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In our article The Staking Plan, we outlined our preferred method of personal betting risk management; the following selection of staking plans are familiar to many of the gambling fraternity, and worth examining.

The most basic system, a level-stakes betting plan, whereby the stake is an unchanged percentage of the bank on every bet, is not entirely merit-less, particularly for those whose bets are predominately similarly priced. The percentage of the bank used with level stakes betting should be tailored, based on previous betting patterns, on how often you expect to win, and a predicted worst-case scenario losing run. One negative for level stakes betting, even for those betting on a narrow price range, is that it ignores the strength of each individual bet; that of the varying levels of value offered. Its relative strength is that it is not reliant on winning and losing patterns to increase or decrease its effectiveness, notwithstanding the initial problem of setting the percentage of the bank for the bet size.

A close relative of level staking is fixed-return betting, whereby the backer bets to win the same amount from each bet, as opposed to betting the same stake. The fixed betting disciple, who sets out to win for arguments sake £250 from each bet, will stake £500 on a 1.50 shot, £250 on a 2.0 chance and £50 at 6.0. Again, this method of betting is simply geared to the mathematics of a staking system without any regard given to the relative strength of each individual bet.

The Pyramid is another well-known staking plan in betting circles.  In the Pyramid, stakes are increased by one unit after a loser and decreased by a unit following a winner. The initial stake never shrinks regardless of the duration of the winning run. This system is designed to return the bettor to the starting point of the pyramid (as will happen each time a winning run exceeds the length of a previous losing run) with at least a one-unit profit, assuming bets are at or above evens. The initial stake should once again be geared to worst case expectations of a losing run and it must be said that with ever increasing stakes during a losing run, this plan could potentially be financially disastrous similar to the ‘doubling up system’. Consequently, the Pyramid is certainly better suited to those whose run of losses are relatively short, and whose bets are even-money or bigger.

Doubling up requires the bettor to double his stake on each losing bet until striking a winner, when the stake returns to its original investment. With the sequence of 1, 2, 4, 8, 16, 32 etc it is easy to see that as long as the price taken is not odds-on a profit is guaranteed when finally unearthing that winner. This ‘system’ is ideally suited to playing red/black on the roulette wheel, and having an inexhaustible supply of money. Unsurprisingly, casinos banned this practice centuries ago. Be aware that beginning with a £10 stake, 10 consecutive losers would leave the user of this staking plan needing to bet more than £10,000 on the 11th bet, and so on.

The Fibonacci staking plan is named after a 12th century Italian mathematician, symbolising the age-old search for successful gambling methods. The Fibonacci involves a staking sequence of 1-2-3-5-8-13-21-34. With each loss, the stake moves up one rung; with each win the stake moves down two rungs. Once reaching 34 a loss returns the player back to the start of the sequence. This sequence is geared to recover the losses incurred on the previous two bets, though as with the previous staking plans it is clearly geared to even-money payback’s and so is essentially another roulette inspired plan. Eight consecutive losers, at the start of the sequence would cost the bank £4350 assuming stakes were £50 for each unit and £870 for a modest £10 unit.

With the advent of betting exchanges, laying has become an integral part of a backers armoury. A staking plan incorporating lays only, known as Maria, is named after a now defunct betting service.  Maria’s notional betting bank was £3000, and the system eschews any lays above 11.0. The percentage of the bank used relates to the backers stake, so for instance 1% (£30) of the bank at 2.50 would mean staking £45 to cover the backer’s stake, and 1.50 would require £15 staked to cover the backers £30 at 1.50.

Prices under 3.5; lay to 1% of bank (backer’s stake).
Between 3.55 and 7.40; lay to 0.6%
7.50 to 11.0 lay to 0.4%.

The Maria, involves increasing stakes inline with the (hopefully) growing bank, though not decreasing until the bank has lost 35% of its equity in losing scenarios. It would then downsize further if the original bank size drops 70%. The purveyors of this staking plan apparently turned £3000 into £100,000 in less than a year. However, the strike rate of 86% as their 4131 suggested lays succeeded 3547 times would have been hugely successful with any staking plan.

All of the staking plans mentioned ignore the weight of value in the bet itself, all focusing purely on staking platforms. However, the Kelly Formula, is entirely value based and is essentially a more intricate version of the staking plan we have suggested in our Staking Plan article.

The Kelly formula is geared to expert backers who form their own tissue and evaluate the percentage chance of their bets. Of course this means only betting when the odds are in your favour, and crucially, evaluating that chance correctly.

The Kelly mathematical formula for straight forward betting is f = (bp-q) / b
                                                                                             
f is the percentage of the bank
b are the odds received  (b to 1)
p is the probability of winning
q is the probability of losing (1-p)

Example: if the bet has a 60% chance of winning and the odds are 2.0 (evens) which of course equate to 50%, then the Kelly bettor is presented with a 20% value opportunity and should back 20% of the bank.

As sound as the Kelly formula is in principle it has noticeable draw-backs. Firstly, the bettor needs to be faultless with his/her calculations. Secondly, even if proportionally paring down the percentage of the bank used, the risk of bankruptcy is high. Moreover, betting opportunities often present themselves, and are available for only fractions of seconds, particularly with in-running betting and other highly volatile markets, and exact calculations in those circumstances are often impossible.  Principally, Bettorlogic’s suggested staking plan is a less rigorous form of the Kelly formula, geared towards a more realistic form of risk management.