Return on investment, or ROI, is a fundamental financial metric used by investors.
It is a measure of the efficiency of an investment – or how much money you make relative to the amount of money you risk.
In both traditional investing and sports betting, return on investment means the same thing, it measures the actual profits in comparison to the money gambled.
ROI is the most accurate way to analyze the success of your betting, more accurate than the profits or the winning percentage that is not an actual profitability metric.
If you prefer to play a lot of underdogs, you are likely to have a poor win percentage, but you may be very profitable based on high underdog odds. The opposite can be true for those that prefer betting on favourites. By betting on favourites, you could win 70% or more of your games and still lose money because of the low odds
A bet of €10.00 placed at 2.10 is more profitable than a bet of €100.00 placed at 1.30, even though the latter will return more money. It is all about the return you get on the money you risk.
One of the reasons this number is so important is that it helps us determine if a system is truly profitable.
To calculate ROI or, in this case the profit earned from sports betting, net profit is divided by the cost of the investment with the result being expressed as a percentage.
ROI = Profit / amount wagered
Total bets placed: 1250 (€10.00 per bet)
Net profit: €1350.00
ROI = 1350 / (1250 * 10) = 0.108 = 10.8%
What is considered a good Sports Betting ROI?
According to surveys of actual sports bettors, a figure of 5% over 1,000 bets is considered an excellent ROI. In fact, this figure ranks a sports bettor in the same league as a bookmaker, which assumes a 5%.
The volume of bets played is crucial in accessing a player’s ROI. A ROI of 5% after 1,000 bets, is considered more successful than a ROI of 20% after 200 bets. In the short term, it’s possible for anyone to be successful at betting, but very few people can manage it in the long-run. This is why the volume of bets is such an important factor.