Both ROI and Yield are very important concepts you should know and use if you are to take yourself seriously as a punter. This article will teach you how to calculate Return on Investment and Yield, and how to use them to evaluate your betting strategy.
- What Is Return on Investment (ROI)?
- Best Betting Sites We Recommend for the Best ROI in 2022
- ROI for Betting
- What is a good ROI in Sports Betting?
- What to do if you have a positive ROI?
- What Is Betting Yield?
- How to Calculate Yield
- Why is Yield important?
- What is a Good Yield in Sports Betting?
- How to use Yield and ROI to Monitor your Betting Strategy
- ROI & Yield in Betting FAQs
- ThePuntersPage Final Say
What Is Return on Investment (ROI)?
In terms of economics, Return on Investment is the amount of money you win or lose on any investment. You can express it in terms of a percentage, or in absolute numbers. You can also call it “rate of profit” or simply “return”.
Investors often calculate their ROI based on transactions. For example, if you buy a house at £1,000,000 and sell it two years later for £1,250,000, and have to pay £100,000 in taxes and fees, you have an absolute ROI of £150,000. In percentages, this is an ROI of 15% on your investment.
If your investment consists of multiple smaller risks and mini investments, it is better to calculate your ROI for a fixed timeframe. Most financial companies have quarterly and annual reports, which they deliver to their shareholders. We suggest a similar strategy for betting. You should always know what your monthly or yearly ROI is. If you take all your deposits, wins and losses into account for any time period, it is very easy to calulate your ROI.
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The main reason to place a wager on any sport is to win as much as you can, while minimizing losses. Any serious punter should keep overall profit in the back of their mind. You should always know whether you are losing money or making a profit. Sure, having several big wins in a row may make you feel you are on cloud nine, but wins can often cloud your judgment and lead to you making irrational betting decisions. Some bettors only focus on how many wins they have, not their win loss/ratio.
Most inexperienced bettors only keep track of their progress by simply checking the balance on their account. They simply place bets according to how much money they have in their account. They have no bankroll management strategy or knowledge of what their win ratio is. When they win, they withdraw, when they lose, they deposit again, without ever knowing if they made a profit at all. Bad strategy, coupled with an overestimation of their sports knowledge, is what turns winning players into cash cows for the bookies overnight.
If you want to be a serious sports bettor, you need a sound strategy. Consider sports betting an investment instead of a hobby. No serious investor would consider investing any amount of money in any business venture without considering the return on his investment. In this article, we will discuss two concepts from the financial world, which will help you analyse your overall betting strategy.
Return on Investment (ROI) and Yield are two concepts that may sound complex, but are actually very simple to use and understand. In fact, anyone who has been to high school should be able to and use them.
ROI for Betting
After you have started your first bankroll at an online bookie, you will probably place frequent bets. Your initial deposit will be turned over and bet multiple times, as long as you do not lose all of it. This is how you can start out with a small deposit and gradually grow it into a large and profitable bankroll. Your ROI is your total profit, usually expressed in terms of percentages when you take your initial deposits into account.
Why is ROI important?
One reason percentages can be very usefull is that they help you evaluate your betting strategy. If you can consistently make a profit of 20% on £100, it is probably time to increase your bankroll, because your betting strategy will produce the same percentages, whether your bankroll is £100, £1,000, £10,000 or £100,000. And 20% of £100,000 is a lot of money! Of course, you should not get ahead of yourself.
How to calculate ROI
The formula for calculating ROI is very simple.
One commonly used formula is:
ROI = (Net Profit / Cost of Investment) x 100
Of course you will need to calculate your net profit first. Note that net profit can be either negative or positive, depending whether you have lost or won money.
You can also use one of these simpler formulas:
If you make a profit: ROI = [(Total return / Total amount invested) -1)] x 100
If you make a loss: ROI = [1 – (Total amount invested / Total return)] x 100
Lets say you create an account at Betfair or Bet365. You make an initial deposit of £1,000, which you divide into smaller units. After making dozens or more bets, betting on the second half of the Premier League season, it is time to analyse your betting strategy. Let us assume that the £1,000 you deposited was your only deposit, and you did not make any withdrawals. We will look at two examples, a profit and a loss.
