1. What is the Kelly Criterion?

The Kelly Criterion is a mathematical formula used to determine the optimal bet size to maximize long-term growth of capital. It considers both the probability of winning and the odds offered to calculate the ideal percentage of bankroll to wager.

2. How Does the Calculator Work?

The calculator uses the Kelly Criterion formula:

Where:

• \( b \) — Decimal odds (e.g., 2.0 for even money)
• \( p \) — Probability of winning (0-1)
• \( q \) — Probability of losing (0-1)

Explanation: The formula calculates the optimal fraction of your bankroll to bet based on your edge over the bookmaker.

3. Importance of Kelly Criterion

Details: Proper bankroll management is crucial for long-term success in betting. The Kelly Criterion helps maximize growth while minimizing risk of ruin.

4. Using the Calculator

Tips: Enter decimal odds, win probability (0-1), and loss probability (0-1). Ensure probabilities sum to 1 or less. A positive result indicates a value bet.

5. Frequently Asked Questions (FAQ)

Q1: What is a good Kelly bet size?
A: Typically, bet sizes between 1-5% are considered reasonable. Many bettors use fractional Kelly (e.g., half-Kelly) to reduce volatility.

Q2: What if the result is negative?
A: A negative result means the bet has negative expected value and should be avoided.

Q3: How accurate are the probabilities?
A: The accuracy of the Kelly Criterion depends on the accuracy of your estimated probabilities. Overestimating your edge can lead to excessive betting.

Q4: Are there limitations to Kelly betting?
A: Yes, it assumes you know the true probabilities and can continuously adjust bet sizes. It can also lead to high volatility in the short term.

Q5: Should I always bet the full Kelly amount?
A: Most experienced bettors recommend using fractional Kelly (e.g., 1/2 or 1/4 Kelly) to reduce risk and volatility while still achieving good growth.