What is the Kelly Criterion?
The Kelly Criterion is a staking formula that calculates the optimal fraction of your bankroll to wager when you believe you hold an edge. It is designed to maximise long-term growth while protecting against the risk of ruin.
Worked example
The odds are +120 (decimal 2.20, so net odds b = 1.20). You estimate a 50% win chance. Your bankroll is $1,000.
Frequently asked questions
How does the Kelly Criterion work?
It divides your edge by the odds to find the ideal stake fraction. The larger your edge over the price, the larger the recommended bet relative to your bankroll.
What is fractional Kelly?
Staking half or a quarter of the full Kelly amount. It gives up a little long-term growth for a much smoother, less volatile bankroll.
What if Kelly says to bet zero?
A zero or negative result means the odds offer no value at your estimated win probability, so the formula recommends not betting.