It is a great benefit for Bettors to use a mathematical edge instead of relying on impulses. Kelly criterion is a great way to manage punters bankroll on the long run.
The main idea of Kelly Criterion is that the amount of bet should directly proportional to perceived edge.
The formula for calculating Kelly Criterion is quite simple:
(B*P - F) / B
B = the Decimal odds -1
P = the probability of success
F = the probability of failure (i.e. 1-p) Let’s use the coin as an example.
For instance, you want to bet that the coin will land on a head with the odds of 2.00. In fact, the coin usually has a 52% probability of landing on heads.
In this case:
F = 1-0.52 = 0.48
B = 2-1 = 1.
This works out at: (0.52x1 – 0.48) / 1 = 0.04
In this case the Kelly Criterion recommend you place a bet 4% of your bankroll.