What is the Kelly Criterion?
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The Kelly Criterion is a mathematical formula for determining the optimal fraction of your bankroll to bet based on your estimated edge and the bet’s odds. It maximizes the long-run growth rate of your bankroll without risking ruin.
The Kelly formula
Kelly percentage = (bp – q) / b, where b is the decimal odds minus 1 (net odds), p is your estimated probability of winning, and q is your probability of losing (1 – p). If you estimate a 55% chance of winning a bet at 2.0 odds: b=1, p=0.55, q=0.45. Kelly = (1×0.55 – 0.45) / 1 = 0.10, meaning bet 10% of your bankroll.
Practical use of Kelly
Kelly optimizes mathematically but requires accurate probability estimates. Overestimating your edge leads to overbetting and can increase bankroll volatility significantly. Most practitioners use fractional Kelly (half or quarter Kelly) to reduce variance while staying close to optimal growth. Kelly is most relevant for sports bettors and poker players who believe they have an edge — for pure casino games with a house edge, the correct ‘edge’ is negative and Kelly recommends not betting at all.
Ben Barber got into the gambling industry through the poker rooms of London in the early 2000s. After building up a solid grounding in casino, sports betting and poker, he made the move to Malta where he spent close to a decade writing for some of the biggest affiliate networks in the region. A few years ago he relocated to Bali, which shifted his focus toward website strategy and affiliate marketing. The casino side never really left, though. He still writes reviews, how-to guides and in-depth pieces on everything from slots and live dealer tables to crypto casinos and sweepstakes sites. His approach is fact-first: help players understand how online gambling actually works before they deposit a cent.