Kelly criterion
The Kelly criterion stakes the share of a bankroll that maximises its long-run growth: the edge divided by the net odds. With no edge, it stakes nothing.
Example
A 50% chance at 2.20 has a 10% edge. Kelly stakes 0.10 ÷ 1.20 = 8.33% of the bankroll, and half Kelly 4.17%.
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Related terms
Betting unitA betting unit is a fixed standard stake, usually 1% to 2% of the money set aside for betting. Bets are sized in units, so results compare across bankrolls.Expected value (EV)Expected value is what a bet makes on average if placed many times: stake × (probability × decimal odds − 1). A positive EV means the odds beat the chance.VarianceVariance is how far real results stray from what the odds and the chances predict. In betting it is large: good bets can lose for weeks before the edge shows.