# Kelly Criterion Calculator

The Kelly Criterion is a powerful formula used by successful bettors to manage their bankroll effectively and success in sports betting lies in knowing how to effectively manage it. In this article, we will introduce you to a powerful tool that helps you do just that: the Kelly Criterion Calculator.Author

Crackito

7 October 2024

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## What is the Kelly Criterion?

As we already talked about it in an article, the Kelly Criterion is a mathematical formula developed by John Larry Kelly Jr., a physicist from Bell Laboratories, which calculates the optimal bet size based on the probability of winning and the expected return of a particular wager. This principle aims to maximize the growth of your betting bankroll over time, while minimizing the risk of losses.

## Kelly Formula Explained

The Kelly Criterion formula is relatively straightforward and can be written as:

Edge / Odds = Bet % or Kelly% = ((B x P) - Q) / B

In the first equation, the 'Edge' refers to the difference between your estimate of the probability of winning and the bookmaker's odds, expressed as a decimal. The 'Odds' stand for the bookmaker's odds, again in decimal format. Or the second equation more detailled:

To put it simply, the Kelly Criterion directs you to bet more when you have a high edge over the bookmakers and less when your edge is lower.

Edge / Odds = Bet % or Kelly% = ((B x P) - Q) / B

In the first equation, the 'Edge' refers to the difference between your estimate of the probability of winning and the bookmaker's odds, expressed as a decimal. The 'Odds' stand for the bookmaker's odds, again in decimal format. Or the second equation more detailled:

**Kelly%**represents the percentage of your bankroll that you should wager.

**B**is the odds offered in decimal format minus 1 (e.g., 2.00 - 1 for even odds)

**P**is your predicted probability of winning (expressed as a decimal between 0 and 1)

**Q**is the probability of losing, which is calculated as Q = (1 - P)

To put it simply, the Kelly Criterion directs you to bet more when you have a high edge over the bookmakers and less when your edge is lower.

## How to use our Kelly Criterion Calculator?

Using our Kelly Criterion Calculator is straightforward and designed to help you maximize your betting efficiency. Here's how to get the most out of it:

**1. Enter the Bookie’s Odds**: begin by inputting the odd offered by the bookmaker. This is the number they are providing for the outcome of an event.

**2. Input Your Estimated Odds**: next, you need to enter the odds that you believe accurately reflect the true probability of the event happening. This is based on your analysis and understanding of the event, and it’s the critical part where your value betting knowledge comes into play.

**3. Set the Kelly Multiplier**: the Kelly multiplier allows you to adjust the aggressiveness of your bet. A multiplier of 1 suggests following the Kelly Criterion exactly, while a lower number will result in a more conservative bet size. This flexibility helps you manage risk according to your personal strategy.

**4. Enter Your Bankroll Size**: lastly, input the total amount of money you have available for betting. This ensures that the calculator recommends a bet size that is proportional to your bankroll, helping you to manage your funds responsibly.

Once you’ve entered all the necessary information, our Kelly Criterion Calculator will quickly compute the optimal amount for you to wager on the bet. This calculated bet size aims to maximize your potential returns while minimizing the risk of significant losses, aligning perfectly with value betting principles.

## Why use a Kelly Criterion Calculator?

Although the Kelly formula is easy to understand, calculating your bets manually may prove time-consuming and error-prone, especially if you're dealing with multiple wagers. This is where a Kelly Criterion calculator comes into action. Here are some benefits of using this valuable tool:

- Efficient bankroll management: by adjusting your bet size according to the odds and edge, you're better equipped to manage your bankroll over time.
- Minimize risk: a proper use of the calculator ensures that you assign a smaller proportion of your bankroll to bets with higher risks, ultimately reducing potential losses.
- Maximize returns: in contrast to fixed staking plans (where you stake the same amount on every bet), this criterion allows you to invest more money in bets which grant bigger edges, thus increasing your potential for profit.