Bankroll Smarter: An Intro to the Kelly Criterion

Most bettors bet the same amount on every pick—regardless of edge or confidence. But not every bet is equal—and betting like they are means missed opportunities or unnecessary losses. The **Kelly Criterion** helps you scale your bets based on how strong they really are.

I. What Is the Kelly Criterion (and Why It's Useful)?

Kelly is a simple formula used in sports betting, poker, and investing. It tells you how much to bet based on two things:

1. How likely you are to win
2. How good the odds are

If your edge is real, Kelly helps you grow your bankroll faster—without going overboard and risking too much.

II. The Kelly Formula (Explained Simply)

Kelly % = (bp - q) / b

Where:

• b = decimal odds – 1
• p = your estimated probability of winning
• q = 1 – p

🧠 Example:

You think a team has a 55% chance to win.
The odds are +110, which equals decimal odds of 2.10.

• b = 2.10 – 1 = 1.10
• p = 0.55
• q = 0.45

Plug it in:

Kelly % = (1.10 × 0.55 – 0.45) / 1.10
Kelly % = (0.605 – 0.45) / 1.10 = ~14%

That means: If your bankroll is $500, bet ~$70.

If your confidence drops to 52%, Kelly would recommend much less—around 5%. And if your edge disappears? Kelly says don't bet at all.

III. Why Kelly Helps You Avoid Big Mistakes

Flat betting ignores the strength of your edge.

• Overbetting risks blowing your bankroll when your confidence is shaky.
• Underbetting means you leave money on the table when your edge is strong.

Kelly gives you structure. It encourages bigger bets only when the math supports it—and smaller ones when risk is higher.

IV. What If You're Not Sure of Your Edge?

Most recreational bettors don't calculate win probabilities to the decimal—and that's okay.

You can still apply Kelly thinking with a more cautious approach:

➤ Use Fractional Kelly Sizing

Many bettors apply fractions of the Kelly percentage to reduce volatility:

• ¼ Kelly — For small edges or lower confidence
• ½ Kelly — For solid bets with good odds and a reasonable edge
• Full Kelly — Only when you have a strong edge with high confidence
• 0 Kelly — Skip bets when there's no clear edge

This method protects your bankroll during cold streaks while letting you take advantage of the bets that truly offer value.

V. Conclusion: Don't Bet Big—Bet Smart

The Kelly Criterion is one of the most powerful tools for growing your bankroll efficiently.

You don't need to master the math to use it—you just need to think in terms of how strong is my edge, and what do the odds say?

Scale your bets up when the edge is real.
Scale down—or skip—when it's not.