Kelly Criterion Calculator | Optimal Bet Sizing Tool

What is the Kelly Criterion?

The Kelly Criterion is a mathematical formula developed by John Kelly Jr. at Bell Labs in 1956. It determines the optimal amount to bet on a wager with a known edge to maximize long-term wealth.

Unlike flat betting (wagering the same amount every time) or gut-feel betting, Kelly sizes your position proportionally to your advantage. It is widely used by professional investors, poker players, and sports bettors to balance aggressive growth with bankroll preservation.

The Kelly Formula Explained

• f* = Fraction of bankroll to bet
• b = Net odds (Decimal Odds - 1)
• p = Probability of winning
• q = Probability of losing (1 - p)

How to Use This Calculator

1. Enter Bankroll: Optional, but helps visualize actual dollar stakes.
2. Select Odds Format: Supports Decimal, American, and Fractional.
3. Input Odds: Enter the price offered by the sportsbook.
4. Estimate Win Probability: This is crucial. Use historical data or deep research to find your "true" win %.
5. Set Multiplier: We recommend 0.5 (Half Kelly) for most bettors to reduce volatility.

Common Mistakes to Avoid

• ✖ Overestimating Win Probability: The #1 cause of ruin. If you think you have a 60% chance but only have 55%, Kelly will suggest overbetting.
• ✖ Ignoring Variance: Full Kelly is extremely volatile. It's mathematically optimal for growth but can result in 50%+ drawdowns.
• ✖ Misunderstanding "Risk of Ruin": The risk calculation is theoretical. It represents the probability of a significant drawdown (e.g., losing >95% of bankroll) over an infinite timeline, not necessarily hitting exactly $0.00.

Frequently Asked Questions