How to Use the Kelly Criterion Calculator
The Betstamp Kelly Criterion Calculator is designed to help you manage your bankroll and optimize bet sizing based on your edge. Instead of guessing how much to stake, this tool uses a proven mathematical formula to calculate the ideal wager — maximizing growth while minimizing the risk of going bust.
The idea is simple: When you have an edge (i.e., the sportsbook odds are worse than the true fair odds), the Kelly Criterion helps you figure out exactly how much to bet. It tells you when to press your edge — and when to stay away entirely. If the odds don’t offer value, the calculator will suggest a $0 bet.
How Does the Kelly Criterion Work?
At its core, the Kelly Criterion uses a straightforward formula rooted in probability and value. Here’s the basic breakdown: it calculates your ideal bet size as a percentage of your bankroll based on how much of an edge you believe you have.
You’ll need two things:
- Your estimated win probability (what you think the real odds are)
- The odds the sportsbook is offering
The formula itself looks like this:
Kelly % = [(Decimal Odds × Fair Probability) – 1] ÷ (Decimal Odds – 1)
What does this mean in practice? If your “fair” probability (found, for instance, using Pinnacle’s no-vig odds) is higher than what’s implied by the sportsbook’s line, the formula gives you a positive percentage — telling you to bet that fraction of your bankroll. If not, the answer is zero, and your money stays on the sidelines.
The Kelly Criterion doesn’t just say “bet more if the edge is higher”; it also scales down your bets when value is thin, protecting your bankroll from wild swings.
Where Did the Kelly Criterion Come From?
The Kelly Criterion traces its origins back to 1956, when John L. Kelly Jr., a researcher at Bell Labs, first introduced the concept. His work wasn’t originally aimed at gamblers—it was designed to solve tricky communication problems—but bettors and investors quickly realized the power of his mathematical formula. Over time, the Kelly Criterion found fans among some of the world’s savviest gamblers and Wall Street legends, including the likes of Warren Buffett and Ed Thorp. Today, it’s become a core tool for anyone looking to turn a disciplined edge into long-term bankroll growth.
Let’s say you have a $10,000 bankroll. You enter the odds, your estimated fair win probability, and Betstamp’s Kelly Calculator tells you whether to bet 1%, 2%, or even less — depending on how strong your edge is. That way, you’re always betting responsibly while still aiming to grow your bankroll long-term.
Example: Calculating “Fair” Win Probability with Market Odds
Let’s look at a simple scenario where you want to determine the fair win probability for a given bet using market odds from a top-rated sportsbook—say, Pinnacle or Circa. Imagine you check the market and see both Team A and Team B listed at -110 odds for a moneyline bet. These identical odds on each side suggest the sportsbook sees both teams as evenly matched once the vig (their margin) is removed.
Here’s how you’d find the “fair” probability:
- Convert the odds to implied probability: For -110 odds, the implied probability is roughly 52.4% for each team.
- Remove the vig: Since both sides can’t win 52.4% of the time, you use a no-vig calculator or do the math manually to strip out the margin. In this case, each team’s “fair” win probability comes out to an even 50%.
So, if you’re betting on Team A at odds that reflect a higher implied probability than the no-vig value (for example, being offered +105 when the market says fair is +100), the Kelly Criterion would signal you have an edge. By crunching these numbers before each wager, you’ll avoid negative expected value bets and give yourself a mathematical advantage in the long run
How Much Should Your Starting Bankroll Be?
Your starting sports betting bankroll should always be an amount you’re fully prepared to lose—think of it as tuition for learning the game. For most bettors, this typically means starting with any figure in the range of $5,000 to $25,000, but there’s no universal number. The key is to choose a sum that won’t impact your lifestyle or financial obligations if you hit a rough patch.
It’s wise to treat your bankroll like your entry ticket to the betting world—never money you need for essentials like rent, food, or that weekly grocery haul at Trader Joe’s. Decide on an amount that fits your risk tolerance and situation, and remember: responsible bankroll management is the foundation for long-term success.
To use the calculator effectively, you’ll need to input:
- The odds you’re being offered
- The “fair” win probability (often derived from sharp or no-vig odds)
- Your current bankroll
When used correctly, the Kelly Criterion is one of the most powerful strategies in all of sports betting. It's trusted by professionals for a reason: it balances risk and reward better than any fixed unit system.
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