The application of Kelly Criterion in lottery mathematical statistics

Abstract

The paper will introduce the concept of Gambler's Ruin by analyzing the psychological analysis of gamblers, and then research the probability problem in lottery. Assuming that there are no other influencing factors, and the winning probability is known, we find the simple model and calculate and analyze the best bet amount, that is, the best strategy for buying lottery tickets by using Kelly Criterion. The Kelly Criterion is a valid formula for calculating the optimal bet amount. We need to use the Kelly Criterion to calculate the formula, use the drawing tool to graph the function and find the highest point, which is the maximum bet amount. Analyze and discuss the relationship between investment risk and return. Finally, the combination of the two explains the player's happiness. Use the Kelly Criterion to define gambler's happiness. To summarize the role of Kelly Criterion in the case of known lottery probabilities.