Bankroll

Bankroll Contracts

Type	Chain	Contract
Diamond (Bankroll, main)	Arbitrum BNB Base	0xC4F837e5366422Ae27505956CeAda80Cb8477b3f

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Kelly based bankroll management

Luckybit employs the Kelly Criterion to manage bankroll effectively and ensure optimal betting strategies for users. This sophisticated approach balances risk and reward while maintaining the platform's long-term sustainability.

How Kelly Criterion Is Applied

• Frontend and Contracts:

  • Luckybit uses 1x Kelly on the frontend to calculate maximum bet sizes.

  • In the contracts, 1.1x Kelly is applied to account for potential transaction fluctuations caused by changes in bankroll size.

• Adjustments for Specific Scenarios:

  • Multibets: When individual users place maximum Kelly wagers on multibets, there is a slight deviation from the standard calculation.

  • Simultaneous Bets: If multiple users place maximum Kelly wagers within a 30-second window (validated by Chainlink VRF), adjustments are made to account for potential risks.

• In these scenarios, if losses occur, the Kelly Criterion adjusts to assume a lower risk, thereby protecting the bankroll. Conversely, during winning streaks, the bankroll assumes slightly higher risk as the Kelly factor increases.

Optimal Kelly Betting Fractions

• The Kelly Criterion ensures the optimal fraction of the bankroll is wagered to maximize long-term growth while minimizing the risk of ruin. The strategy avoids the pitfalls of overbetting (e.g., 2x+ Kelly) and ensures stability:

• Negative Growth Risk:

  • Reaching the negative growth zone (2x+ Kelly) is extremely improbable. It would require a highly unlikely streak of maximum wager wins, hitting maximum multipliers, or excessive spending.

  • Even if such a scenario occurred, the impact would be temporary, as Luckybit’s bankroll would have already grown significantly, keeping it above the initial value.

• Short-Term vs. Long-Term Impact:

  • In rare cases where 2x+ Kelly bets are accepted, short-term effects are not necessarily harmful. However, sustained negative growth from such bets could pose a long-term risk.

Why Kelly Works for Luckybit

• Built-In Safety Margin: The use of 1.1x Kelly in contracts introduces a buffer that accounts for fluctuations, making the strategy safer than a pure Kelly application.

• House Edge Advantage: The inherent house edge further reduces risk, ensuring the bankroll grows steadily over time.

• Average Bet Size: Most users wager below the maximum calculated bet size, adding an additional layer of safety.

Balancing Risk and Growth

• Luckybit’s application of the Kelly Criterion dynamically adjusts the bankroll's risk profile based on outcomes:

  • When Losing: Kelly decreases, reducing exposure and preserving the bankroll.

  • When Winning: Kelly increases, allowing for slightly higher risk and greater potential growth.

• By maintaining this balance, Luckybit ensures a robust and sustainable betting ecosystem while offering users an engaging experience.