How to Use the Kelly Criterion Calculator
The Kelly Criterion is a mathematical formula that answers one of the most important questions in betting: how much should I bet? It calculates the optimal stake size that maximizes your long-term bankroll growth while minimizing the risk of going broke.
Here's the core insight: if you bet too much, even with an edge, variance can wipe you out. Bet too little, and your bankroll grows painfully slowly. Kelly finds the sweet spot — the exact percentage of your bankroll that grows your money fastest over time.
The formula only recommends betting when you have positive expected value (+EV). If the sportsbook odds are worse than the "fair" odds, Kelly tells you to bet €0. This is crucial — never bet without an edge.
For example, if fair odds are 2.03 but a sportsbook offers 2.00, you have negative EV. Kelly says don't bet. But if they offer 2.10 when fair is 2.03, you have +EV and Kelly calculates your optimal stake.
Kelly Calculator Inputs
To use this Kelly Criterion calculator, you need to enter:
- Kelly Divider: How much to reduce your stake. 10 = bet 1/10th of full Kelly (safest). 4 = quarter Kelly. 2 = half Kelly
- Odds: The decimal odds offered by the sportsbook (e.g., 2.50)
- Fair Win Probability: The true win probability. You can calculate this using a no-vig calculator to remove the bookmaker's margin
- Bankroll: Your total betting bankroll — the money you've set aside for betting
The calculator shows your recommended stake based on Kelly math. Remember: only bet when you have positive expected value. If EV is negative, don't bet regardless of what the calculator says.
Important: Your bankroll should be money you can afford to lose. Don't bet rent money. Most serious bettors start with €1,000-€10,000 and grow from there.
Finding Fair Win Probability
The key to Kelly is knowing the true win probability — not the implied probability from bookmaker odds (which includes their margin).
Use a no-vig calculator to remove the bookmaker's margin and get the fair probability. This is what you should enter into the Kelly calculator.
Example: If a bookmaker offers 1.90 on both sides of a 50/50 bet, the implied probabilities sum to 105% (their margin). The fair probability for each side is actually 50%, not 52.6%.
Kelly Criterion Formula
Kelly % = (bp - q) / b
Let's break this down step by step:
- b = decimal odds minus 1. This is your profit per €1 wagered. If odds are 2.50, then b = 1.50 (you profit €1.50 for every €1 bet)
- p = your true win probability as a decimal. 60% chance = 0.60
- q = your loss probability = 1 - p. If p = 0.60, then q = 0.40
Example calculation: Say you find odds of 2.50 and believe the true win probability is 45% (0.45).
- b = 2.50 - 1 = 1.50
- p = 0.45, q = 0.55
- Kelly = (1.50 × 0.45 - 0.55) / 1.50 = (0.675 - 0.55) / 1.50 = 0.125 / 1.50 = 8.33%
This means full Kelly recommends betting 8.33% of your bankroll on this bet.
Why Use Fractional Kelly (Kelly Divider)?
Here's the problem with full Kelly: it assumes you know the exact true probability. In reality, you're always estimating. If your estimate is off by even a few percent, full Kelly can massively over-bet and expose you to huge drawdowns.
The Kelly Divider solves this by dividing your stake. Instead of betting the full Kelly amount, you bet a fraction of it:
- Divider of 2 (Half Kelly): Bet 50% of full Kelly. If Kelly says 8%, you bet 4%
- Divider of 4 (Quarter Kelly): Bet 25% of full Kelly. If Kelly says 8%, you bet 2%
- Divider of 10 (Tenth Kelly): Bet 10% of full Kelly. If Kelly says 8%, you bet 0.8%
Why this matters:
- Estimation error protection: If you overestimate your edge, fractional Kelly prevents disaster
- Smoother equity curve: Full Kelly can see 50%+ drawdowns. Quarter Kelly dramatically reduces swings
- Psychological comfort: Smaller bets are easier to stick with during losing streaks
- Still optimal: Fractional Kelly still grows your bankroll — just more slowly and safely
Recommendation: Start with a divider of 10 (tenth Kelly). As you gain confidence in your edge estimates, you can lower it to 4 or 2. Never use full Kelly unless you're absolutely certain of your probabilities.
FairOdds Terminal and Kelly Betting
This calculator shows you HOW to calculate optimal bet sizing, but FairOdds Terminal makes it easy by:
- Automatically calculating fair probabilities using sharp market odds
- Showing your edge (EV%) on every bet
- Displaying +EV opportunities where Kelly recommends betting
- Helping you track bankroll and performance
Start your free trial to find +EV bets with built-in edge calculations.
Kelly Criterion Calculator FAQ
What is the Kelly Criterion?
The Kelly Criterion is a mathematical formula that determines optimal bet sizing to maximize long-term profit while minimizing risk of ruin. It calculates what percentage of your bankroll to wager based on your edge and the odds offered.
How is the Kelly Criterion calculated?
Kelly % = (probability × decimal odds - 1) / (decimal odds - 1). This gives the fraction of bankroll to wager. Most bettors use fractional Kelly (25-50%) to reduce variance while still growing bankroll optimally.
Who created the Kelly Criterion?
John Kelly created the Kelly Criterion in 1956 for long-distance telephone signal optimization at Bell Labs. He realized it could be applied to investing and gambling, and it became the gold standard for bankroll management.
Should I use full Kelly or fractional Kelly?
Most professional bettors use fractional Kelly (quarter Kelly = 25% or half Kelly = 50%) to reduce variance. Full Kelly maximizes growth but creates large swings. Fractional Kelly provides smoother growth with less volatility.
What is a Kelly Divider?
The Kelly Divider determines what fraction of the full Kelly stake you'll bet. A divider of 4 means you bet 1/4 (25%) of full Kelly. A divider of 10 means you bet 1/10 (10%) of full Kelly. Higher dividers mean smaller, safer bets. Most bettors use a divider between 4 and 10 to reduce variance while still growing their bankroll.
What bankroll should I start with for Kelly betting?
Start with an amount you're comfortable losing—typically €5,000-€25,000 for serious bettors. Kelly Criterion works best with adequate bankroll to handle variance. Smaller bankrolls should use more conservative (lower) Kelly multipliers.