The formula was developed by John Larry Kelly. The kelly strategy determines the capital percentage to be used in each bet/trade to maximize long-term growth. Kelly Criterion was most commonly used by gamblers in horse racing. Later the strategy was applied to investing. Kelly staking plan is using a mathematical formula to determine the best stake for your bets. It requires that you know your winning percentage and odds at which the bet will be placed. Original Kelly formula is f = (b. p – q) / b. F is the percentage of your betting bank that should be used as stake. Australia Sports Betting has developed a free staking plan Excel spreadsheet which doubles as a betting tracker. This project is a fork (offshoot) of the standard version (v2.16) of our free Excel betting tracker. The worksheet tracks your bets and provides in-depth performance data as well as a profit graph.

• Kelly Staking Plan Formula Calculator
• Kelly Staking Plan Formulary
• Kelly Staking Plan Formula Example
• Kelly Staking Plan Formula Examples
• Kelly Staking Plan Formula Sheet

How does the Kelly criterion calculator work?

By entering your bankroll, the odds and your estimated probability of winning, the Kelly Criterion calculator will tell you how much you should wager on a certain event to maximise your value and profit.

Use the Kelly Criterion Calculator here

According to the Kelly criterion, you should place a wager of approximately 1.18% of your account balance on this selection.

After applying the fractional Kelly value of 0.04, this adjusts to a wager of approximately 1.71% of your account balance.

Based on your account balance of $1,000, this equates to a wager of $11.76.

The expected value of this wager is approximately $11.76*[(0.68)(0.60) + (-1)(0.4)] = $0.09, which equates to a 0.80% return on the funds wagered.

The Kelly criterion returned a value of -0.0061.

After applying the fractional Kelly value of 0.0, this adjusts to -0.0061 of your account balance.

Because this number is below 0 you should not back the selection at the available odds.

What is the Kelly Criterion?

Kelly Staking Plan Formula Calculator

The Kelly Criterion is a method by which you can used your assessed probability of an event occurring in conjunction with the odds for the event and your bankroll, to work out how much to wager on the event to maximise your value. By inputting the odds, the probability of the event occurring and your betting balance, you will be able to determine the amount you should wager on the event. The fractional Kelly betting input is a way to change how aggressive or conservative you are with your wagering (1 being the standard and moving towards 0 the more conservative you wish to be with your wagering). Ultimately, the Kelly Criterion calculator, if you are accurate with your assessed probability should increase your value and profit over a long-term period.

When it comes to making long-term profit through gambling, managing your betting bank correctly and finding the right staking plan is as important as identifying a winning strategy based on finding value in the market. Even if you have an edge and can identify value – which is where the bookies offer higher odds than you’d expect – you could still find yourself out of pocket with a depleted betting bank if your staking plan is not up to scratch.

There are a number of different staking plans out there, all of which have their merits and downsides. Some of the most common staking systems include:

• Fixed or Level Staking where you put the same stake down regardless of the odds, such as $20 per bet whether the odds are 1.20 or 2.40
• Variable Staking where you put a stake on to win a fixed amount per bet, rather than staking a set amount, such as always ensuring your return is $20 per bet
• Percentage of Bank Staking where you bet the same percentage of your current bank balance regardless of size, for example, 5% per bet whether the bank is at $10 or $1000
• Progressive Staking where you increase or decrease the size of your stake after each bet depending on whether it won or lost, such as the Martingale System where you double up after a loss

The Kelly Criterion – also known as Kelly Strategy or Kelly Staking Plan – takes elements from Fixed, Percentage and Progressive staking to create somewhat of a hybrid staking plan. It was developed in 1956 by John Larry Kelly Jr. to identify how to maximise the long term growth rate of investments and has since been used successfully by gamblers across a range of sports and games, as well as those looking to invest in the stock market.

The Criterion looks at your current betting bank, the odds available and the edge you think you have in order to determine the optimal size of your bets. If you believe you have a significant edge on a particular bet, then your stake would be larger than a bet in which you only had a slight edge. For example, if you were and English Premiership fan betting on Tottenham to win at evens, you could place a 15% stake if you had a significant edge or a 5% stake if you had less of an edge, as calculated using the Kelly formula.

There are a number of variations of the Kelly Criterion – some of which look much scarier than others – however the one that makes most sense to me is written below. This formula is based on bets with two outcomes – i.e. you either lose all of your stake, or your stake and profit are returned if you win – although several variations have emerged for different circumstances. Luckily, there are multiple Kelly calculators online which can take away some of the pain, particularly https://www.albionresearch.com/kelly/default.php and https://bettify.com/tools/kelly.

Stake = ((Decimal Odds x % Chance Win) – 1) / (Decimal Odds – 1) * 100

Where:
Stake = Optimal size of stake
Decimal Odds = Odds offered by bookie
% Chance Win = Estimated probability of bet winning

Kelly Staking Plan Formulary

Using the Tottenham example above, betting on Spurs to win at evens (decimal odds of 2.0) with a 53% probability and £500 bank would result in the following calculation:

Stake = ((2.0 x 0.53) – 1) / (2.0 – 1) x 100
Stake = ((1.06 – 1) / 1) x 100
Stake = 6% of bank or £30 if bank is £500

A couple of points for consideration when using the formula. If you have a zero edge – i.e. your probability is the same as the bookies’ – then the Criterion states that you should not bet. Similarly, if you have a negative edge – i.e. your probability is lower than the bookies’ – then you could either avoid the bet or you could consider laying it. It is also recommended that you don’t bet more than the calculated Kelly stake as this is known to negatively affect your bank in the long term.

The main – and somewhat significant – flaw to the Kelly Criterion is that it assumes that you know the true probability of an event happening. Whereas this is easier to ascertain when flipping a coin, it becomes near on impossible to predict for a football game involving 22 players or a horserace with 10 runners. If you cannot be sure your probabilities are entirely accurate, then this could cause detrimental effects on your bank roll, particularly if you have a habit of overestimating the likelihood of winning rather than underestimating!

Another drawback is that the percentage result from the Criterion is often a significant proportion of your bank balance, meaning that large stakes may be required. The Kelly Criterion aims to increase your betting bank at the optimal – or maximum – rate possible, which is a relatively aggressive approach. Most professional bettors would not risk anywhere near 10% of their bank on a single bet, whereas the Kelly formula rarely suggests low single digits.

A common strategy employed by some gamblers to overcome the two issues above is to use a ½ Kelly or even a ¼ Kelly strategy to ensure they are not overexposed – this is simply halving or quartering the suggested Kelly stake. With problems associated with overestimating and predicting accurate probabilities, it is always sensible to be risk averse and bet less than the Kelly amount.

Kelly Staking Plan Formula Example

Whether the Kelly Criterion is the right approach for you comes down to personal preference. It is sensible to approach your betting in a professional manner though, so concepts such as bank management and staking plans should be in your thinking while trying some of the best sports betting websites. If it’s not using Kelly, then simple concepts related to the theory such as ensuring you research your bets, creating a betting bank separate to your other accounts and eliminating emotion from any betting decisions can significantly help.

Kelly Staking Plan Formula Examples

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Kelly Staking Plan Formula Sheet