The Kelly criterion is actually somewhat complex, but I'll take a shot at a simple explanation anyway. First off, everyone has a gambling bankroll, even those who claim they don't or who claim their bankroll is infinite. That's just a load of cacadevaca, everyone has a gambling bankroll and nobody has an infinite bankroll. With that out of the way, the question arises as to how much you should bet? You could bet it all, but it shouldn't take much to realize that that is sheer lunacy. With one bet you'd be facing 50% risk of ruin (losing it all) or even worse. And if you keep on betting it all, the result will be that you will eventually lose it all, meaning 100% risk of ruin. As I said, sheer lunacy. Put that in the camp of people who claim to have infinite bankrolls. OK, with the preliminaries out of the way, then how much of your bankroll should you bet? Well, it turns out that the Kelly criterion is the mathematically optimal bet size for maximum average bankroll growth. You should bet that amount, or less, but never more. Don't get stuck if the Kelly bet is $5.522589, yes you can bet $5 and no you can't bet $6 or $10. It's that simple. Just remember: Kelly bet or less, never more. Remember the raven. Now, you may not believe in the Kelly criterion or may not understand the math behind it, but that doesn't matter, it still applies, always. It's not a question of belief, it's a mathematical truth. So there you have it, either follow the math, which leads to the Kelly criterion, or make up your own system for determining how much of your bankroll you should bet. And if you choose to violate the math of the Kelly criterion, all I can say is, good luck in crazy town.
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