The Kelly Criterion: Betting and Laying Using Pb77 Id

Part 3 of a three-part series on the Kelly criterion and its application to sports betting. Part 1 introduces the Kelly criterion and includes a worked example. Part 2 includes a straightforward derivation of the Kelly criterion. Part 3 of this series discusses certain Kelly criterion extensions. This essay broadens the Kelly criterion to include supporting and laying bets on an exchange like Pb77 Id. If you haven't previously, it's advised that you read Parts 1 and 2 before continuing.

What Is the Difference Between Backing and Laying?

You can only bet on an outcome with traditional bookmakers. You can wager both for and against sporting events because Pb77 Id is an exchange rather than a bookmaker.

When you 'back' a bet on an outcome, you are betting that it will occur. You could, for example, back Federer to win Wimbledon. If the odds are 3.50, a $10 wager will net him a $25 profit if he wins and a $10 loss if he loses.

When you 'laid' a bet against a result, you are betting that it will not occur. For example, you could wager on Federer winning Wimbledon. If the odds are 3.50, a $10 wager results in a $25 loss if Federer wins and a $10 profit if he doesn't. When you place a wager, you essentially function as the bookmaker. If the other punter loses, you get to keep their money, but if they win, you must pay them at the agreed-upon odds.

The Kelly criterion is intended for 'back' bets. If f = 0, you would not place a bet, according to the formula. The Kelly criterion is adjusted in this piece to account for Pb77 Id commissions. It also includes the appropriate lay bet formula.