Free sophisticated software

[SpeedyBen]

I haven't fully explored this yet but it looks pretty special.
http://www.championpicks.com.au/blog/horse-racing/rewardbet/

[Lord Greystoke]

Staking and money management are the most underrated aspects of gambling

One view I saw expressed a while back by a professional punter was that the handicapping of horses is a science, whilst the wagering element is an art. Would suggest a different kind of approach for each?

LG

[Magister Ludi]

One view I saw expressed a while back by a professional punter was that the handicapping of horses is a science, whilst the wagering element is an art.
LGHe couldn't be more wrong.

[Lord Greystoke]

He couldn't be more wrong.How could this be, Ma' Ludi?

LG

PS I call on Demodocus for further input here (http://www.propun.com.au/racing_forums/showpost.php?p=285679&postcount=138)

[Magister Ludi]

How could this be, Ma' Ludi?

LG

PS I call on Demodocus for further input here (http://www.propun.com.au/racing_forums/showpost.php?p=285679&postcount=138)If you have an edge, there is no faster way to attain optimal geometric growth for your assets than the Kelly Criterion. Who should not use the Kelly Criterion to size their bets? Anyone who does not have an edge. If you use the Kelly Criterion and you don’t have an edge, it will evidence itself very quickly. Even for those who do have an edge, the variance and risk of ruin can be gut-wrenching.

note: all examples below use American odds

Example: horse with 5:1 odds and an expected 3% edge

BR = bankroll = $100,000
p = expected win probability
q = expected loss probability
A = net odds (American)
e = (A+1)p-1>0
f* = fraction of BR to invest = e/A
f*BR = amount invested
EV = expected value = ef*BR

p = .1717
A = 5
e = (5+1)*.1717-1 = .03
f* = .03/5 = .006
f*BR = $100,000*.006 = $600
EV = $600*.03 = $18

The short form:

edge = 3%
odds = 5
edge/odds = 3%/5 = .6%
optimal bet = .6% * $100,000 = $600
EV = $600*3% = $18

With a 3% edge and a $100,000 bankroll, your optimal bet on a 5:1 horse is $600. Your expected value is $18.

Constructing an optimal hedge bets on two or more horses is a little more difficult. Let’s say that you have a race with a 5:1 and a 25:1 horse, each with an expected 3% edge:

P(a) = .1717
P(b) = .0396

First you calculate what is called the reserve rate:

r = reserve rate = (1-sum(each p bet))/(1-sum(each 1/(A+1)))
r = (1-(.1717+.0396))/(1-((1/(5+1))+(1/(25+1))))) = .9923

Then you calculate the optimal percentage of your bankroll to invest:

f* = p-r/A
f*(a) = .1717-(.9923/6) = .00629
f*(b) = .0396-(.9923/26) = .00145

The optimal amount that you bet on each horse is:

f*(a)BR = .00629*100,000 = $629
f*(b)BR = .00145*100,000 = $145

Your expected value is:

EV(a) = $629*.03 = $18.87
EV(b) = $145*.03 = $ 4.36
EV(total) = $23.23

Note that EV(a) = $18.87 > EV = $18.00 above. Even though they’re both 5:1 horses with an expected 3% edge, you are able to optimally bet more on a given horse if it is hedged with one or more other horses. Of course, the Kelly Criterion can also be applied to both vertical and horizontal exotics. You should always place all bets in a race for which you have a positive expected value.

With relatively large bankrolls and/or small pools, the calculated optimal Kelly bet may exceed the amount that will return maximum expected value from the parimutuel pool(s). To calculate the optimal bet in these cases involves a delightful foray into the world of non-linear programming, far beyond the scope of this thread.

[Magister Ludi]

How could this be, Ma' Ludi?

LG

PS I call on Demodocus for further input here (http://www.propun.com.au/racing_forums/showpost.php?p=285679&postcount=138)Unless I miss my guess, it sounds as if Demodocus of Leros has fallen into the all-too-common trap of picking winners rather than overlays. Historical final tote odds show that the public is highly skilled in picking winners but not overlays. Optimal betting of overlays is the key to success in this business.

[Lord Greystoke]

Not a lot of 'art' in Post No. 5 above. Maths/science? Yes.

Thanks for your detailed contribution here ML. Point taken!

Cheers LG

[Rinconpaul]

ML, can you use the Kelly for lay staking?
RP

[Chrome Prince]

Who should not use the Kelly Criterion to size their bets? Even for those who do have an edge, the variance and risk of ruin can be gut-wrenching.
Which is why I would personally never use Kelly Criterion.
For those backing multiple horses per race, reward bet, is probably the best option out there at present.
For those backing single selections, I'm led to believe there is no advantage.