Kelly criterion in betting

The Kelly criterion sets stake size in proportion to your edge and the odds, maximising long-term bankroll growth. Most practitioners use a fraction of it because full Kelly is uncomfortably volatile.

The formula asks two questions: how big is your edge, and how much does the price pay? A large edge on a short price justifies a bigger share of bank than a small edge on a long one. Kelly is mathematically optimal only if your probability estimates are accurate — and since they never are, half or quarter Kelly is the practical standard.

f = (bp - q) / b, where b = odds - 1, p = win probability, q = 1 - p.

Odds 3.00, your probability 40%. b = 2, p = 0.4, q = 0.6, so f = (2 x 0.4 - 0.6) / 2 = 10% of bankroll. On ₦300,000 that is ₦30,000 — far more than most bettors would risk, which is exactly why quarter Kelly (₦7,500) is the sane version of the same instruction.

Kelly links staking to edge instead of to feeling. Even the fractional version enforces the right relationship: bigger edge, bigger stake; no edge, no bet.

If your edge estimates come from watching NPFL matches rather than from a validated model, use quarter Kelly at most. Overconfident inputs are the fastest route from an optimal formula to a ruined bankroll.

• Feeding in an optimistic probability and letting the formula justify a huge stake.
• Running full Kelly and abandoning it after the first 40% drawdown.
• Applying Kelly per bet while ignoring correlation across simultaneous positions.