Kelly Calculator
Calculate optimal bet size using the Kelly criterion. Interactive curve visualization shows full, half, and quarter Kelly with expected growth rates.
Inputs
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Frequently Asked Questions
What is the Kelly criterion?
The Kelly criterion is a mathematical formula for optimal bet sizing. It calculates the fraction of your bankroll to wager on a bet with a positive expected value, maximizing long-term growth while minimizing ruin risk. The formula is f* = (bp - q) / b, where b is the net odds, p is the win probability, and q is the loss probability.
Why use half Kelly instead of full Kelly?
Full Kelly maximizes long-term growth rate but produces large swings in bankroll size. Half Kelly sacrifices only about 25% of the growth rate while reducing variance by 50%. Most professional bettors and traders use fractional Kelly (half or quarter) because probability estimates are never perfectly accurate.
How do I estimate my true probability?
Compare the market implied probability to your own analysis. If a sportsbook prices a team at -150 (60% implied), but your model shows 65% win probability, your true probability estimate is 65%. The accuracy of your Kelly sizing depends entirely on the accuracy of this estimate.
What does the Kelly curve show?
The Kelly curve plots expected logarithmic growth rate against stake size. The peak of the curve is the full Kelly fraction, the optimal bet size. Staking above Kelly (the red zone) reduces growth and increases ruin risk. The curve helps visualize why over-betting is more dangerous than under-betting.
What happens if I bet more than Kelly suggests?
Betting above the Kelly fraction reduces your expected growth rate. At exactly 2x Kelly, your expected growth drops to zero, the same as not betting at all. Beyond 2x Kelly, your expected growth becomes negative, meaning you expect to lose money over time despite having a positive edge.
Can I use Kelly criterion for prediction markets?
Yes. Enter the contract price as odds in PM Cents format and estimate the true probability of resolution. Kelly works for any binary outcome bet, including prediction market contracts on Kalshi, Polymarket, and other exchanges.
What bankroll should I use for Kelly calculations?
Use only the capital you have specifically allocated for betting or trading. Never include living expenses or emergency funds. Your Kelly bankroll should be money you can afford to lose entirely, as even optimal Kelly sizing has significant short-term variance.
Does Kelly criterion account for fees?
The standard Kelly formula does not include fees. For prediction markets, you should adjust your net odds by subtracting expected fees from the payout. For example, if you buy a 40¢ contract and expect 2¢ in fees, your effective cost is 42¢, which changes the optimal Kelly fraction.