series of serial bets are made the chance of dropping to 1/n of your bankroll is 1/n. Thus you have a 50% chance of at some point losing 50% of your bankroll, a 10% chance of dropping to 10%, and so on.
Edit: Umm most BR management theories would never advocate playing in a game that you cannot afford to buy into at least (at the very least) 50 times.
Edit Edit: also how could you ever figure the odds etc, to even figure out the formula?
f* is the fraction of the current bankroll to wager;
b is the odds received on the wager;
p is the probability of winning;
q is the probability of losing, which is 1 − p.
Poker players can never know with certainty what the odds are to win or the odds are to lose. Plus there are no odds on the wager??
23rd April 2008, 8:27 AM
Poker at: Full Tilt
re: Poker & Kelly Criterion
The avg poker player already uses parts of this system. We all calculate pot odds in our head(although some use a program =/), we all consider EV and ect ect. I see no reason why this formula wouldnt work in the long run, although I am admittedly not intelligent enough to apply it myself on the fly. I am an english man not a math man but it seems to me this particular formula speaks to making the same bet/call numerous times knowing that you may lose a few times, but in the long run you will make money making that particular decision repeatedly. While my game isnt based completely on numbers they do play a very large role. So I say if you can, or have a software that can calculate this on the fly, more power to you.
23rd April 2008, 7:19 PM
Online Poker at: her whim
Game: ON !
I have thought about this in the past. Mostly in relation to my stack size in a tournament being equivalent to my "bankroll" with regards to Kelly, and there being some way to use this to figure out the line between +chipEV and survival.
Never got very far with quantifying anything, however. In reality, it probably isn't practical.
Also, there are already pretty well established guidelines for regular bankroll management in poker.