Kelly Criterion

The Kelly Criterion is a mathematical formula that determines the optimal bet size to maximize long-term bankroll growth while minimizing risk of ruin.

Formula: Kelly % = (bp - q) / b

Where: - b = decimal odds - 1 - p = your estimated probability of winning - q = probability of losing (1 - p)

Full Kelly is often too aggressive for most bettors due to estimation errors. Many use "fractional Kelly" (1/4 or 1/2 Kelly) for more conservative sizing.

The key insight: bet more when you have a bigger edge, less when edge is smaller.