The Kelly Criterion
The Kelly Criterion is a probability theory that was developed by John Larry Kelly, Jr. He created a formula used to determine the optimum amount to wager on a series of bets. Kelly’s Criterion was originally applied to a scenario when the number of possible wagers is infinite. In reality however, the handicapper only has a limited amount of capital to wager with. The theory has therefore been further tweaked to allow the user to maximize the chance of winning with the capital they have available – this is the basis for the Utility Theory. SIN is looking to make consistent profits over the long term and therefore will err on the side of caution when selecting our wagers to increase the chances of success. The basic formula for the Kelly Criterion is the following:
f* is the fraction of the current bankroll to wager;
b is the net odds received on the wager (that is, odds are usually quoted as “b to 1”)
p is the probability of winning;
q is the probability of losing, which is 1 − p.
Sabremetrics was pioneered by Bill James as a way of attaining “objective knowledge about Baseball”. Due to the on-going rapprochement between US and European sports, techniques that have been traditionally associated with analyzing baseball are now being applied to European football. Sabremetrics attempts to analyse large amounts of data with a view to uncovering the reasons why certain teams and players achieve the levels of performance and success they do. The science claims that by analyzing past data one is potentially able to predict future outcomes when circumstances are comparable. Though the work is still in its infancy in European football, many top levels clubs including Arsenal and Chelsea are dedicating more time and money to consultancy in the field. It has been claimed that the take-over of Liverpool AFC by John Henry and the NESV group who also own the Boston Red Sox is a new dawn for Sabremetrics in the sport. Tom Tomkins has recently published the first real study of the techniques applied to football in his book Pay as you Play that is being heralded as the football equivalent to Moneyball.