Kelly Strategy or Criterion
Kelly Strategy goes by a couple of other names among which are Kelly Criterion and Kelly Staking Plan. One very important thing to always have at the back of your mind with this staking strategy is that it is best known for long-term profit maximization in betting and gambling. It’s one of the most cherished staking plans that Pros use in adding value to their bets and ensuring the health of their bankroll.
- It was developed by John Larry Kelly Jr. in 1956
- Many betting applications and software build on its logic
- It is a sort of hybrid staking strategy
- It combines fixed unit, fixed percentage, and progressive staking plans
Kelly Strategy, also Kelly Criterion, was conceived and propounded by John Larry Kelly Jr. in the year 1956. Apart from the fact that it was developed by a genius, one distinguishing attribute of excellence that set this staking strategy apart from other sports betting and staking strategies out there is its incredible hybrid nature. By hybrid, we mean that Kelly Criterion creatively combines the inner workings and logic and three staking plans.
Mathematically, the implication of this is that its probability of guaranteeing success for bettors using it in their bets compared to another staking formula. When one staking strategy is drawing strength from what contents and elements that power three other staking formula, definitely its formula has to be a whole lot thicker and potent in bringing about significance winning experience and creating value for itself in betting and gambling space.
How Kelly Strategy was conceived
Another way we can understand the potency of Kelly Criterion is by looking back to its incidents surrounding its inception – the notion that its founder had in mind that eventually led to its creation. When John finally came up with Kelly Criterion in 1956, it was a manifestation of a fruitful and productive effort that he had embarked on. His goal was to devise a strategy, an initiative, a formula that can be used and applied to investment with the sole aim of maximizing its long-term growth rate. He finally achieved this goal in 1956 when he came up with the Kelly Criterion. Given how powerful the formula has proven, its application extended rapidly far beyond the whims of investment and found its rightful place in the world of betting and gambling.
Today, Pros and experienced bettors as well as bettors who create the time to learn and understand how it works, can now use Kelly strategy to take good care of the bankroll, manage risks that are expected to surface in betting, and consequently make more profit by winning more of their sports bets.
How Kelly Criterion works exactly
In its quest of taking good care of your bankroll on your behalf and making your more money by winning more of your sports bet, the Kelly strategy takes a holistic approach to management. The strategy makes judicious use of three very important variables to achieve optimal health of your bankroll. These three variables include:
- Current bankroll size: That is, your current betting budget.
- Bet odds that are available.
- Edge that bettors think are available to them in determining the optimal size of their bets.
This is how it works. The logic here is that Kelly Criterion posits that your stake should be larger and bigger for sports bets in there is a reasonable degree of significant edge. Conversely, it implies that for a sports bet that you don’t think you actually have a significant edge on, then it only makes sense that your stake be lower.
The Kelly Criterion Formula
The Kelly Criterion formula makes use of two major variables. Well, they are actually two major outcomes. The first outcome it uses is that it’s either a bettor loses all his stake. The second outcome is that bettor’s stake and profit come back to him if he wins. Before we bring up the formula, you should be aware that there are different variations of Kelly strategy formula today due to differing circumstances. However, you need not worry much about the variations. This is because there are enough Kelly calculators on the Internet that take good care of you on this front.
Now, the Kelly formula looks something like this:
Stake=(((Decimal Odds×Percentage Chance of Winning)-1))/((Decimal Odds-1))×100
Stake: This will be the optimal and desirable size you want you stake amount to be.
Decimal Odds: The bet odds that your bookmaker offers, an example is 3.0.
Percentage Chance of Winning: It’s simply the estimated probability of you winning your bet.
Let’s use a good example to illustrate:
Let’s say for example that you are a big fan of the English Premiership and you decide to take bet odds offered by your bookmaker for Tottenham to win a match with decimal odds of 2.0 and a winning chance of 53%. Now, let’s assume that your bankroll is $500, using the Kelly Criterion calculator, here is what you get:
How Kelly Criterion protect his own
One interesting thing about Kelly Criterion is how it embeds notes of warning in its own doctrine. For example, its logic and formula clearly point out that there may be situations and circumstances where bettors really have no edge, that is, zero edge. This usually happens when the probability offered by your bookmaker is the same as yours. On such occasions, the note of warning is to avoid betting.
There may be another scenario that is not even zero edge. In these circumstances, bettors may find themselves a negative edge. Negative edge simply means that the probability that your bookmaker offers for a sports event outcome is higher than your own probability for the same outcome. In such circumstances, Kelly preaches that bettors can either completely avoid the bet, or those with a relatively high level of risk threshold can lay such bets.
One last important detail to mention is the question of whether this particular variable staking type in context is the most appropriate or right for you. To be frank, that is completely a question of personal preference and compatibility. Without mincing words, we’ve identified and explained the numerous advantages and strengths of Kelly staking plan and what makes it soar higher in the world of betting and gambling. However, whether it’s the right staking plan choice for you will depend on your risk threshold, your bankroll size, your betting goals, and your betting habit. We discussed all this when discussing staking strategies: How to win in Sports Betting Like a pro.
Why you should consider using Kelly Strategy
There are a lot of reasons that you really should make this staking strategy your indispensable companion. Let’s highlight a few:
- It’s one of the initiatives that has been successfully implemented in various fields and discipline where the money is managed.
- More and more betting applications and software are built based on its logics and more are expected to use this staking strategy’s formula to achieve growth in whatever form of financial assets they are managing.
- It clearly takes good care of bettors utilizing it. It gives clear pointers and warning.
- It posits that in the face of zero edge, bettors using it are expected to abstain from any bet with zero edge if the health and growth of their bankroll is indeed a priority.
- It posits that in the face of negative edge, bettors are expected to either abstain completely from such a bet or lay such bet.
If you personally like the idea of applying the Kelly strategy in your betting, check out our Sports Betting Comparison to find all the sports betting sites where you can legally bet online and apply this advanced betting system to try and beat the bookie and finally win at sports betting.