Aaron Schatz will sail the Kelly seas!

Nate Silver and fivethirtyeight crew took on the World Cup, with tremendous success. Nate turned $100,000 into $571,538 by Kelly-betting every game of the tournament (I skipped the meaningless game between Brazil and Netherlands). As Aaron has graciously provided the information required to do so for the NFL this year, I will track his Kelly results. First, let me explain what Kelly betting means.

The Kelly Criterion is a mathematical formula that determines the correct amount to wager (or invest) for maximal bankroll growth. For some background these may prove helpful:

http://en.wikipedia.org/wiki/Kelly_criterion

and this:

http://www.amazon.com/Fortunes-Formula-Scientific-Betting-Casinos/dp/0809045990

So, some ground rules. I’ll handle the Thursday games on gameday, and the rest of the events on Friday. All games will be considered separate events, with no simultaneous staking. I will not be changing the bankroll size to reflect the Thursday results, but I will update from week to week. Kudos to the math geniuses among you who just realized that this means I am giving every bet a simultaneous-Kelly stake, just for a different (much larger) bankroll than the one I am using. 

I’ll be giving Aaron a bankroll of $1,000,000, but will give him a major line of credit if needed. 

Game 1:

Green Bay Packers @ Seattle Seahawks

Green Bay +6, risking $194,776 to win $177,609. 

Starting with a bang, but wait until you see the rest of week one tomorrow. Good luck to Mr. Schatz and Football Outsiders.

Seth Burn

@sethburn on Twitter

 

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2 comments
  1. Michael Chustz said:

    Can you break down the calculation for us? How is the probability of winning determined from the Football Outsiders data.

  2. sethburn said:

    Yeah, I’ll go into more detail in my next post, but it won’t be until Sunday as per Football Outsiders request.

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