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Originally Posted by blackthroatedwind
I would take 5000-1 on this horse for at least $1000.
Is there no end to the idiocy?
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That got me thinking. How much money would you have to have available for betting horses (or devoted to horses and other roughly similar investments), to justify what would be considered a "correct" bet on Chelokee of $1000 at 5000-1 odds?
I think Ed Thorp showed that the correct "Kelly" bet was Bankroll*%ADV/odds. ("%ADV" is percent advantage, your expected return on the bet) For a $1000 bet, then, 1000=Bankroll*%ADV/5000. Therefore, Bankroll*%ADV would have to equal 5 million.
If fair odds on Chelokee are as "low" as 250-1, then %ADV is (5000/250) -1 = 19. (or 1900%) Therefore, you'd need a 5000000/19 = $263,000 bankroll to justify that $1000 bet at 5000-1.
But if fair odds on Chelokee are even lower, say 75-1, then a 77K bankroll would be more than enough.
And yes, I'm sure by now you are thinking that "no, there is no end to this idiocy!"
--Dunbar