Kelly criterion
What does "kelly criterion" mean in sports betting?
The Kelly criterion is a bet-sizing formula that sets your stake as a share of your bankroll, based on your edge and the odds.
It comes from a 1956 paper by J. L. Kelly Jr., a researcher at Bell Labs. The common betting form is: Kelly fraction = (b x p - q) / b, where b is the decimal odds minus 1, p is your win chance and q is 1 - p.
If the result is zero or negative, there's no edge and Kelly says don't bet. Full Kelly swings hard and assumes your probability is right. That's why many bettors use half or quarter Kelly, to cut the swings and protect against overestimating their edge.
Example
You bet +150 (decimal 2.50, so b = 1.5) and estimate a 45% win chance. (1.5 x 0.45 - 0.55) / 1.5 = 0.0833. Full Kelly is 8.33% of your bankroll, or $83.33 on $1,000. Quarter Kelly is $20.83.
Related terms
Implied probability
Implied probability is the win chance a price suggests. It turns odds into a percentage so you can compare them with your own estimate.
Expected value (EV)
Expected value (EV) is the average amount a bet would win or lose per play if you could make it many times. Positive EV (+EV) means the price is better than the true chance.
Unit
A unit is a fixed slice of your bankroll, commonly 1% to 2%, used to size every bet so stakes stay consistent.
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