Poker players can deploy several strategies in a poker game, including betting strategies. Plenty of betting strategies could be used in the game, including the Kelly Criterion.
In this article, we’ll look at the Kelly Criterion and its use as a betting strategy. We’ll also examine the positive and negative sides of using the Kelly Criterion in a poker game.
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Overview of the Kelly Criterion
The Kelly Criterion, also known as the Kelly strategy, is a formula for determining how much of your bankroll to bet on each game. The formula was developed by John L. Kelly Jr., an American scientist who initially intended the formula for AT&T to help with the company’s signal noise issues.
Bettors, later on, realized the formula’s potential in optimizing the system as it allows for the maximization of the amount of their earnings.
To calculate how much of the bankroll will be staked, you must first know your decimal odds, the probability of winning, and the probability of losing. After identifying these factors, subtract one from the decimal odds and multiply this by the probability of winning. The probability of losing is then subtracted from the product. The difference between the two is divided by the decimal odds minus one. The quotient equates to the percentage of your bankroll you should place as a bet.
For example, the decimal odds are 4, the probability of winning is 0.50, and the probability of losing is 0.50. If you apply the formula, the equation would appear as [((3 x 0.50) – 0.50) / 3]. When solved, the criterion would suggest betting 0.33 or 33% of your bankroll.
The Benefits of Using the Kelly Criterion in Poker
Using the Kelly Criterion can have several advantages. The following are some of the most significant ones.
One of the benefits of using the Kelly Criterion in poker is that it can help players maximize their winnings over time. Using it allows players to manage their bankroll more effectively, only risking appropriate amounts of money on each hand.
By doing so, players can avoid taking on too much risk and potentially losing large sums of money. Instead, the Kelly criterion allows players to steadily increase their profits over time by making calculated bets with a high likelihood of success.
Another benefit of using the Kelly Criterion is reducing risk. As previously mentioned, players can avoid taking on too much risk because the formula dictates that only a specific, calculated amount of money should be bet on each hand. If they lose a hand, their losses will be less significant since they had only bet an appropriate amount.
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Can Be Leveraged to Place Pressure on Opponents
In addition to the previously stated benefits, the Kelly Criterion can help players gain leverage over their opponents. You could place your opponents in a more demanding position by betting, raising, or making a 3-bet in which your opponents’ next decision is between a shove or fold.
The amount you’ve placed in the bet using the Kelly Criterion has, therefore, leveraged you to gain a more significant advantage over your opponents. Furthermore, should the bet be successful, it is also considered efficient as the increase in bankroll has offset the loss should the situation turn unfavorable towards you.
Lastly, using the Kelly Criterion also helps simplify betting decisions for players. Since the formula already provides a clear guide for how much to stake when playing poker, players don’t have to spend time deciding how much to wager. This leaves them more room and energy to focus on other aspects of the game, such as making better decisions or reading opponents more accurately.
Likewise, should you choose to play poker online, there are bots and calculators available that can automatically apply the Kelly Criterion formula for you. This further simplifies the process and allows you to focus on your gameplay.
The Drawbacks of Using the Kelly Criterion in Poker
Although there are many benefits to using the Kelly Criterion while playing poker, some drawbacks should be considered before applying it.
Volatility and Bankroll Requirements
One drawback of using the Kelly Criterion is that it can lead to significant volatility in winnings and losses. Since it dictates that players should bet a more significant percentage of their bankroll when they have an edge, this can lead to greater fluctuations in bankroll size.
Players, therefore, need to have enough of a bankroll to withstand these fluctuations. Without a sufficiently large bankroll, the volatility from using the Kelly Criterion could lead to going bust.
Assumptions About Winning Probabilities
The Kelly Criterion also relies on accurate assumptions about winning probabilities. If a player’s estimates of their chances of winning a hand are incorrect, then the formula will produce inefficient results.
For the Kelly Criterion to be effective, players must have a strong understanding of pot odds, equity, and other concepts that allow them to accurately determine their probability of winning. Without this knowledge, the formula can do more harm than good.
Constantly Changing Game State
Finally, the game state in poker is constantly changing based on the cards dealt and opponents’ actions. This means that win probabilities constantly fluctuate, and the Kelly Criterion may indicate different bet sizes on each betting street.
For players to use the formula effectively, they need to be able to keep up with these changes and adjust their bets accordingly. This requires skill and mental effort, and the formula may be too complex for casual or beginner players.
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Should You Use the Kelly Criterion?
In summary, the Kelly Criterion can help you manage your bankroll and gain an advantage at poker tables.
However, it has some significant drawbacks, including volatility, the need for accurate win probability estimates, and the mental effort required to apply it effectively. Whether or not to use the Kelly Criterion depends on your skill level, risk tolerance, and personal preferences.
While professional poker players may find this helpful knowledge, applying it during a poker tournament depends on their skill, experience, and situation. However, training poker players can improve their game by being well-versed in this betting strategy.
The Kelly Criterion can be a helpful guide for betting while playing poker, but deciding whether or not to use it is ultimately up to the player.
Finally, understanding the Kelly Criterion and how to apply it correctly can provide a solid foundation for any poker player’s journey. With the right strategy and an understanding of the Kelly Criterion, you, too, may see your bankroll increase in no time.