You find a nickel 50 play, including the card club and mailers and some secret promotions and employee greasing and back doors plus a fence for the casino swag, it's a 1% overlay. You guess your current bankroll would let you load up the machine about halfway, and the halfway variance is about 5. That would make the approximate Kelly number 5/.01 = 500. Each hand is five nickels = $.25, so the increment is 500 x $.25 = $125. Your current gambling bankroll is $2,612.21, divide that by 500 to get your Kelly bet of $5.22442 . Some nits would say you have to play exactly that amount but that's horse dookey, the rule is you can't bet more than that, less is perfectly ok, in fact even a good idea. So here we're talking 20 hands right? 20 x $.25 = $5. And you're off, but not to a good start, you have a bad run of cards and you're down $125. Hey, that's the increment, right, see above. What do you do? Down to 19 hands, that's right. You drop another $125, maybe this wasn't a good idea, maybe the machine is fixed, maybe that gypsy fortune teller was right, whatever, down to 18 hands. Finally you get a nice hand and win $200 (still a running loss of $50, right?), but you go back up to 19 hands, and so on. Hopefully you get the idea. $125 is your increment, you go up or down depending on where your current bankroll is.
http://www.youtube.com/watch?v=bg8lSyGavc4
http://www.youtube.com/watch?v=Mo0baknLDdU
