The answer to this question has quite surprisingly been around for ages though it is discussed, analysed and refined often. Named after its author, John L Kelly Jr, if was first published in 1956.
Calculating winning and losing runs
Are you a rotten gambler or just plain unlucky? You seem to have hit on a winning system when woe and behold you are struck down by a really bad losing run and with it your confidence. So, were you just unlucky?
Fair or unfair games – “Expectation”
One of the most valuable uses to which a gambler can put his knowledge of probabilities is to decide whether a game or proposition is fair, or equitable. To do this a gambler must calculate his ‘expectation’.
Some gamblers might he tempted to base staking plans on the theory that in any series of even-money events there must come a time sooner or later when the outcomes reach equipartition.
Understanding Combinations and Permutations
In 1665, three years after his death, Pascal’s famous arithmetical triangle was published. Pascal’s Triangle is a well known mathematical pattern.