John Larry Kelly, Jr. was a mathematician from Bell Labs. He is most famous for using a voice synthesizer in the early 1960's to have a computer sing "Daisy, Daisy, give me...". Arthur Clarke was visiting a friend at Bell Labs at the time and worked the song into 2001, A Space Odyssey".

But he also developed the Kelly Criterion. One of the results of the Kelly Criterion which dooglus used is that for a bet with 1% house edge for even money bets only the optimal amount for the investors to bet is 1% of the house bank.

It should be noted that the Kelly Criterion changes for different payouts. For instance if the player selects a profit of 50%, Kelly Criterion says he should be allowed to bet up to 2% of the bankroll. Presumably dooglus thought that would complicate the rules and he assumed that the majority bets would be 1:1 return.

Even Kelly supporters usually argue for fractional Kelly (betting a fixed fraction of the amount recommended by Kelly) for a variety of practical reasons, such as wishing to reduce volatility. Hence the phrase "half Kelly".

Kelly died of a stroke on a Manhattan sidewalk at the young age of 41 in 1965. It is reported that he never used his own criterion to make money.


Technically it recommends you do that only if betting a profit of 100% (i.e. 50%-HE/2 probability of winning). It changes if you select another profit.