The Professional's Guide to Smart Bet Sizing
If you've ever wondered how much you should actually bet on a game, you're not alone. Most bettors either bet the same amount every time or just pick a number that feels right. But there's a better way.
The Kelly Criterion is a mathematical formula that tells you exactly how much of your bankroll you should risk on a bet when you have an edge. It was developed in 1956 by John Kelly, a researcher at Bell Labs who was originally trying to solve problems with telephone signal noise. He probably didn't realize his formula would become the gold standard for bankroll management in sports betting and investing.
Here's the thing about Kelly: it's not some complicated theory that only works in textbooks. Professional bettors, Wall Street traders, and even Warren Buffett have used versions of this strategy. Why? Because it works. When you have an advantage, Kelly helps you maximize your long-term growth without risking everything on a single bet.
The beauty of the Kelly Criterion is that it prevents you from going broke. You're never betting your entire bankroll on one game, no matter how confident you feel. At the same time, you're betting enough to actually capitalize on your edge when you have one.
Don't let the math scare you off. The Kelly formula is actually pretty straightforward once you break it down.
Let me translate that into English:
For sports betting with American odds, we can simplify this even more. The formula becomes:
Before you can use the formula, you need to convert American odds to decimal format:
Let's say the Cowboys are playing the Eagles on Monday Night Football. The Cowboys are -3.5 at -110 odds.
After doing your homework, you believe the Cowboys have a 55% chance of covering that spread. The sportsbook's implied probability at -110 is only about 52.4%.
Step 1: Convert -110 to decimal odds = 1.909
Step 2: Apply the formula:
Kelly % = (1.909 × 0.55 - 1) / (1.909 - 1)
Kelly % = (1.050 - 1) / 0.909
Kelly % = 0.050 / 0.909 = 0.055 or 5.5%
Result: If you have a $1,000 bankroll, the Kelly Criterion says you should bet $55 on this game.
The Dodgers are underdogs at +140 against the Giants. You've crunched the numbers and believe they actually have a 48% chance of winning straight up.
Step 1: Convert +140 to decimal odds = 2.40
Step 2: Apply the formula:
Kelly % = (2.40 × 0.48 - 1) / (2.40 - 1)
Kelly % = (1.152 - 1) / 1.40
Kelly % = 0.152 / 1.40 = 0.109 or 10.9%
Result: With a $1,000 bankroll, Kelly suggests betting $109 on the Dodgers.
The Knicks are favored at -110. You think they have a 50% chance of winning, which is actually worse than the implied probability.
Kelly % = (1.909 × 0.50 - 1) / (1.909 - 1)
Kelly % = -0.055 or -5.5%
Result: The negative number means don't bet. You have no edge here. Walk away.
Here's the reality: almost no professional bettor uses full Kelly. And for good reason.
Full Kelly is aggressive. Really aggressive. If the formula tells you to bet 15% of your bankroll on one game, that's a stomach-churning amount of money for most people. Even worse, if you slightly overestimate your edge—which happens all the time—you could be betting way too much and exposing yourself to massive swings.
This is why fractional Kelly exists. Most pros use either half Kelly (50% of the recommended bet) or quarter Kelly (25% of the recommended bet). This reduces volatility dramatically while still allowing you to grow your bankroll steadily when you have an edge.
Here's what the numbers look like for a bettor with a 55% win rate on even-money bets:
| Strategy | Growth Rate | Volatility | Risk of 50% Drawdown |
|---|---|---|---|
| Full Kelly | Highest | Very High | Moderate |
| Half Kelly | 75% of Full | Much Lower | Low |
| Quarter Kelly | ~50% of Full | Very Low | Very Low |
Notice how half Kelly gives you 75% of the growth but with dramatically less volatility. That's a trade most smart bettors are willing to make. You sleep better at night, you're less likely to go on tilt after a bad streak, and you can stick with the strategy long-term.
💡 Pro Tip: Start with quarter Kelly if you're new to this. Once you're confident in your edge calculation and you've seen positive results over a few months, you can move up to half Kelly. But never go full Kelly unless you're absolutely sure your win probability estimates are accurate.
This is the big one. It's human nature to be overly confident in your picks. You watched all the film, you read the injury reports, you know the matchup inside and out. So you think your 53% edge is actually 60%. Now you're betting twice as much as you should, and that's a fast track to going broke.
Bill Benter, who made millions using Kelly on horse racing, said that even the best handicapping models can overestimate the edge by a factor of two. That means if you think you have a 10% edge, you might actually have a 5% edge—or less. This is another reason to use fractional Kelly.
You can't just guess your win probability. You need a track record. If you're just starting out, track your picks on paper for at least 100 bets before you start using Kelly with real money. Once you have data showing you're actually profitable, then you can start applying the formula.
