## What is Kelly staking

Kelly staking plan has many different names, Kelly criterion, Kelly strategy, Kelly system, Kelly bet and Kelly strategy, but all refer to the same thing and named after John Larry Kelly, Jr. A scientist that worked for Bell Labs, J L Kelly came up with a formula that is claimed to determine the optimal bet size for a single bet in a planned series of bets given a predetermined betting bank. It is said that the Kelly staking plan will out preform any essentially different staking plan in the long run in terms of growing your betting bank.

## Methods for Kelly Stake betting

The Kelly staking plan pretty much has one sole method of use. If you plan to have only one bet this isn’t the staking system for you. Kelly staking is for a serious punter that believes they have a betting edge and have a set amount of money set aside just for betting, a bet bank roll. The way to use the Kelly staking plan is to simply use the formula below or the Kelly calculator above. The output will give what J. L. Kelly’s formula believes is the maximum amount to bet in order to have your bank roll get the maximum growth without putting the whole bank at risk. Some people believe it is best to play it even safer and only bet a set percentage of the suggested amount, for example bet 50% of the amount Kelly would have you bet. But never go above his suggested amount.

As this staking system is for the more committed punter it is recommended to have betting accounts open and funded with several different betting companies. Also it is advised to take the best price available, therefore you should also familiarise yourself with a good odds comparison site. Here are some of the sites we recommend for people who believe this is the staking system for them. These are recommended as they don’t mind having punters that constantly take top price when betting. You will find that with many of the mainstream shop fronted bookmakers that your account will be quickly limited or even closed if you continually bet with them when they are top price or out of line with other bookies.

## Kelly stake calculations

The maths behind Kelly Stake betting isn’t the hardest although it does look rather messy. As there is so much to calculate we’d defiantly recommend using our Kelly Calculator instead of doing the maths every time, because as we have already mentioned Kelly Stake betting is only used by people placing many bets and calculating your stake manually for each bet will eat into much needed time finding value in the betting markets.

**Kelly calculator maths**

There are 4 inputs needed for calculating 7 different returns

Inputs

Bank Roll (B)

Decimal odds (D)

Estimated win Probability (E)

Commission (C)

Maths for the 7 outputs

Real odds = (((D-1)/100) * (100-C)) + 1

Fair odds = (1 / E) * 100

Value = Real odds / ((1/E) * 100)

Stake = ((((E / 100) * Real odds) – 1) / (Real odds – 1)) * B

Stake Percentage = ((((E / 100) * Real odds) – 1) / (Real odds – 1)) * 100

Potential Profit = Stake * (Real odds – 1)

Potential losses = Stake

Once you have entered the required data into Kelly calculator the main thing you are looking for is to see if the “Fair odds” are less than the “Real odds”. If this is the case then the only other bit of information you really need is the “Stake”, as this is the amount you need to bet in order to get the maximum return for your given betting bank. The rest of the information is not really necessary but is normally good to see anyway.

## Examples of how Kelly calculator works

Taking all that information isn’t easy, so let’s look at an example to clear things up. Firstly you need the four input values. Three of these are easy and matter of fact. You should know how big your betting bank is, the best odds you can get for your chosen bet and whether or not the bookmaker you are placing the bet with charges a commission – and at what rate.

The part that takes skill and is based on your opinion is the “Estimated win probability”. Here you will be deciding on your own, or via a formula you have created the probability you think your chosen bet has of winning. This is where hopefully your odds compiling knowledge is better that that of the bookmakers. Once you have calculated you can also have a quick check using our odds conversion calculator to see if your “Fair odds” are less than that of the bookie.

Putting all this together in an example, let’s say your betting bank is £1500 and a bookie is offering even money on your chosen selection and this bookmaker doesn’t charge commission. Using whatever method it is you use to generate an estimated win probability you arrive at a 60% chance of your selection winning.

Now let’s throw these inputs into the formulas given earlier, as this bet has no commission it makes it a lot easier to work out

Real odds = 2 (or even money)

Fair odds = (1/60) * 100 = 1.66

Value = Real odds / Fair odds = 2 / 1.66 = 1.2

Stake = ((((60/100) * 2) -1 / (2 -1)) * 1500

= (0.6 * 2) -1 /1) * 1500

= 300

Stake percentage = (0.6 * 2)-1 /1) * 100

= 20%

Potential Profit = 300* (2 – 1) = 300

Potential losses = 300

As you can see there is a lot of working out to be done.