Kelly’ing Goldie

There was a twitter outrage when Goldman published  their WC winner odds last week. Brazil at 48% suggests even after group stage(assuming they’ll go through 100%) Brazil will have  83% likelihood of winning each game. Odds-makers suggest Brazil only has 25% chance of winning. I am(Well the ELO model I use) somewhere in between; I think GS is overestimating home field advantage(they have home continent and home country advantage separately boosting Brazil’s odds) and bookies might be underestimating it.

WC’s are very few and so are the games in a given WC which makes it less open to prediction than some annual events with a lot more games. But since Goldman published their odds; here is how they should theoretically bet with $1,000,000 using Kelly criterion: (I assumed only bets and no lays):

 

Brazil to win $313K odds 3/1

Netherlands to win $18K  odds 25/1

USA to win $1K  odds 250/1

 

Best result possible Brazil to win: +920K profit

Worst results possible: -332K loss

 

Next week, what to watch WC edition!

 

 

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