Kelly Criterion Explained: How Much Should You Bet?

Kelly Criterion — The Math Behind Optimal Bet Sizing

The Kelly Criterion was developed by John Kelly Jr. at Bell Labs in 1956. It tells you the optimal fraction of your bankroll to bet.

The Formula

Kelly % = Edge / Odds

Where:

• Edge = Your win probability minus bookmaker implied probability
• Odds = Decimal odds minus 1

Real Example

Game: Dodgers vs Giants

• Your probability: 65%
• Bookmaker odds: -120 (1.83 decimal)
• Implied probability: 54.5%

Kelly % = (0.65 - 0.545) / (1.83 - 1)

Kelly % = 0.105 / 0.83

Kelly % = 12.6% of bankroll

Important: Most professionals use half Kelly (6.3%) to reduce variance.

Bankroll Example

Bankroll: $500

Half Kelly: 6.3%

Suggested bet: $31.50

Why Kelly Works

Over many bets, Kelly maximizes the long-term growth rate of your bankroll.

SharperAI calculates Kelly sizing automatically for every pick in the bankroll manager.