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Once a decision is has been made to wager money on an event, the next decision is to choose how much of your account balance to wager. The most popular methodology for determining the optimal wager size is the Kelly Criterion. It is a simple formula that calculates the proportion of your balance to wager on a particular gamble. The formula was derived by J.L. Kelly, Jr in 1956. The formula has a number of applications, one of which is sports betting.1, 2
Australia Sports betting has previously published a series dedicated to the Kelly Criterion, which can be followed using the links below.
- Introduction
- Derivation
- Backing and Laying Bets with Betfair
- Accounting for the Time Value of Money
- Incorporating the Possibility of a Refund
- Fractional Kelly Betting
Tools
- Kelly Criterion Calculator
Calculates a recommended stake based on the bookmaker odds and your estimated probability that the selection will win. Lay betting, commissions, refunds and fractional Kelly betting are supported.
Notes and Sources
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