> The Kelly system can work fine for games where you can make
> relatively small changes in your bets, allowing you to bet a
> calculated percentage of your bankroll, but that is rarely possible
> in video poker. The only situation I can think of would be a 100-play
> machine that lets you play any number of hands.
The Kelly system still works, even when you can't make that optimum bet of say $7.457999 . Given the bets that you can make, the Kelly system tells you which one is optimal.
> Also, Kelly is not very good for games with widely skewed
> probabilities and payoffs, including video poker.
As long as you have the correct formula, it is. An approximation for video poker like games is edge/variance.
> The only reliable calculation for risk is the Sorokin formula, first
> applied to video poker by (I think) jazbo, and included as a feature
> in Optimum Video Poker.
That's a good formula, but it only tells you the chance of losing your entire bankroll on a given gamble. The Kelly system tells you how to achieve maximum average bankroll growth. The approximate Kelly bankroll (variance/edge bets) generally corresponds to a Sorokin risk of ruin of about 10%, and the double Kelly bankroll generally corresponds to a Sorokin risk of ruin of about 1%, but the Kelly system is much more than just a bankroll number. It is a system, the only system that maximizes average bankroll growth. Is average bankroll growth important? According to that last Dancer article it is (if you want to continue to play video poker in the future). Dancer consults to the casinos, so his predictions are quick likely to come true.
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