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Kelly Criterion in Sports Betting

Betting enthusiasts are constantly testing a variety of strategies in order to improve the chances of success. Currently, there are a number of game systems that work well and can help gamblers save money.

The Kelly Criterion is one of these strategies. It is able to keep the player afloat even if there is a long run of unsuccessful bets. However, it is not so easy to be in the black constantly, according to this system. So let’s analyze the essence of the Kelly strategy in sports arbitrage, learn the formula for bet calculation, and discuss the rules of using this approach.

What is Kelly Criterion

The Kelly Criterion in betting is a method of wise bankroll management, when the amount of each subsequent bet is determined in relation to the probability of success of a particular outcome. That is to say, the gambler estimates the chances of the event's success on his own, and then calculates the optimum bet amount using a special formula. This strategy is an improved version of the “flat” strategy.

How it works

The Kelly Criterion works on the principle that a bettor has to distribute some amount of his bankroll for each next bet, based on its value. The amount of the bet is calculated using three criteria: the total size of the funds, the bookmaker's quotes, and the probability of the event's success (estimated by the player). In doing so, the calculated success probability of the selected event should be higher than the bookmaker claims it to be.

As per the Kelly criterion, the bet amount is calculated according to the specific formula.

Bid amount = ((Odds х Probability* – 1) / (Odds - 1)) х Bankroll

* Probability – Gambler’s assessment of a bet success rate.

The formula above looks pretty simple, but it is very difficult to apply it in fact. It’s not an easy task to find an overstated event, and moreover, it is necessary to define the risks wisely. Even experienced gamblers struggle to cope with the last task. But you can use the BetBurger scanner and find valuebets without any problems. Kelly's strategy is considered to be marginally profitable, and to make it a good source of revenue, you should almost be a math genius.

Calculation formula example

A clear understanding of Kelly's strategy requires a review of this method using a real case example. To check it out, let's take a real match of the 2020/2021 Champions League Final between Manchester City and Chelsea. In this match, the bookmakers are leaning towards the Citizens, obviously underestimating the chances of the Pensioners. Such a situation would work in our favor.

Kelly Criterion

According to the quotes, the bookmaker estimates the probability that Chelsea won’t lose (X2) during the regular time at 51.8% (odd 1.93). We estimated this outcome at 58%, and that means the value of the bet. For simplicity, our bankroll will be $100. Now let's put the gathered data in the formula:

Bid amount = ((1.93 х 0.58 – 1) / (1.93 – 1)) х 100 = $12,83 

You can clearly see that when Chelsea won’t lose, and with a $100 bankroll, the bet amount corresponds to $12,83 (12,83% of the bankroll).

When it’s best to apply the Kelly Criterion

This method is not recommended for newbies since its success is determined by the ability to calculate the correct probability of the event outcome. Even experienced players face difficulties when making use of this technique. Kelly's strategy looks like a competition between a gambler and a bookmaker in the accuracy of determining the success rate of a particular event.

For more information see the article:How to Make Predictions and Analyze Sports Events

Usually, the strategy is used when there is a deal with valuebets. That is when the bookmaker made a mistake in calculating the probability of a certain outcome and set wrong quotes. However, you can expect to succeed by Kelly bet only if you follow the proven rules. These tips have been developed by betting experts based on years of experience:

  1. Always analyze and collect information about events with a clear mind. You should never review the upcoming game after a series of failures, in a bad mood or being mentally tired after an exhausting day. Try to check out the forecast when your head is clear and you don't think through the problems. Only in this case will you be able to estimate the situation properly and make a correct prediction.
  2. Avoid low odds. The quotes at the rate of 1.2-1.5 are strictly not allowed according to the Kelly strategy. Many gambling experts state that it is better to take into account only the odds from 1.75 and higher. However, there is no upper limit. If you estimate the probability at 50%, and the bookmaker issues odds at 4.0, then why don't you give it a try?
  3. Use odds higher than 2.0 for parlay bets. The Kelly criterion works great with accumulator bets, but here you need to increase the quotes right away. Also, you should never use it for parlays with odds below 2.0.
  4. Make up a decent bankroll. The starting capital has to be formidable enough to apply the Kelly strategy. You shouldn't count on serious success with a bankroll of $10-20. It is better to start with $100-200, but it all depends on your capabilities and drive.
  5. Assess a potential outcome adequately and objectively. None of the games has a 100% success rate, this is a mathematically incorrect calculation. Also, do not exaggerate the chances of your favorite team, you should draw a conclusion based on the result of the available data analysis.
  6. Use the BetBurger service to find valuebets. They are required in order to use the strategy, but even experienced gamblers get confused when searching. BetBurger is one of the best specialized products that might help. Our service analyzes and provides clients with overestimated odds from more than 100 bookmakers, so you will always be aware of quote errors.
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