What is the Kelly Criterion Model in Sports Betting?
The Kelly Criterion Model is a fascinating model that takes little knowledge of sports to be successful if executed properly. It is a formula created by John Kelly to bet with discipline and make sure to always protect yourself, rather than go for the home run each time. While this was formulated around table games, it is a concept that can be applied to any sort of wagering, as long as the bet being taken has exactly two outcomes.
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This model of betting has nothing to do with what sport you bet on or what kind of bets you like to take (money line, total, props, etc.), but rather trusting in the system to make sure that you never “go broke.†This is good for a casual bettor who wants to participate but doesn’t want to get too risky, because the amount wagered is relative to the amount set aside for wagering. As more is won, the amount risked increases, and the same goes for the inverse. If you lose, the amount you wager decreases based on bankroll remaining.
Another point that is important to the model is that there is value in having more information than others. This model is all about exploiting opportunities to be profitable, so if you know something that is considered insider information, the model says that these are must-play wagers. This concept goes back to the days of horse racing, where there were rigged races. A lot of people like to say they lost their wagers nowadays because the “fix is on,†but this used to exist in the horse racing world, where people were able to take the risk out of their bets by knowing who was going to win prior.
The goal of this model is to limit losses to be able to keep playing. This seems like a reasonable way to approach things, which in turn means potential gains are limited. However, sportsbooks came up with a way to counter this model and try to get people betting more was with free bet promotions. They want to create the vision that betting for free money doesn’t count towards the bankroll, but in reality, they know that they have the upper hand, so it is worth the “risk†of giving the second chance to their users as a result.
Source: The Kelly Criterion: Make Bets In Areas Where You Have An Advantage
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Whether you’re new to sports betting or a betting pro, our How To Bet and Sports Betting Strategy and Advice pages are for you. You can get started with our Sports Betting 101 Section — including 10 Sports Betting Tips for Beginners — or head to more advanced sports betting strategy — like Key Numbers When Betting Against the Spread — to learn more.