Using Kelly’s criterion in Horse Playing Effectively

John Kelly, who worked at AT&T's Bell Laboratory, originally developed the Kelly Criterion to assist AT&T with its long distance telephone signal noise issues. Soon after the method was published as "A New Interpretation of Information Rate", however, the gambling community got wind of it and realized its potential as an optimal betting system in horse racing. It enabled gamblers to maximize the size of their bankroll over the long term. Today, many people use it as a general money management system for not only gambling but also investing.

f=(bp-q)/b

where f is Kelly’s % = fraction of capital for the day to bet on horse
b= net odds
p= % chance of horse winning
q= % chance of horse losing

Say you are fancying a horse which has a 40% chance of winning (p) odds offered are 5/1 (b) then the horse have 60% chance of losing (q) and above all you are with a day’s capital of Rs 10,000

then

f = (5*40-60)/5
= 28%
so you have to bet your fancy 28% of your days capital ie Rs 2,800 you are going to win 14000 if your fancy oblige.

Money management cannot ensure that you always make spectacular returns, but it can help you limit your losses and maximize your gains through efficient money management. The Kelly Criterion is one of many models that can be used to help you manage your monies efficiently.