What is the Kelly criterion in prediction markets?

It is a rule for sizing a bet so that your bankroll grows fastest over many trades: stake (q − c) / (1 − c) of your bankroll, where q is your probability and c the contract cost including fees.

Should I bet full Kelly?

Usually not. Full Kelly is only optimal if your probability is exactly right; most traders use half or a quarter of it to reduce drawdowns from estimation error.

What if the calculator says to stake nothing?

Then neither side has a positive edge after fees at the price you entered — the market already prices the event at or beyond your estimate.

Tools

Kelly criterion calculator

Enter the contract price, your own probability and your bankroll. The calculator picks the side with an edge after fees and sizes the position by the Kelly criterion — the stake that maximises long-run growth if your probability is right.

Kelly calculator

YES price (¢)Your probability of YES (%)Bankroll (USD)Fee per contract (¢)Kelly fraction (% of full)

Side: Buy YES
Suggested stake: $76.27 · 186 contracts
Share of bankroll: 7.6% (full Kelly 15.3%)
Edge: 9.0% points

The formula

f* = (q − c) ÷ (1 − c) where q = your probability, c = price + fee of the side you buy

How to read the result

A binary contract costs c and pays $1. If you believe the true probability is q, your edge is q − c, and Kelly bets the share of bankroll that grows it fastest: (q − c) / (1 − c). If the YES price is above your probability, the NO side has the edge instead, and the calculator switches to it.

Worked example: YES at 40¢, you think 50%, no fees. The edge is 10 points and full Kelly is 0.10 / 0.60 ≈ 16.7% of bankroll — $167 of $1,000, or 416 contracts.

Why most traders use a fraction of Kelly

Full Kelly assumes your probability is exactly right. It rarely is, and overestimating your edge makes full Kelly lose money fast. Half or a quarter of Kelly gives up a little growth for much smaller swings, which is why the calculator defaults to 50%.

Fees matter more than they look: a 1–2¢ fee per contract can remove a small edge entirely. Enter the platform’s real fee on your contract size — our reviews list each platform’s fee schedule.

Frequently asked questions

What is the Kelly criterion in prediction markets?: It is a rule for sizing a bet so that your bankroll grows fastest over many trades: stake (q − c) / (1 − c) of your bankroll, where q is your probability and c the contract cost including fees.
Should I bet full Kelly?: Usually not. Full Kelly is only optimal if your probability is exactly right; most traders use half or a quarter of it to reduce drawdowns from estimation error.
What if the calculator says to stake nothing?: Then neither side has a positive edge after fees at the price you entered — the market already prices the event at or beyond your estimate.

Not financial advice. These calculators do arithmetic on the numbers you enter; they do not know a platform’s current prices or whether it is open to you. Check both in the platform reviews.