What is the Kelly Criterion?
A practical guide to the Kelly Criterion, its formula, fractional Kelly staking and the risks of overestimating your betting edge.
What Kelly does
The Kelly Criterion calculates a bankroll percentage based on your estimated edge and the available odds. Its goal is long-term bankroll growth while accounting for risk.
Formula
For decimal odds, let b be odds minus 1, p your win probability and q equal 1 − p. Full Kelly is (b × p − q) ÷ b.
Example
At odds 2.00 with a 55% estimated chance, full Kelly suggests 10% of bankroll. That is aggressive because small probability errors create large stake errors.
Fractional Kelly
Many bettors use half Kelly or quarter Kelly to reduce volatility and protect against imperfect estimates. If the formula is zero or negative, Kelly recommends no bet.
Main risk
Kelly is only as reliable as the probability estimate. Overconfidence produces oversized bets, so conservative fractions and stake caps are sensible.
Continue learning
- How to Read a Football Prediction
- What is Expected Value (EV) in Betting?
- What is Odds Movement?
- What is a Steam Move?
New to football predictions? Read our starting guide: How to Read a Football Prediction.