Blackjack Basics: The Kelly Criterion
There is more to the game of blackjack than properly counting the cards - you must be able to take advantage of the way you tilt the odds in your favor. Any good blackjack player knows this and if you want to be one of those good players, it would do you good to know the basics of the Kelly Criterion.
The Kelly Criterion is a method of betting for players that have a mathematical edge in a wager, or for players who have the odds in their favor. It maximizes profit and gain and reduces the risk significantly of catastrophic failure. It is not card counting, but a method of making full use of the effects of card counting. It seems basic but it is a method of control - the more the odds are in favor of the player, the larger the bet becomes. If the house has the edge, such as in 6:5 systems, then it is useless.
It is a mathematical formula and a model for long term profit growth. It does not predict short term success, but aims for the long game, for the consistent player. Casual blackjack players will find little mileage with this tactic, but serious players will find the Kelly Criterion incredibly useful. Basically, it helps you determine just how much the current round should be worth to you if you want to make a profit while the odds are in your favor. When the chips you throw in rise proportionally to your advantage, then you are, perhaps unintentionally, applying the Kelly Criterion strategy.
Originally created by John Larry Kelly, the Kelly system was born in Texas. It was developed out of a desire to create investing strategies and tactics based on probabilities and theories. It just so happened that these strategies could be applied to gambling as well - some of these are now an integral part of game theory. The drawback of the system itself is obvious, as it cannot guarantee as win - but nothing can at the end of the day. It simply maximizes profit and minimizes loss as much as the system is able. The problem with it is that it can create highly volatile situations. Every three games you play has a chance of losing half your bankroll long before you double it. Half Kelly techniques have been created in order to control this dynamite like behavior.
The Kelly Criterion, like many other tactics, strategies and card counting systems, comes down to the player. It requires discipline, commitment and a sharp mind to use properly and consistently. Keep this in mind if you decide to use this highly explosive betting system.