Kelly criterion and betting

I recently came across (and actually understood this time) , arbitrage opportunities in FX exchange rates.

So there is a graph algorithm which when used against different FX pairs, can tell us if riskless bets can be made.

Trying to apply the same to horse betting seemed obvious at first glance, but since there is no clear ‘graph’ we can exploit here, it took some time for me to understand how it is possible. Here the fairness of a bet comes into picture.

In the ‘Physics of Wall Street’ the author mentions the Kelly Criterion and how this general criteria tells us of how to bet. Wikipedia has a simple example for binary return rate as is the case with horse betting.