ROI (Return of Investment), also known as ROR (Rate of Return) and Yield are the same thing and they determine the ratio between profits/losses versus investment.
These calculations apply not only to the betting universe but also to every other investment we make. Clear examples of that are the stock market and bank deposits.
The way to calculate ROI is pretty simple:
(Total Profit – Total Losses) / Total investment
In case we want to obtain our ROI in percentage value, all we need to do is to multiply the value obtained by 100
When determining ROI regarding sports betting, we need to consider a few things:
- We should adjust our investment in every bet, so that all of them have the same stake (also known as Flat Stake).
- Eliminating all cancelled/void bets. In bets that have been half won and half void or half lost and half void, you should only use the half that was won/lost, using only half the stake of normal ones.
We can use the formula written above to calculate our ROI bet by bet or over a group of bets. If we apply it to individual bets, we can’t forget to deduct our stake value, because that doesn’t count as profit.
To exemplify this ROI calculation, let’s imagine that during a month there were 125 bets made, which accounted for a total of 110 units wagered and a profit of 20 units.
If we consider the profit the deduction of our losses’ total to our total profit, all we need to do now is divide by our invested total:
ROI= 20 (Profit) / 110 (Total investment) = 0,18 (in percentage 18%)
This means that for every 100 units we are betting, we’re profiting 18 units.
But ROI doesn’t serve only for this data, because if we want to obtain a more “reliable” ROI we can divide our bets by market, competition, sport, etc. and use this information to maximize our profits.
There are people who mix up Yield with ROI, because ROI can be determined assuming an initial bankroll.
That concept doesn’t apply to betting, since every bet is an unique event, which makes it impossible for us to determine it according to an initial bankroll.