Heavy favorites at -300 or -400 might feel like free money, but Kelly will often tell you to bet a huge percentage of your bankroll on these. Don't do it. Even 80% favorites lose 20% of the time, and upsets happen way more often than people think. Cap your bet size at 5% of your bankroll regardless of what Kelly says.
⚠️ Critical Rule: Never bet more than 5% of your bankroll on any single game, even if Kelly says to bet more. This is your insurance policy against bad variance and incorrect probability estimates.
Your bankroll isn't static. If you start with $1,000 and grow it to $1,500, you should be betting based on that $1,500, not the original $1,000. Conversely, if you're down to $700, your bet sizes should decrease. Update your bankroll weekly at minimum.
Theory is great, but here's how you implement this step-by-step:
Start tracking every bet you make. Record the odds, your reasoning, and the result. After 100+ bets, calculate your actual win percentage for different bet types. This becomes your baseline for estimating future win probabilities.
Your betting bankroll should be money you can afford to lose completely. It's not rent money. It's not your emergency fund. It's money set aside specifically for sports betting. Be honest with yourself about this number.
If you're risk-averse or new to betting: use quarter Kelly.
If you're comfortable with some volatility: use half Kelly.
If you're very confident in your edge and have extensive data: maybe use 60-70% Kelly, but never go full Kelly.
Don't eyeball it. Use the calculator at the top of this page or create a spreadsheet. Input your current bankroll, the odds, your estimated win probability, and your Kelly fraction. The math doesn't lie.
Every week, review your results. If you're consistently overestimating your edge, dial back your win probability estimates by 2-3%. If you're underestimating, you can adjust up slightly. The goal is to calibrate your estimates to reality.
💡 Smart Move: Keep a betting journal. Note not just your picks, but WHY you made them and what your estimated win probability was. Over time, you'll get much better at estimating your true edge.
Flat betting means you bet the same amount every time—usually 1-2% of your bankroll. It's simple and it works, especially for beginners. The downside? You're not capitalizing on games where you have a bigger edge, and you're betting the same amount on games where you have a smaller edge. Kelly optimizes this by adjusting your bet size based on the quality of the opportunity.
This is the "double your bet after every loss" system. It's terrible for sports betting. Don't use it. You'll eventually hit a losing streak that wipes out your entire bankroll. Kelly does the exact opposite—it tells you to bet less after losses (because your bankroll is smaller) and more after wins (because your bankroll is larger).
Some bettors bet more when they're more confident. The problem? Confidence doesn't always equal edge. You might be really confident about a -200 favorite, but that doesn't mean it's a good value bet. Kelly forces you to do the math and separate confidence from actual expected value.
If you're betting on multiple games from the same slate, they're not independent bets. Betting on three NFL underdogs in the same week at 10% Kelly each isn't the same as three independent 10% Kelly bets—your risk is actually higher because underdogs tend to win or lose in bunches based on weather, variance, etc. Reduce your Kelly percentage when betting correlated games.
Getting -105 instead of -110 might not seem like much, but it dramatically improves your Kelly calculation. If you're consistently getting better lines than the closing line, your edge is bigger than you think. Factor this into your win probability estimates.
Live betting odds move fast, and your edge can change rapidly. If you're using Kelly for in-game betting, you need to recalculate quickly and be prepared for higher variance. Consider using even more conservative fractions (like 1/8 Kelly) for live betting.
If you're betting multiple sports, consider keeping separate bankrolls. Your edge in NFL might be very different from your edge in MLB. Track them separately and apply Kelly independently to each bankroll based on your actual win rate in that sport.
If you're serious about sports betting and you have a genuine edge, yes, you should use some version of the Kelly Criterion. It's mathematically optimal for long-term growth while avoiding ruin.
But—and this is important—Kelly is not a magic bullet. It won't turn losing bets into winning bets. It won't help you if you don't actually have an edge. What it will do is maximize your growth rate when you do have an edge, and protect your bankroll from catastrophic losses.
Start conservative. Use quarter Kelly or even 1/8 Kelly until you've proven to yourself that you can consistently beat the closing line and maintain a profitable win rate. Track everything. Be honest about your results. And never, ever bet more than 5% of your bankroll on a single game no matter what any formula tells you.
The Kelly Criterion isn't about getting rich quick. It's about getting rich slowly and safely by making mathematically sound decisions over hundreds or thousands of bets. If you can stick with it and resist the urge to chase losses or bet more than you should, it's one of the most powerful tools in sports betting.
🎯 Final Reminder: Kelly only works if you have an edge. If you're not beating the closing line consistently, no bankroll management strategy will save you. Focus on improving your handicapping first, then use Kelly to optimize your bet sizing.