Kelly Criterion

Fractional Kelly betting The recommended Kelly criterion stake will be multiplied by this value. For standard Kelly betting, set the fractional Kelly betting value to 1.00. If you want to be more conservative than the Kelly criterion, enter a value less than 1 (e.g. Input 0.5 if you want to wager 50% of the stake recommended by the Kelly.

1. Kelly Criterion Calculator
2. Kelly Criterion Calculator
3. Kelly Criterion
4. Kelly Criterion Explained
5. Kelly Criterion Forex
6. Kelly Criterion Sports Betting

• The Kelly Criterion was first introduced by J.L. Kelly who was a researcher for Bell Labs in 1956. The idea behind the theorem is to maximize wealth as the number of observations (or bets) goes to infinity. Though originally created for financial portfolios, it has been borrowed by the sports betting community for bet size management.
• The Kelly Criterion is well-known among gamblers as a way to decide how much to bet when the odds are in your favor. Most only know a simplified version. Most only know a simplified version. We will show why that holds, but our main goal is to explain the full version.

How does the Kelly criterion calculator work?

By entering your bankroll, the odds and your estimated probability of winning, the Kelly Criterion calculator will tell you how much you should wager on a certain event to maximise your value and profit.

Use the Kelly Criterion Calculator here

According to the Kelly criterion, you should place a wager of approximately 1.18% of your account balance on this selection.

Kelly Criterion Calculator

After applying the fractional Kelly value of 0.04, this adjusts to a wager of approximately 1.71% of your account balance.

Based on your account balance of $1,000, this equates to a wager of $11.76.

The expected value of this wager is approximately $11.76*[(0.68)(0.60) + (-1)(0.4)] = $0.09, which equates to a 0.80% return on the funds wagered.

The Kelly criterion returned a value of -0.0061.

After applying the fractional Kelly value of 0.0, this adjusts to -0.0061 of your account balance.

Because this number is below 0 you should not back the selection at the available odds.

What is the Kelly Criterion?

Kelly Criterion Calculator

The Kelly Criterion is a method by which you can used your assessed probability of an event occurring in conjunction with the odds for the event and your bankroll, to work out how much to wager on the event to maximise your value. By inputting the odds, the probability of the event occurring and your betting balance, you will be able to determine the amount you should wager on the event. The fractional Kelly betting input is a way to change how aggressive or conservative you are with your wagering (1 being the standard and moving towards 0 the more conservative you wish to be with your wagering). Ultimately, the Kelly Criterion calculator, if you are accurate with your assessed probability should increase your value and profit over a long-term period.

Bettors should always look for a mathematical edge rather than rely on their impulses. Learning how to use the Kelly Criterion, for example, is a great way for bettors to determine how much they should stake. Read on to find out.

Prior to placing a bet bettors should consider six important questions: who, what, when, where, why and how? But for this article, it is the how, as in how much to bet, we are interested in.

Popular staking method which suggests that stake should be proportional to the perceived edge.

Consider placing a bet on the English Premier League. We can adapt these questions accordingly:

Kelly Criterion

• Who to bet on? Manchester United
• What to bet on? Top 4 finish
• When to bet on? Now
• Where to bet on? Pinnacle tend to offer the best odds
• Why to bet on? They seem to be under-priced
• How much? How much to bet on this outcome?

Most articles focus on the first five questions, typically using mathematical or statistical justifications on answering ‘why’ - such as the article on how to use Monte Carlo methods.

In making financial decisions, the key issue is not only finding the adequate financial products to invest in but also deciding how to subdivide one’s portfolio. Similarly, an important question for a bettor, is how much to wager?

Many papers recommend using the Kelly Criterion or a derivative of it - such as my 2013 paper appearing in the The Journal of Gambling Business and Economics. In essence, the Kelly Criterion calculates the proportion of your own funds to bet on an outcome whose odds are higher than expected, so that your own funds grow exponentially.

B = the Decimal odds -1
P = the probability of success
Q = the probability of failure (i.e. 1-p)

Using a coin as an example of Kelly Criterion staking

For example, consider you are betting on a coin to land on heads at 2.00. However, the coin is biased and has a 52% chance of ending up on heads.

In this case:

P= 0.52
Q = 1-0.52 = 0.48
B = 2-1 = 1.

This works out at: (0.52x1 – 0.48) / 1 = 0.04

Kelly Criterion Explained

Therefore the Kelly Criterion would recommend you bet 4%. A positive percentage implies an edge in favour of your bankroll, so your funds grow exponentially. You can also test the criterion for different values in this online sheet by using the code below.

Kelly Criterion Forex

Ultimately the Kelly Criterion offers a distinct advantage over other staking methods such as Fibonacci and Arbitrage methods as there is a lower risk. However, it does require precise calculation of the likelihood of an event outcome, and discipline of this method will not provide explosive growth of your bankroll.

Kelly Criterion Sports Betting

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