Kelly Criterion for Bet Sizing
Intermediate
10 min read
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Nov 28, 2025
The Kelly Criterion
Kelly Criterion determines optimal bet size to maximize long-term growth.
The Formula
f* = (bp - q) / b
- f* = fraction of bankroll to bet
- b = decimal odds - 1
- p = probability of winning
- q = probability of losing (1-p)
Fractional Kelly
Full Kelly is aggressive. Most bettors use 1/4 to 1/2 Kelly to reduce variance.
Important Notes
Kelly assumes you know true probabilities. Overconfidence leads to overbetting.
Discussion
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