Bankroll Management: Kelly Criterion and Flat Staking

Even with positive expected value (EV), you can burn your entire bankroll in a week. The cause isn't a bad strategy — it's incorrect bet sizing.

Variance in betting is massive. At odds of 2.0+, a run of 10–20 losses in a row is a normal statistical event. If you bet too large a percentage of your bank, such a streak will destroy your capital before the maths can play out.

The Kelly formula calculates the optimal stake to maximise bankroll growth: f = (bp − q) / b, where f is the fraction of the bank, b is the odds minus 1, p is your probability estimate, and q = 1 − p.

Example: you estimate a 55% chance of winning, and the bookmaker offers 2.10. Then b = 1.10, p = 0.55, q = 0.45. Kelly = (1.10 × 0.55 − 0.45) / 1.10 = 0.14. The optimal bet is 14% of your bankroll.

Full Kelly is aggressive. If your probability estimate is slightly off or you hit a bad run, your bankroll drops too fast. Almost all professional bettors use Fractional Kelly — 25% or 50% of the calculated amount.

Quarter-Kelly (25%): you bet 3.5% instead of 14%. This reduces variance and provides a buffer for estimation errors. Half-Kelly (50%) is a compromise between growth and safety.

If Kelly maths feels complicated, use a fixed percentage: 1–2% of your current bankroll on every bet. As the bank grows, the stake increases; as it falls, the stake decreases automatically.

Advantage: simplicity and protection from total ruin. Disadvantage: with strong edge (high EV), bankroll growth is slower than it could be. For beginners, it's the optimal approach.

Many bettors use a 'unit' system: the bankroll is divided into 100 units, and stakes vary from 1 to 5 units depending on confidence. This is a variation of fixed percentage with manual control.

Flat staking means the same monetary amount every time, not a percentage. Risk: during a downturn the percentage of bank increases, during growth it decreases. Not recommended for long-term work.