How the Kelly Criterion Can Increase Your Bankroll

The Kelly Criterion has been used for a long time as an essential tool for sports bettors. With the rise of sports betting around the world, bettors have so many options.

Despite this expansion and rapid development of sports analytics, most bettors still lack successful betting strategies. This oldie but goodie just might be the answer.

Key Points

– The Kelly Criterion has been used by sports bettors since the 1950s.

– Sound money management is one of the keys to successful betting.

The Kelly Criterion Explained

There are numerous betting strategies from which to choose. Zig-zag theory is one. The Kelly Criterion is another.

This betting strategy was created in the 1950s by scientist John Kelly Jr. who worked for Bell Labs. The formula he developed can help bettors find value on the odds board and determine how many units to stake on a given wager.

It is best used with a bettor’s sports analytics and modeling tools. Combining the two helps bettors pick and choose which events to bet.

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How to Apply the Formula

The Kelly Criterion can be written as a straightforward equation. A coin toss is frequently used as an example to explain the method in its simplest terms. However, you can bet on the NBA Rookie of the Year, NHL games, and more using this theory.

The equation is as follows:  (BP-Q) / B. B is the decimal odds, P is the probability of winning, and Q is the probability of not winning.

Suppose you have the chance to place a bet on a coin toss with decimal odds of 2.00 (+100 in moneyline odds) using a coin that you have determined has a 55 percent chance of coming up heads.

When we substitute the numbers into the equation, we get the following:

                        [(0.55 x 1) - 0.45] / 2 = 0.10

The result is 0.10 which tells us what we should stake on our bet. For this coin toss, we should stake 10 percent (or 10 units) of our bankroll.

This formula can be used in a pretty straightforward fashion. There are a number of Kelly Criterion calculators online should bettors prefer to use those.

Now, there is a reason why smart sports bettors have used this strategy for so long. When used properly, this formula serves as an essential tool for determining how much of your bankroll you should risk on a given bet. It also helps you in finding value bets. 

Bankroll Management Is Crucial

Sports betting money management is crucial, according to the Kelly Criterion. Following the fundamentals of bankroll management is essential to accurately assessing your wins (or losses) at a sportsbook. The Kelly formula would be meaningless without understanding what a bankroll is and how crucial it is to manage it.

Using common sense when it comes to sports betting, bankroll management entails setting aside a certain sum of money for wagers. It’s an amount that a bettor can afford to lose. Never gamble with the rent or car payment.

Smart money management also means keeping organized records of your betting activity. Track everything. This way, you can go back and determine what changes to make when you experience a losing streak.

Remember, you will keep track of bets using units rather than dollars. You will have to determine the size of one unit. That will depend upon the size of your bankroll. For example, a bettor with a weekly bankroll of $1,000 may have a unit size equal to one percent or $10.

If the initial bankroll was $500, the numbers would be different. Dividing that budget into 100 units, each unit would be worth $5.

The value of each unit will increase as your bankroll expands. The value of individual units will decline as the bankroll decreases. The method of measuring your bankroll in units is crucial to figuring out how much you will wager once you find a value bet. Your bankroll size will inevitably fluctuate, which means your unit size will too.

Figuring out how many units to stake on a value bet is still difficult. You have to understand the odds. The Kelly formula can be extremely helpful to your betting success in this situation.

Avoid These When Using the Kelly Criterion

The Kelly Criterion has some drawbacks. The formula has been known to advise sports bettors to place excessively large bets depending on the values used. The sports bettor's capacity to identify value on the odds board also restricts the formula's efficacy.

Identifying value is aided by a strong online gaming site. Be sure to have an account with one that offers you everything you need - stats, scores, odds, and more - to achieve success.

Most importantly, the sports bettor needs to understand that applying the Kelly Criterion won't guarantee a quick path to betting success. It is merely intended to be used as a risk management tool and is only one tool in the management of bankrolls for sports betting.

Manage Your Money on the Road to Success

Laying bets without first identifying value is a road to disaster for most inexperienced bettors. Just randomly placing bets with no thought to managing your money is a method that can quickly deplete a sportsbook account.

It's important to develop your ability to find the best wagers at your choice of sportsbook. You can take a big step toward making your sports betting experience enjoyable and lucrative by incorporating sound bankroll management into your game through tried-and-true methods like the Kelly Criterion.