What is the Kelly Criterion Betting System?
What is the Kelly Criterion Betting System & Formula? - Sports Bet Strategy
Every good bettor worth their salt will tell you that you can’t go into gambling unprepared. One of the biggest elements of this is the implementation of betting strategies, which are ways to effectively manage your outlay and how you play. While they’re never going to be able to guarantee success for players, they can help provide structure to their betting and encourage a more level-headed approach.
There are many different forms of strategy that sports bettors and online casino game players can use. However, there are certainly some that stand out amongst the busy crowd of other strategies. One in particular is the Kelly criterion system.
We’ll break this strategy down and explain how it can be used here at Stake.com.
What is the Kelly Criterion Betting System & Formula?
This betting strategy is a mathematical formula that was first proposed by mathematician and researcher John L. Kelly back in the 1950s. Not originally specific to gambling, it was a criterion that John Kelly spoke about in relation to predicted values of wealth growth based on long periods of time.
That idea of wealth growth has been applied in many instances to different scenarios that relate to money, as could probably be expected. It has been used as a basis for stock market analysis and predictions and has become synonymous with the world of gambling. So, what exactly is this formula and how can you use it at Stake Sportsbook?
The formula itself can be written as f=(bp–q)/b and bettors can use it to work out the optimal bet size. You can be forgiven for thinking that the formula is just a jumble of letters but here’s a breakdown of what it all means:
“f” is your bet amount - this will always be a percentage of your bankroll.
“b” is your selection’s odds minus 1 - this will be a decimal amount.
“p” is that selection’s winning probability - this is also a decimal amount.
“q” is that selection’s losing probability - this is also a decimal amount.
But now you might be wondering how exactly you would use the formula. We’re going to take a look at a sports betting strategy example for you, using moneyline odds.
How to Use Kelly's Criterion?
Now that we know that the formula is used to find your optimal betting value based on the percentage probability of your selection’s outcome and your bankroll, let’s take a look at an example of how you would apply it.
First up, a Rugby League game. Say you have a game between the Salford Red Devils and the Leigh Centurions and you have selected the Centurions at 1.90 as, despite being slight favourites with a suggested probability of 52% for them to win, you see them as stronger and analysts have them at around 55%, this is how your stake amount would be calculated with the strategy formula:
“b” (1.90-1 = 0.80)
“p” (55% = 0.55)
“q” (45% = 0.45)
0.05 = (0.90*0.55 - 0.45)/0.90
Once this is calculated, you’re left with 5% of your bankroll being the proposed amount to bet. This will obviously seem small, but it’s based on the fine margins of probability theory over a long time. It is important to note that the actual implied probabilities of your odds would likely return much lower results based on the simple formula you use, and there may be some extra analysis required.
Best Sports to use Kelly Betting Method
You may have noticed that, so far, we have limited ourselves to looking at this formula strictly from a sports betting perspective. That’s because, as a strategy, this isn’t one that can be applied to every aspect of gambling. While this might be a perfectly functional betting method for horse racing betting, as well as football and rugby, it’s not one that can truly be applied to casino games.
This is because games of chance like roulette or blackjack will always have an underlying house edge which skews the chance of success that a player has. Let’s look at red or black in roulette, one of the most popular casino games for beginners - the presence of green means that this isn’t a 50/50 outcome as you might imagine. Instead, the house edge removes some of that figure, meaning our criterion outcome would be negative and suggest that we should not place a bet.
Pros & Cons of Kelly Criterion Betting
It’s important that you are always balanced in your approach to using betting strategies. As much as you may think that they will help you in the long term, there are always going to be downsides. Here are a few of those pros and cons:
A good way of managing your bankroll
Flexible for players happy to use the handicap on sports outcomes
Keeps probability in mind when betting
Cannot be used on casino games
Requires long-term investment for results
Kelly Criterion Tips & Strategies
One of the best tips and tricks that players should know when they look at any strategy is to know your stuff. When betting on sports or even when learning to play blackjack, you should make sure you have the full context around the match, race, or game for the greatest shot at success. You can use our sports betting guides for more information on upcoming events and different strategies.
It is also advisable to keep your options open and look at how you can maximise your bet using your knowledge. Do you see an opportunity in a football match that nobody else has seemed to pick up on? Maybe you can handicap the team you see as being at an advantage and play with your formula. If you’re live betting in-play on a match and see value unfolding, be reflexive and open to making a bold decision based on the flow of the game.
As well as keeping your options open by bringing other stakes into play, you should be aware that there are so many other strategies that you can use. For example, you may want to take advantage of progressive betting strategies at times, or even specifics such as the Fibonacci betting system, D'Alembert System the Paroli system, the Labouchere method, unit betting system, Oscar's grind or the Martingale strategy, especially if you’re looking to play table games at the online casino.
You can also use the Stake budget calculator alongside our guide to betting limits to help manage your bankroll and ensure you are on top of it.
Betting Promotions, VIP Club & Responsible Gambling
At Stake Casino and Sportsbook, we know that it’s not enough to offer great odds in all the best markets. That’s why we are always looking to offer promotions for casino and sportsbook rewards that you can take advantage of. Every week, there are weekly giveaways, challenges that pit you against others on the leaderboard, reload bonuses, and even rakebacks on your stakes, where you can make some of your outlay back.
Players can explore our extensive options for deposits and withdrawals. We can process transactions in a number of different currencies, as well as all the leading crypto and vault to safely store your funds.
We also are pleased to offer an exclusive VIP club that rewards users based on their loyalty. There are different levels of rewards that players can access based on their monthly staking amount, and they can even make use of a dedicated VIP host. For any questions, our helpful VIP FAQ has the answers, but you can also get in touch with us via our friendly customer support team.
Just as importantly, though, we’re committed to ensuring the safety of our players. Because of that, we offer resources that people can refer to if they feel their gambling is getting out of hand, such as a self-assessment and FAQs in our responsible gaming section, including a dedicated Stake Smart guide.
