When you use the word "Kelly" here, is that just meaning 1%, or is there some other meaning for the word?
He's referring to the Kelly criterion which tells you the optimal amount to risk when you have a positive expectation.
It turns out that Kelly recommends you risk the same amount of your bankroll as the house edge percentage. Since JD has a 1% house edge, "full Kelly" means 1%.
There's a tradeoff to be made between volatility and expected profit. We're conservative in only risking 0.5%.
This article is a good introduction to the concept, and includes this image which shows how volatility and profit trade off against each other:
See this, too:
http://compoundingmyinterests.com/compounding-the-blog/2012/10/12/how-did-ed-thorp-win-in-blackjack-and-the-stock-market.html