Staking Plans – Why Kelly Criterion Is Better Than Level StakesJuly 24, 2021
In this article I’m going to talk about the different types of staking plans you can use in your quest for gambling profits. A book would be needed to cover every staking plan in detail so I’ll summarize the best I can.
The most commonly quoted staking plan is Level stakes, with other popular ones being Variable staking, Progressive staking, Kelly Criterion staking and Percentage of bank staking. I’ll go through what each means and what my thoughts are on their plus and minus points.
Many tipsters quote their profit figures (they never lose do they?) to level stakes in their advertisements. It is also the figure journalists and TV presenters throw at us when there quoting various trends for upcoming races, or matches. The problem with level staking however lies in its title. It means having the same stake on a 100/1 shot as a 1/2 shot. The result is, a few big priced selections, decide whether you end up in profit or not. Your variance will be huge, meaning you will have huge swings in your betting bank, and frankly there is very little logic behind a level stakes approach.
Let’s say a trainer had 30 runners over a period of the last 14 days and 29 of them started at 1/1 and the other runner was 100/1. All the 1/1 horses got beat but the 100/1 shot won. Would you say this particular trainer’s string was in form? No of course you wouldn’t but Level Staking would, as you’d be up €71 for a €1 level stake. One result has camouflaged a very poor run of hot favourites getting beat. You might say this is an extreme example but I find you have to us these examples to show up obvious flaws.
Why then do the tipster’s and media use it to the exclusion of almost anything else? The tipsters will use whatever they can to make their product look better than it is. Level stakes will achieve this, as a few decent priced winners will give them a tidy profit and thus it gives them an opportunity to advertise after a particularly good period. They will hand-pick the exact period they were most profitable and using level stakes can make it seem even better than it really was.
It is the same with the stats quoted by various media outlets. Quotes like ‘such and such a trainer has a level stakes profit in novice chases at Kempton’ and thus they’ll tip up the trainer’s runner in a Novice chase at Kempton based solely on this logic. The sample size might have been only 10 runners with one 20/1 winner but that won’t put them off. People are paid to come up with these trends or stats so they can be presented to the public in print, or on TV. It is much easier to come up with stats that were profitable what is staking in the past if you have a small sample size and use level stakes as the proof of profit. Therefore I expect the reason the media use it, is firstly to make their job easier, and secondly ‘the sheep effect’. Everyone else does it so why shouldn’t I? I will always be very sceptical of any trends based on level staking unless the sample size is very big or the prices of the selections were within a tight band. I’m not saying that trends are to be ignored; just they need to be analysed properly in order to find the valuable ones.
Some in the media like Hugh Taylor of ATR and James Pyman of the Racing Post have used Actual/Expected winners a good bit lately to evaluate statistic’s and this is much better than Level Stakes as a barometer of whether the statistic has value.
Okay, enough level stakes bashing. Percentage of bank staking is still fixed stakes but you’re staking a certain % of your betting bank on each selection. Same flaws as level staking while being marginally better for punting purposes as at least now you’re including the size of your betting bank in your decisions.
Progressive staking is basically increasing stakes after a loser in order to have more money on the winners you back than the losers. Sounds very good in theory but in practice the bad losing run will wipe you out every time. You will win most of the time as a few winners will normally wipe out your loses and produce a profit. The problem comes when you get the really bad run that only happens rarely. You’ll have two problems. One your betting bank won’t have the ridiculous amount needed for the ever increasing stakes, and two even if it had, you won’t be able to get the bet amount needed on. Some plans like doubling your stake after a loser would soon need astronomical stakes after a relatively short losing run even if you started at just €5 bets. I’ve heard of people using this in casinos on the roulette table. They will win often but the loss when it comes, and it will come, will wipe them out. Some will say they only bet up till they have 8 losers but this will happen often enough, for the big loss incurred to be bigger than all the small profits accumulated. You can’t make money from a staking plan of any sort if you haven’t found an edge to begin with. Some will just put you in the poor house quicker.