How to Use Kelly Criterion for Bet Sizing

The Kelly Criterion is a formula-based betting strategy that helps you decide *how much* of your bankroll to wager on a given bet when you believe you have an edge. In plain terms, Kelly tells you the optimal percentage of your bankroll to bet to maximize long-term growth, based on the probability you think a bet will win and the odds you’re getting. It’s popular among sharp bettors and investors because it balances risk and reward mathematically.

The formula for Kelly in betting: `f* = (p * (b + 1) - 1) / b`, where `p` is your estimated probability of winning, and `b` is the net decimal odds (for example, decimal 3.00 has b=2, since it’s 2-to-1 payoff). The result `f*` is the fraction of your bankroll to bet. Don’t worry if that sounds complex – let’s simplify with an example. Suppose you believe a boxer has a 60% (0.60) chance to win a fight, and the odds are +100 (decimal 2.0, which means b=1). Plugging in: f\* = (0.60 \* (1+1) - 1) / 1 = (0.60\*2 - 1) = 0.20. So Kelly says bet 20% of your bankroll on this fight. Indeed, if you had a fair coin (50% chance) at even odds, Kelly would say bet 0% (no edge), but at 60% chance with even odds you have an edge, so 20%.

In practice, betting 20% of your roll on one fight is extremely aggressive – and that’s a known caveat with Kelly. It maximizes theoretical growth but can lead to big swings. Many bettors use a “fractional Kelly” (like half-Kelly or quarter-Kelly) for safety. For instance, they might bet 10% in the above scenario instead of the full 20% to reduce risk. In fact, a common guideline is never risk more than 5% of your bankroll on a single bet no matter what.

Using Kelly requires two things: a reasonable estimate of your win probability, and discipline to stick to the calculated stakes. It’s most useful when you have confidence in your handicapping or model. Kelly will naturally bet larger when your edge is big, and tiny when your edge is small – preventing you from under-betting great opportunities or over-betting marginal ones. Over the long term, it can optimize growth and prevent going bust (compared to flat betting large amounts arbitrarily).

To use Kelly in boxing, figure out your perceived chance of a fighter winning, calculate the implied probability from odds, and then determine your edge. If you have an edge, Kelly gives the optimal fraction to wager. Just remember the Kelly Criterion is theoretical – real-world factors like imperfect info and risk tolerance mean you might dial it down. But it’s a powerful tool to manage your bankroll scientifically. As the saying goes, “bet size matters as much as bet selection,” and Kelly is one way to get it right.

Sources: OddsJam