Kelly's criterion is a mathematical formula that can be used in several forms of gambling, including sports betting. It can also be used in various forms of investing, as its primary function is to strike a balance between risk and profit while reducing volatility. With regard to sports betting, this is a good method of maximizing your potential betting profits and minimizing the risk of losing the entire bank. Since these are two of the main goals of every player, Kelly's criterion is a strategy worth exploring.

Although there are some complications associated with using it, it is a popular strategy among many bettors. In fact, there are many professional players at bookmakers who swear by it. And yet, there are people who say that it is useless. In this article we will try to find out who is wrong and who is right.

Kelly's Criterion and Sports Betting

Kelly's criterion is essentially a mathematical formula that can be used to determine the optimal amount of money to invest or bet on an opportunity. The formula includes the total amount of the bank (money) and the expected return on investment.

Therefore, from a sports betting point of view, it can be used to calculate the amount of money you place on each bet. The formula you see below calculates the "right" part of your bank that is worth investing in for a specific bet.

This probably sounds very easy by this stage, but there are actually some pitfalls. To use the formula effectively, you need to know how likely your bet is to come out. This is the basic idea behind this strategy - to bet more when you place a bet with a higher probability of success and smaller bets when the probability of success is lower.

The exact likelihood of any sports bet is unclear as it is based on too many factors. Determining the likelihood of a bet being successful comes down to more or less a personal opinion that cannot be a definitive answer. Using the Kelly criterion is really not effective unless you can determine the probabilities with some degree of accuracy. Of course, you don't need to know the exact probability percentage, but at least be close to it. However, this requires a serious analysis of the event in question.

For now, let's say that you are able to determine the odds of your bets mostly accurately.

Formula

To use Kelly's criterion as a betting strategy, you must apply the following formula each time you place a bet:

(bp - q) / b = f

The formula doesn't say much by itself, so you need to understand what each of its components represent:

"b" is the odds of your bet in decimal format, from which you substract 1.00. That is, if the odds are 3.00, the "b" is 2.00
"p" is the probability of a bet being successful. For example, if a bet had a 40% chance of winning, "p" would be 0.40
"q" is the probability of a bet losing. If it is 60%, "q" is 0.60
"f" is the part of your entire bank that you have to bet.

Using these exaple numbers, the formula would produce the following result:

((2 x 0.40) - 0.60) / 2 = 0.1

According to the result of this calculation, you should place 0.1 (ie 10%) of your total bank on the bet in question. That is, if you have $ 100 in your account, the correct bet size with a 3.00 odds and a 40% chance of success is $ 10.

Advantages and disadvantages

We can easily understand why strategy with this mathematical formula is so popular. Obviously, it makes sense to bet higher amounts on good value bets. Kelly's criterion also takes into account your bank size, which is another advantage. Whatever method you choose to set your bets, it must be based primarily on the amount of money you have available for bets. The fact is that most professionals use the Kelly criterion, which means that there is benefit out of it.

Of course, its main drawback is that it really only works when you are able to roughly determine the odds of your bets being successful. Your main task is, first of all, to learn how to find bets whose odds of success are higher than the odds offered by the bookmaker. Betindex.net materials will provide you with many useful tips to help you achieve this goal.