Kelly Criterion
A formula for sizing bets to maximise long-run bankroll growth.
The Kelly Criterion, developed by mathematician John Kelly in 1956, tells you exactly what percentage of your bankroll to stake on a bet with known edge.
Formula: Kelly fraction = (edge) / (odds − 1)
Where edge = (model probability − implied probability) and odds are in decimal format.
Example: If your model gives a 60% win probability and the odds are 2.00 (50% implied), the full Kelly stake is (0.10) / (1.00) = 10% of bankroll.
Why use fractional Kelly? Full Kelly is mathematically optimal but causes enormous swings. Most professionals use half-Kelly (5%) or quarter-Kelly (2.5%) to reduce variance. OddsIntel uses quarter-Kelly capped at 1% bankroll per bet.
Common Questions
Should I use full Kelly?
Almost never. Full Kelly maximises long-run growth but tolerates drawdowns of 50–80%. Most bettors use quarter-Kelly or less.