# The Kelly System Explained: Betting Successfully with the Kelly Formula

Newcomers in particular often bet far too high amounts, which is why the account balance sooner or later drops to zero. Professional sports bettors at 20Bet often resort to the so-called Kelly System to set their stakes. How this betting strategy works exactly and when it is worthwhile to use the system, you will learn in this guide.

The Kelly System is a development of the US scientist John Larry Kelly, who published the strategy in the 1950s. The system aims to find the optimal bet to maximize your winnings. For the betting strategy to work, you have to estimate the probability of an event – for example, “Team A wins the game” – and weigh the odds you calculated on your own against the odds offered by the bookmakers in the sports betting comparison. In other words, you need to find value bets. How high your bet will be in detail is always determined by the relation between the determined probability of winning and the payout ratio in the Kelly system.

This is a professional strategy. If you want to use the Kelly system, you need experience and expertise in the betting sector. Therefore, the strategy is less suitable for very young beginners. In addition, the Kelly system requires a comparatively high initial capital.

## HOW DOES IT WORK?

The Kelly strategy is based on bets with a positive expectation of winning – i.e. bets where the advantage is on the side of the bettor. We will explain what is meant by this with an example: After thorough research of a soccer match, you personally come to the conclusion that team A should be quoted with a maximum of 1.7. If you find the match with odds of 1.8 or 1.9 at the betting providers, then this match falls exactly into the grid of the Kelly system.

Kelly System Calculator: How to calculate your bets with the Kelly System

You can calculate the optimal betting amount yourself with the Kelly system. The system is based on a special formula. However, the stake must be recalculated for each tip. Of course, this requires a considerable amount of time, which is why for a long time only absolute professionals resorted to this strategy. Fortunately, you can now find various Kelly System calculators on the Internet, in which you only have to enter the corresponding parameters. In order for you to understand exactly how the optimal stake is determined, we would of course like to present the calculation basis to you:

## THE FORMULA

Bet = capital x (probability of winning x odds – 1) / (odds – 1)

For better understanding, we will explain the formula with a practical example. Imagine that your current total capital is 1,000 euros. In our case study, we assume a tennis match, which player A wins with a probability of 70 percent according to your personal assessment. The online betting providers, on the other hand, assume a lower probability and quote your favorite with 1.5. This corresponds to a mathematical chance of winning of 67 percent. So you see the outcome of the bet as three percent more positive than your bookmaker. Consequently, the Kelly system can be applied, resulting in the following calculation:

• Bet = 1.000 € x (0,7 x 1,5 – 1) / (1,5 – 1)
• Bet = 1.000 € x 0,05 / 0,5
• Wager = 100 €

According to the Kelly system, you should therefore bet 100 euros on player A, which corresponds to 10 percent of your complete betting balance. However, it must be mentioned here that the system was actually developed for bets with constant win probabilities.