Kelly Criterion Calculator

What Is the Kelly Criterion?

The Kelly Criterion is a mathematical formula used to determine the optimal size of a bet or investment to maximise long-term growth of your bankroll. Developed by John L. Kelly Jr. at Bell Labs in 1956, it has been adopted by professional gamblers, sports bettors, and quantitative investors worldwide. The formula balances the trade-off between risk and reward, ensuring you bet enough to capitalise on favourable odds without risking ruin.

Our Kelly Criterion calculator takes your estimated probability of winning and the odds being offered, then returns the optimal percentage of your bankroll to wager on that particular bet.

The Kelly Formula Explained

The basic Kelly formula is: f* = (bp − q) / b, where f* is the fraction of your bankroll to bet, b is the net odds received (decimal odds minus 1), p is the probability of winning, and q is the probability of losing (1 − p). If the result is zero or negative, the Kelly Criterion says you should not bet at all — the odds are not in your favour.

For example, if you estimate a 60% chance of winning a bet at decimal odds of 2.00 (even money), the Kelly calculation gives: f* = (1 × 0.60 − 0.40) / 1 = 0.20, or 20% of your bankroll. In practice, many bettors use “fractional Kelly” — betting a quarter or half of the recommended amount — to reduce variance and smooth out the inevitable losing streaks.

When to Use the Kelly Criterion

The Kelly Criterion is most valuable when you have a genuine edge — that is, when your estimated probability of winning is higher than the implied probability of the odds on offer. It is used extensively in sports betting, poker bankroll management, horse racing, and even stock market position sizing.

However, the formula is only as good as your probability estimates. If you overestimate your edge, you will bet too aggressively and risk significant losses. For this reason, many professionals recommend using half-Kelly or quarter-Kelly as a default. The Kelly Criterion also assumes you can make the same type of bet repeatedly, which is more applicable to systematic strategies than one-off wagers.