Quote:
Originally Posted by 3put
Take Pointbet as an example.
They closed after not paying in months and many players tried to lose their balance by arbing.
I guess big Pointbet-underdogs were used often in this process.
But quite counter-intuitive, at least to me initially, using your formulas, it seems that betting on big favorites is much better in this situation.
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The article above only addresses a single bet at a time. Once you start considering multiple bets simultaneously, whether the underlying events' outcomes are mutually exclusive (as would be the case when considering a perfect hedge), independent (as would be the case with bets on different games), or non-mutually exclusive dependent
* (for example a side and a money line on the same game), the equations in the above article no longer strictly hold. This will be addressed in the next article in the series.
Quote:
Originally Posted by 3put
There are situations where the goal is to Minimize Expected Growth with respect to certain restrictions on betsize.
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In mathematics these are known
boundary conditions and they can often complicate problems immensely. Fortunately, in the case of single-bet Kelly the solution is simple. Just bet the smaller of the Kelly stake and the maximum bet.
Quote:
Originally Posted by 3put
Take Pointbet as an example.
They closed after not paying in months and many players tried to lose their balance by arbing.
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You don't need Kelly to tell you that this is a bad idea. If a book won't pay you if you win, then a bet at the book isn't a hedge but rather a waste of time and bandwidth.
Of course, if a player thinks the book in question has a non-zero probability of repayment
and he can find a profitable arb involving that book, then he certainly could use his funds at the distressed book as a
semi-hedge of sorts, provided he discounted any holdings at that book by a reasonable estimate of repayment probability.
* Dependent includes both correlated and uncorrelated bets. After all, it is possible for two non-mutually exclusive bets to be uncorrelated, but not independent. Consider for example, a bet on Team X winning a game versus Team Y and a bet that Team X and Team Y's finals scores will be within 1 of each other. If Team A's win and lose probability are equal, as are the win-by-1 and lose-by-1 probabilities, then while the two bets are uncorrelated, they're obviously not independent.