Imagine stepping up to the betting window with a crystal ball in your hands—one that doesn’t guarantee wins but tells you exactly how much to bet when you find an edge. That’s essentially what the Kelly Criterion aims to do. It’s not some get-rich-quick scheme; it’s a mathematically sound formula used by sharp bettors, professional gamblers, and even Wall Street traders to balance risk and reward in a way that maximizes long-term growth.
If you’ve ever found yourself second-guessing how much to put down on a bet—too much and you risk going broke, too little and you leave money on the table—then this deep dive into the Kelly Criterion is exactly what you need.
The Kelly Criterion: Betting with a Plan
Most casual bettors follow their gut when deciding how much to wager. Professionals, on the other hand, treat betting like an investment strategy. The Kelly Criterion, named after John L. Kelly Jr., a scientist at Bell Labs, provides a calculated answer to a crucial question: “How much should I bet on this?”
The formula itself is simple on paper:
f∗=bp−qbf^* = \frac{bp – q}{b}f∗=bbp−q
Where:
- f* = the fraction of your bankroll to wager
- b = the decimal odds minus 1 (for American odds, convert to decimal first)
- p = the probability of winning
- q = the probability of losing (1 – p)
In theory, this formula helps bettors avoid over-betting (which leads to bankruptcy) and under-betting (which limits profits). In other words, it finds the sweet spot between risk and reward.
Many experienced bettors apply the Kelly Criterion when wagering on platforms like 20Bet, where competitive odds and a wide range of betting markets provide plenty of opportunities to find an edge. By using this strategy, bettors can make more calculated decisions instead of blindly chasing wins.
Why Does Kelly Work?
Think of sports betting like driving a car. Go too slow, and you’ll never get anywhere. Go too fast, and you might crash. The Kelly Criterion is like cruise control—it adjusts your speed to get you where you want to go without burning out.
The magic of Kelly is that it scales your bet size depending on your advantage. If your edge is strong, the formula recommends a bigger wager. If it’s weak, it suggests a smaller one—or even nothing at all. It’s designed to prevent reckless bets while still maximizing long-term gains.
A Real-Life Example: Applying Kelly to Sports Betting
Let’s say you find a bet with +150 odds (2.50 in decimal), and your research tells you there’s a 45% chance of it winning. How much should you bet?
- b = 2.50 – 1 = 1.50
- p = 0.45
- q = 1 – 0.45 = 0.55
Now, plugging into the formula:
f∗=(1.50×0.45)−0.551.50f^* = \frac{(1.50 \times 0.45) – 0.55}{1.50}f∗=1.50(1.50×0.45)−0.55 f∗=0.675−0.551.50=0.1251.50=0.0833f^* = \frac{0.675 – 0.55}{1.50} = \frac{0.125}{1.50} = 0.0833f∗=1.500.675−0.55=1.500.125=0.0833
Result: The Kelly Criterion suggests betting 8.33% of your bankroll. If your bankroll is $1,000, you’d bet $83.30.
The Catch: Kelly Isn’t Perfect
While Kelly sounds like a dream formula, it has one big flaw—it assumes your probability estimates are 100% accurate. In reality, no bettor can predict outcomes with absolute certainty. If you overestimate your edge, Kelly might tell you to bet too much, and you could wipe out your bankroll fast.
To counter this, many bettors use a “fractional Kelly” approach, typically betting half or a quarter of what Kelly recommends. This keeps them safer in the long run while still benefiting from the math.
Should You Use the Kelly Criterion?
If you’re serious about sports betting and want to bet smarter, not harder, Kelly can be a game-changer. It won’t make you rich overnight, but it helps maximize long-term profits while reducing unnecessary risks.
That said, Kelly isn’t a magic bullet—it works best for disciplined bettors who have a real edge. If you’re just betting for fun, it might not be necessary. But if you take your betting seriously, knowing how much to bet is just as important as knowing what to bet on—and that’s where Kelly shines.
So next time you’re eyeing a bet, don’t just throw money at it blindly. Let the numbers guide you. Because in the world of sports betting, the ones who survive aren’t always the lucky ones—they’re the ones who bet with a plan.