Kelly Criterion
The Kelly Criterion is a staking formula that sizes a bet in proportion to the edge and the price, in order to maximise long-run growth.
In plain English
It requires an accurate probability estimate as an input, and it is unforgiving when that input is optimistic. Overestimating an edge produces stakes far larger than the situation justifies, so full Kelly is aggressive in practice even where it is optimal in theory.
Example
The formula returns a percentage of bankroll to risk, given an estimated chance and an offered price.
Why it matters
It is the reference point most staking discussions start from, and its sensitivity to a wrong probability is the part most often ignored.
How V8 uses this term
V8 teaches this as a concept. It does not publish its own probability estimates, does not compute a recommended stake, and does not tell any user what to risk.