Calculator Tool for Determining Kelly Betting Stakes Based on Risk and Reward
Edited by Brian Webb & Alex Windsor ** Last Updated: March 5, 2025**Welcome to our guide on the Kelly Criterion, a popular mathematical formula used to optimize betting decisions in sports and gambling. While it may seem intimidating, we'll explain it in an easy-to-understand manner, focusing on sports betting.
What is the Kelly Criterion?
In essence, the Kelly Criterion is a formula that helps determine the optimum bet size relative to the implied odds, actual odds, and your bankroll. Essentially, it helps you decide how much to bet to ensure profits over the long run.
Sports betting revolves around probabilities, making the Kelly Criterion a valuable ally. By using this method, you can place smart bets, increasing your chances of long-term success.
The Kelly Criterion Formula
Here's the basic Kelly Criterion formula:
f = (bp - q) / b
- f: The optimal bet size, represented as a percentage of your bankroll.
- b: The decimal odds of the bet (like 2.5, 2.10, etc.)
- p: The implied or true probability of winning (eg: 47%=0.47)
- q: The probability of losing, which is (1 - p)
Using an odds converter may help you work with American odds if needed.
Applying the Kelly Criterion in Sports Betting
Though the formula may seem straightforward, it can get complex in practice as it involves three main variables and the size of your bankroll. Using the formula, you get a percentage value that indicates the optimal bet size in relation to the winning probability.
If you find the true odds to be close to the implied odds, you're in a favorable position for potential gain. The following example illustrates this:
Assume the implied odds are 2.00 (+100 American). These odds are beneficial, giving room for profit. Suppose the true odds are 2.15 (+114 American). An outcome with 2.15 true odds would have a win probability of 46.5% (0.46), and the loss probability is 53.5% (0.53). Fill in the variables:
- b: 2.15 (+100)
- p: 46.5% (0.46)
- q: 53.5% (0.53)
Plug these into the Kelly Criterion formula to get:
(2.15 x 0.46 - 0.53) / 2.15 = 0.21. This value indicates you should bet 21% of your bankroll.
For instance, if you have a £300 budget, you should wager £63.
Using the Kelly Criterion Calculator
We've made the process even easier with our free, user-friendly Kelly Criterion calculator. To use it:
- Input the bet's odds.
- Estimate the win probability.
- Set your Kelly multiplier (0.5 is recommended for small-stakes bettors).
- Enter the size of your bankroll.
- Hit 'Calculate'.
The benefits and Drawbacks of the Kelly Criterion in Sports Betting
Though the Kelly Criterion offers advantages, it also has pitfalls:
Pros
- Suitable for singles and combined bets
- Proven betting formula
- Helps place valuable bets with positive expected value
Cons
- May be challenging for beginners to grasp
- Requires understanding of essential handicapping to work out true odds
Conclusion
Embracing the Kelly Criterion and our calculator will greatly benefit your sports betting strategy. Accurate tools like this are vital ingredients for smart bettors. With our calculator and betting guides, you'll find reliable assistance to help you make informed choices for a rewarding betting experience.
Alex WindsorWith a decade-long history in the iGaming industry, Alex Windsor serves as our Managing Editor, specializing in sports betting and betting tools. Blending professional expertise with a passion for football and soccer, Alex ensures we provide a reliable resource to assist you in making educated choices.
Brian WebbSkilled writer and editor Brian Webb has been a part of our team for over five years. His focus is on sports betting strategies, ensuring our content remains up-to-date and accessible for new and seasoned bettors alike.
- The Kelly Criterion, a mathematical formula for sports betting, helps determine the optimum bet size by considering the implied odds, actual odds, and bankroll.
- By using the Kelly Criterion, sports bettors can place smart bets and increase their chances of long-term success, as it optimizes bet sizes in relation to winning probabilities.
- The formula for the Kelly Criterion is 'f = (bp - q) / b', where 'f' represents the optimum bet size, 'b' stands for the decimal odds of the bet, 'p' is the implied probability of winning, and 'q' is the probability of losing.
- To maximize profits over the long run, the Kelly Criterion indicates the potential bet size that should be a percentage of your bankroll.
- To simplify the process, our website offers a free, user-friendly Kelly Criterion calculator, allowing users to input odds, win probability, bankroll, and a Kelly multiplier to assist in determining the optimal bet size for sports betting.
