Exploring the value of Kelly Criterion to bettors

A smart bettor tries to explore ways to plot his strategy that works to win to ensure longevity and durability to an enjoyable sports betting career. But carrying a winning streak comes with a bigger payroll, and punters should implement wise betting decisions to protect their bankroll before wagering on that specific bet.

Among the strategies used by most sharp bettors would be the Kelly Criterion, which enables them to determine how much to invest in a specific asset to maximize wealth growth for the long term.

Developed by Bell Labs scientist John Kelly Jr during the 1950s, this mathematical formula points out a value on the odds board, as well as provides a guide as to how many units a bettor should wager on a particular bet.

A bettor’s funds can grow exponentially through the Kelly Criterion, which calculates the proportion of your funds to place money on an outcome whose odds are higher than expected.

HOW KELLY CRITERION WORKS FOR SMART BETTORS

Before going further, a bettor has to ask himself: “How much will I bet on this outcome (On a sports event)? This question should go hand-in-hand with the five “Ws” in betting:

* Who to bet on?

* What to bet on?

* When to bet on?

* Where to bet on?

* Why to bet on?

Basically, the Kelly Criterion formula breaks down as follows:

(BP-Q)/B

B = Decimal Odds

P = Probability of success

Q = Probability of failure

Let’s use a coin as example for something to bet on, the coin landing on heads at 2.00. But the coin is biased and instead has a 52% chance of ending up on heads.

P= 5.52

Q= 1-0.52 = 0.48

B= 2-1= 1

The result is determined through: (0.52X1-0.48)/1 = 0.04

This means the bettor should only bet 4% based on the Kelly Criterion. A positive percentage hints that you might have the edge in favor of your bankroll, so your funds will grow. The criterion can also be used as a test for different values in the online sheet by using the code below:

Decimal odds             :  2.000

Probability of success:       50

Percentage of own stake:    0

A negative percentage means the bettor should not wager on this outcome.

USE CRITERION BASED ON BANKROLL, STRAIGHT APPROACH

The size of a bettor’s bankroll serves as a basis for determining the viability of using the Kelly Criterion. An important advantage provided by this formula is that the criterion uses the application of the theoretical value of wagers, something other staking plans could not.

The criterion enables punters to get the right balance between increasing their bankroll and protecting it. Staking more when the theoretical value is high and staking less when the theoretical value is low should make the most of profits in the long run while it cuts the chance of going bust.

Bettors are also assured that placing of wagers is prevented where positive expected value does not exist through the criterion. Take note that the formula will return a negative once there’s no positive expected value, which serves as a warning to avoid such wagers.

AVOID CONFUSION ON BETTING WRONG AMOUNTS

A purpose can only be reflected by bettors using the Kelly Criterion when you will be able to accurately work out the probabilities of any proposed wagers. Getting confused on these probabilities will result in a bettor placing his money on the wrong amounts, leading to either losing your bankroll quickly or your potential growth in betting is hindered.

The criterion can also be overly aggressive, which is one of the few disadvantages of the strategy. Staking an amount equal to 10% on a bettor’s bankroll can be a very high percentage to risk under any circumstances.

If the option is to commit more than 5% of your bankroll to a single wager, many bettors may never go above 2%.

Punters should remember that no matter how much they adjust the formula, it won’t still be able to tell them what selections they should make on their betting slips.

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