Kelly Formula Betting Strategy
When it comes to Kelly Formula Betting Strategy, simply put that, the Kelly Formula describes how the optimal bet one can calculate in sports betting. The aim of this betting strategy is to find the optimal stake for betting in order to maximize the betting budget. Betting with the Kelly strategy actually operates with constant, constant odds. One must repeat it many times in order to guarantee a long-term profit.
For sports betting, this is not possible one-to-one – after all, we are not sitting at the roulette table or playing dice poker here and can precisely calculate the probability of sporting events occurring. As a sports bettor, it is only possible to calculate the probability of winning better and more precisely than the respective betting provider – i.e. to find so-called value bets! Now, of course, the question arises at this point: How can we transfer this mathematical theory to sports betting practice?
Table of content:
How can the Kelly Formula be used in sports betting?
In truth, betting with the Kelly Formula wasn’t actually designed for sports betting per se. Nevertheless, this strategy can be transferred to this sector and provide valuable assistance. In betting strategies, the focus is mostly on the betting odds themselves or on risk minimization.
With regard to money management in particular, however, a very important point is often neglected. The question of the appropriate or ideal bet for individual bets. And this is exactly where the Kelly formula comes to the fore, the task of which is to calculate this stake.
The highlight of the matter: The strategy uses the entire available betting budget as a basis! The second basis is your own calculation of the probability of winning. You can find out how this works in our article on value bets. It’s obvious that the calculations of these specially measured probabilities of occurrence are naturally associated with risk.
Example for calculating the stake
Let’s go one step further: In this one we want to present you the specific application. For our example, let’s take a 3-way bet . A betting provider provides the following odds for this:
- 1st-Tip 1 | Quota 2.4
- 2nd-Tip X | Quota 3.4
- 3rd-Tip 2 | Quota 2.8
You decide to place a bet on a home win. While the betting provider calculates a probability of occurrence of 41.6% (= 100 / 2.4), you rate it – based on your own experience or calculations – at 50% So you recognize a value in this bet! In this example, your available betting budget is 1000 euros.
In the next step, you take the Kelly formula to hand, which should tell you the ideal bet ! This is as follows:
Bet stake = betting budget x (personal probability of winning x odds-1) / (odds-1)
Let us now insert our determined values:
Bet = 1000 x (0.5 x 2.4 -1) divided by (2.4 – 1)
= 142.86 euros
With a betting budget of 1000 euros in total and the interplay between the betting provider’s odds and the personally assessed probability of winning, this results in a bet of 142.86 euros in this specific case.
As you can see, large amounts come into play here very quickly. It becomes clear: the higher your total budget and the greater the deviation in the area of the calculated probability of winning, the higher the bet will be. Assuming the bet is won: As the basis for your next bet, you should now use the updated betting budget, which in this case would be 1200 euros.
Conclusion
Betting with the Kelly formula says: If the betting budget increases, the stakes also increase. In addition, a single bet may result in a high proportion of the available budget is due! One cannot rule out that the formula advises a bet of 300 euros or more with a bankroll of 1000 euros. We clearly advise against such bets – it is important to keep your hands off them!
See Also: Corner Betting: Best Football Betting Strategy for Easy Cash Out
