Kelly Criterion

Kelly Criterion

The Kelly criterion or Kelly strategy or Kelly Staking Plan is a formula used to determine the optimal size of a series of bets.

Kelly Criteria was developed in 1956 by John L. Kelly and was designed to maximize the growth of your bank roll over the long term.

Main problem with The Kelly Criteria is estimations of percentages for certain event which are should be better than the bookmakers’ estimations.

Formula for determining optimal size of stakes is:

Stake = ((Odds *Perc) - 1) / (Odds - 1) * 100

  • Odds = Odds offered for certain event by bookmaker
  • Stake = Optimal size of stake
  • Perc = Estimation of percentages for certain event

For example, your bank roll is £1000, and you decide to bet on football team who is priced @2.20 by your bookmaker. You also estimated chances of your team to win the match and probability for your team to win is 50%. According to Kelly formula, optimal size of your stake would be: Stake = ((2.20*0.50)-1)/(2.20-1)*100 = 0.833 = 8.33%

So, the optimal size of your stake in this example would be 8.33% of your bank roll, or 8.33% * £1000 = £83.

The Kelly Criteria is popular with many professional punters, but as mentioned above, the main problem is to precisely estimate percentages in certain betting event. If you think you are able to estimate percentages of a football match better than your bookmaker, than Kelly Staking is right staking plan for you, and calculator below will help you determine your optimal stakes.

To avoid complex calculations, feel free to try our kelly calculator.