How to Use Kelly Criterion In Sports Betting
Bettors are continuously testing different betting systems to beat bookies over the long term. At the moment, there are a lot of strategies allowing punters to make profits from bets on sporting events.
The Kelly criterion is a popular system capable of keeping the punter in business even after the long losing streak. With that, it is pretty tricky to regularly generate positive results, according to this betting strategy. Let’s take a look at how the Kelly strategy works in sports betting, find out the formula for stake calculation, and explore the system’s rules.
Kelly Criterion Basics
The Kelly criterion is an advanced bankroll management system where the stake of each next punt is calculated according to the expected probability of match results. In other words, the punter evaluates the chances of the particular outcome and then calculates the necessary stake. The strategy is an advanced version of the flat system. Now, let’s look at the Kelly criterion system principles.
How the Strategy Works
The Kelly criterion implies distributing some part of the bankroll for each next punt, depending on its value. Punter calculates the stake using three points: the bankroll size, the sportsbook’s prices, and the evaluated probability of success — the bettor determines the probability on his own. The evaluated probability of the chosen bet needs to be higher than the sportsbook states it to be.
The stake is calculated based on the formula:
Bet size = ((Bet odds х Probability* – 1) / (Bet odds — 1)) х Bankroll
*Probability – bettor’s evaluation of the outcome success.
The Kelly criterion formula seems simple, but it’s very complicated to implement it in reality. It’s challenging to identify an undervalued selection, and it’s crucial to estimate the risks.
Even the well-seasoned punter struggles with the last aspect. With that, you can take advantage of specific scanners and find value bets within seconds. Kelly’s bankroll management method is profitable, but you need to read betting odds better than bookies.
Example of Application
How does the Kelly strategy work using a real case? Let’s take the recent EPL match between Manchester United and Wolverhampton Wanderers as an example. Sportsbooks are leaning towards the Red Devils in this duel, clearly underrating the Wolves’ chances. These things would work to our advantage.
Sportbooks evaluate the probability that Wolverhampton won’t lose during the regular time at 44.44% (odd 2.25). The capper estimates this outcome at 60%, and it implies the value of the punt. Let’s imagine that his bankroll is €100. Putting the collected data in the formula:
Stake = ((2.25 х 0.60 – 1) / (2.25 – 1)) х 100 = €28.00
As you see, the bet on Wolverhampton won’t lose, and with a €100 bankroll, the stake equals €28.00 (28.00% of the bankroll).
When it’s Best to Implement the Kelly Criterion
The Kelly criterion system is not the best choice for newbies as all results depend on the ability to evaluate the probability of outcomes. Even well-seasoned bettors might face issues while applying this method. This betting strategy resembles a contest between a punter and a sportsbook — they both try to determine outcomes with more accuracy.
This system is often used by bettors who hunt value bets — bets for matches where bookies make mistakes in evaluating the probability of a particular outcome and set wrong betting odds. With that, achieving good results is available only by following the proven rules:
- Research info about a sports event only with a clear mind. Never analyse the upcoming match following a sequence of lost bets. Never do this in a bad temper or being weary after a difficult day. Assess outcomes when you don’t think about troubles. By doing this, you can evaluate the chances and prices accurately.
- Try to avoid short betting odds. The odds at the rate of 1.10 – 1.50 don’t suit the Kelly criterion strategy. Experienced bettors suggest taking into account only the betting odds from 1.75 and higher. The good news is that there are no upper limits. If you assess the probability at 75%, while the sportsbook offers betting odds at 2.00, why don’t you place this tempting bet?
- Select the betting odds higher than 2.00 for accumulator punts. The Kelly criterion strategy works fine with parlays, but you should increase the betting odds to remain in the black over the long term.
- Have a decent budget. The bankroll should be big enough to implement the Kelly betting strategy. You can’t wait for significant success with a bankroll of €30 — 50. It is better to start with €100, but it is a subject of your capabilities and intentions.
- Try to evaluate outcomes objectively. No one can predict the results with 100% accuracy. Besides, do not overvalue the chances of your most loved team. You need to rely only on available stats and data analysis.
- Use services hunting value bets. Such tools analyse and reveal overvalued odds from many world’s sportsbooks, so you will know errors in betting odds.