Kelly Criterion
A formula for calculating the optimal bet size to maximize long-term bankroll growth.
The Kelly Criterion is a mathematical formula that determines the ideal percentage of your bankroll to wager on a bet with a known edge. It balances the tradeoff between betting too little (slow growth) and betting too much (risk of ruin).
Full Kelly can be aggressive, so many professionals use fractional Kelly (typically 25-50% of the recommended amount) to reduce variance while still capturing most of the growth benefits.
The formula requires knowing your true win probability and the odds being offered. In sports betting, estimating your true probability is the hard part — the Kelly Criterion only works if your probability estimates are accurate.
Formula
Kelly % = (bp - q) / b, where b = decimal odds - 1, p = win probability, q = 1 - pExample
If you estimate a 55% chance of winning a bet at -110 (decimal 1.909): Kelly % = (0.909 × 0.55 - 0.45) / 0.909 = 5.5%. Bet 5.5% of your bankroll.
Related Terms
Bankroll Management
The practice of managing your gambling funds to minimize the risk of going broke.
Expected Value (EV)
The average amount you can expect to win or lose per bet over time.
Unit
A standardized bet size used to track performance, typically 1-2% of your bankroll.
Risk of Ruin
The probability of losing your entire bankroll, even with a positive edge.
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