The goals of this video are to educate North Americans with a combined interest in mathematics and sports betting on how to:
- use the Kelly Criterion to optimally size bets on sporting events
- understand how to interpret American style odds
In order to accomplish this goal, the basic outline of the instructional material is described below.
- Answer "What is the Kelly Criterion?"
- Address how to use it
- convert American style odds to decimal odds
- calculate the probability implied by the American style odds
- use these two calculated values to calculate the Kelly Criterion
- interpret the results
- Caution learners about what the Kelly Criterion is and isn't
In order to minimize the cognitive load of the mathematical formulas in the lesson, constituent parts are consistently color coded. All representations and calculated results of implied probability are yellow. All representations and calculated results of decimal odds are blue, and all representations of American odds are light blue. Both the decimal odds and American odds are shades of blue since they represent the same thing but are interpreted differently.
By applying the Kelly Criterion to a contrived Major League Baseball post-season game, learners are able to immediately see the material's application to a real-world scenario. This has an overall positive impact of the effectiveness of the lesson, but also requires that learners do not get distracted or confused by the example application.
The order of explaining and calculating the decimal odds then the implied probability from the example's American odds was chosen as to gradually ramp from more basic mathematical ideas to more advanced. This is because the underlying ideas of converting American odds to decimal odds are easier to grasp than what implied probability means.