A formula that is used in gambling to determine the amount of money that a gambler should bet on a particular wager to maximise returns while controlling risk. It is named after John Kelly, a researcher who worked at AT&T’s Bell Laboratory, in his 1956 paper dealing with signal noises in long-distance communication lines. Over the years, the Kelly criterion has been adopted by many investors to help them build an ideal investment portfolio. According to the criterion, the amount of money allocated towards different investments should be based on the potential return on a winning investment and the percentage of total investments that are likely to be successful.