The Kelly Criterion in Sport Betting

The Kelly Criterion is a popular betting strategy in sports betting that is designed to help bettors calculate the optimal amount to bet based on their edge and the size of their bankroll. In this article, we will discuss the Kelly Criterion in sport betting, how it works, and how to use it to improve your chances of winning.

What is the Kelly Criterion?

The Kelly Criterion is a mathematical formula used to calculate the optimal amount to bet based on the expected value of the bet and the size of your bankroll. The formula was developed by John Kelly, a scientist at Bell Labs, and is widely used in finance, investment, and sports betting.

The Kelly Criterion assumes that the bettor has an edge over the sportsbook, which means that they have a higher probability of winning than the odds suggest. The formula helps bettors maximize their long-term profit by betting a percentage of their bankroll that is proportional to their edge.

How Does the Kelly Criterion Work in Sport Betting?

The Kelly Criterion formula is as follows:

f* = (bp — q) / b

Where:

f* is the optimal percentage of your bankroll to bet

b is the decimal odds — 1 (e.g., if the odds are 2.0, b is 1.0)

p is the probability of winning (e.g., if the odds are 2.0, the probability of winning is 0.5)

q is the probability of losing (1 — p)

To calculate the optimal amount to bet, you first need to calculate your edge or expected value. This involves estimating the probability of winning and comparing it to the implied probability of the odds. For example, if the odds are 2.0, the implied probability of winning is 0.5. If you believe that the true probability of winning is 0.6, then you have an edge of 0.1 (0.6–0.5).

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Using the Kelly Criterion formula, you can calculate the optimal percentage of your bankroll to bet. For example, if your bankroll is $1,000, and the odds are 2.0, and you have an edge of 0.1, the optimal percentage to bet would be:

f* = (0.1 * 2–0.9) / 1 = 0.1

This means that you should bet 10% of your bankroll ($100) on the bet.

Advantages and Disadvantages of the Kelly Criterion

One of the advantages of the Kelly Criterion is that it helps bettors maximize their long-term profit by betting a percentage of their bankroll that is proportional to their edge. This means that bettors can take advantage of their edge and increase their profits while minimizing their risk.

Another advantage of the Kelly Criterion is that it is a flexible system that can be used in various sports betting markets, including money line, spread, and total bets.

One of the disadvantages of the Kelly Criterion is that it assumes that the bettor has an accurate estimate of their edge. If the bettor’s estimate is wrong, they may end up betting too much or too little, which can result in losses.

Another disadvantage of the Kelly Criterion is that it can be difficult to apply in practice, especially for novice bettors. It requires a deep understanding of probability theory, and the calculation can be time-consuming.

Conclusion

The Kelly Criterion is a powerful tool for sports bettors who want to maximize their long-term profits by betting a percentage of their bankroll that is proportional to their edge. However, it is not a foolproof system and requires a deep understanding of probability theory and accurate estimates of your edge. Always bet responsibly and within your means to avoid financial losses.