To make the most of their bankroll, experienced punters use various betting strategies. While some of them relate to ways of betting, others have to do with bank (bankroll) management. One of the most common bankroll management strategies is the strategy based on the Kelly Criterion. This strategy can be applied to different forms of betting. Unfortunately, Kelly strategy won’t work with online pokies NZ or other casino games. We will show you in this article, why it is so, and how to become a successful bettor with the Kelly Criterion.

Kelly Criterion Formula Explained

The Kelly betting strategy is based on one mathematical formula. To apply Kelly strategy, you need to use it for every single bet. This formula was developed in 1956 by American researcher John L. Kelly. He worked at Bell Labs and invented this formula to deal with signal noise issues. Later this formula was applied to trading and gambling. But let’s look at the Kelly formula and understand what each variable stands for:

(B*P – Q)/B = F

F in this formula is the fraction of the bankroll to use in a single bet. It is the variable we need to calculate. For example: F = 0.12. The solution of the Kelly equation must be transferred to the decimal system, then our F% = 12% of the bankroll. It implies that the punter should stake 12% of his bank on the wager. B in this formula stands for odds for the wager – 1. P stands for the probability of the anticipated wager winning, and Q is the probability of losing the anticipated bet. To put it simply, Q = 1 – P.

Sometimes the calculated “F” can be negative, which means that the wager is not profitable at all, so there would be no profit or positive return with these parameters. It is also the reason why the Kelly formula doesn’t work with casino games: they are negative-expectation games. If you try to apply this formula to a casino game with an RTP ratio, you will get the negative “F”-number. This can be explained logically casino games work in such a way that players face a long-term disadvantage because of the house edge. The Kelly formula calculates the success of a bet in the long term.

As you may see, the Kelly formula helps punters calculate the bet size accurately. It takes into account betting odds, the probability of winning and losing, and the bankroll of gamblers. Simply put, gamblers need to handicap the game.

Tips For Punters On How To Use The Kelly Formula

To apply the Kelly formula correctly and win in the long run, punters should follow some tips. The tips listed below are tips from professional bettors who have helped us with this article and are all based on personal experience.

1. You should constantly improve your handicapping abilities. The Kelly formula is based on the probability of winning the wager. To calculate it punter should have in-depth knowledge of handicapping techniques in betting. And for this punter must be able to predict sports events and analyze them. Kelly strategy requires many skills and knowledge from a sports bettor. Do handicapping, research the games, and learn to calculate probabilities. This is the way you can master Kelly strategy.
2. You should control your emotions and keep your greed in check when using the Kelly system. The Kelly system is a clear mathematical probability system. To calculate the result correctly, it is necessary to carefully double-check all parameters and avoid errors. If one of the parameters is incorrect, the final value will be unreliable and incorrect. To avoid mistakes, employ the use of the calculator. It will make the mathematical work for you.
3. You should not place the bet with a negative F result. Even if a bet seems favorable to you, you should not do it. It is important to apply the Kelly rule consistently and clearly.
4. Use the Kelly Criterion alternatives to reduce your risks. Kelly bankroll percentage is usually high because the system itself has certain risks. To lower the risk factor you can use modified Kelly formulas. For example: the Half Kelly formula is equal to the Full Kelly Formula, but the calculated bet “F” size” is divided by 2. The Quarter Kelly formula divides the Full Kelly Formula result by 4. Consider using these formulas if the original strategy is too potentially aggressive for you.
5. You should not use this formula on casino games. We have already mentioned it before: applying this formula to casino games makes no sense. Online casino games are negative-expectation events.

When done right, Kelly strategy can rapidly increase punters’ bank and help them join the winning set of gamblers. It is the technique only professional punters use. To wield the Kelly Criterion, you need to have certain skills. And remember that no betting strategy guarantees you a 100% winning streak and always imposes risks on you. Bet responsibly and use the Kelly strategy with sports analytics.