A profit is every punters goal and you are lucky and or smart enough to have one! After placing 100 smaller bets, as well as a few larger ones, you have £1,200 on your account. Congratulations, you are one of the few who has managed to beat the bookies. In order to calculate your football ROI betting, we will use the following data:
- Net Profit = £1,200 – £1,000 = £200
- Cost of Investment = £1,000
- ROI = (£200 / £1,000) x 100% = 20%
This is a very simple example, and no matter how many bets you place, win or lose, your ROI will always be this easy to understand.
Not all punters are clever or dedicated enough to create a profit over the term of four months. Let us assume that after betting for 4 months, your initial deposit of £1,000 has dwindled down to only £800. In this case you will have a negative ROI.
• Net Profit = £800 – £1,000 = -£200
• Cost of Investment = £1,000
• ROI = (-£200 / £1,000) x 100% = -20%
This simple calculation show you have a 20% loss.
What is a good ROI in Sports Betting?
This is a question many punters ask. Of course, bookies like to keep these details to themselves. While some punters claim outrageous percentages, such as 30% and more, a more realistic ROI is probably somewhere between 5% and 10%.
Keep in mind that you will probably have losses as well as wins. ROI refers to your total investment, versus your total returns.
What to do if you have a positive ROI?
Let us look at our first example again. After betting small amounts consistently for 4 months, with an initial bankroll of £1,000, winning some bets and losing some bets, you now have £1,200 on your casino account. This equates to a positive ROI of 20%.
The question is what you should do now. Should you:
- Withdraw all the money and enjoy your winnings?
- Withdraw only your net profit?
- Leave your profit on your account to increase your bankroll?
- Make another deposit and create an even larger bankroll?
This is the real challenge. The answer depends on how seriously you plan to take yourself as a punter. While £200 is a fun profit and an ROI of 20% is admirable, there are probably plenty of easier ways to make £200 than to research games, players and football statistics for hours. Making even a small profit in terms of absolute cash, which is worth your hours of research, requires a very large bankroll. Which of these four options you should choose, depends on your personality, your ambition and the confidence you place in your ROI betting strategy:
- If you feel like taking a break from betting, and do not plan to bet for a few months, we recommend withdrawing all your funds so you can use them to enjoy the summer.
- If you want to keep betting, but are not 100% confident with your betting strategy, you can withdraw only your profit or leave everything on your account, to keep a bankroll for future bets.
- If you are confident in your betting strategy, you can consider doubling your bankroll. If you can maintain the same ROI percentage, you will also double your winnings in absoute amounts.
What Is Betting Yield?
While ROI is very important, both in absolute terms and percentages, Yield is an equally important concept, as it give you an idea how well you are doing on average. Yield can mean profit, earnings or revenue, in terms of economics. However, we will give it a specific definition in terms of betting.
We can define Yield as:
- The profit or loss ratio for the total capital invested. In terms of betting, total capital invested means the total of all of your bets for a given period.
The difference between ROI and Yield is that Yield gives you your average return per bet, not your total profit. The higher the stakes you win and the more bets you win, the higher the Yield will be. The lower the stakes you win and the fewer bets you win, the lower your yield will be.
How to Calculate Yield
The formula for yield very simple:
[(Amount of winnings – Amount of bets) / Amount of Bets] x 100%
It will give you your average win per bet.
Lets look at an example. In this example, we will limit ourselves to just 5 bets, though an experienced punter will probably calculate yield for at total hundreds. Here, you bet on £10 on five different football matches. You won four bets, while losing one. Your total wins are £64.5, after betting a total of £50.
|Real Madrid - Barcelona||1.25||10||Win||12.5||2.5|
|Monaco - Montpellier||2.5||10||Loss||0||-10|
|Bayern - Dortmund||2.2||10||Win||22||12|
|Arsenal - Man U||1.6||10||Win||16||6|
|AC Milan - Juventus||1.4||10||Win||14||4|
Your yield after five bets is:
[(£64.5– £50) / £50] x 100% = 29%
This means you win an average of 29% per bet for these five bets.
Why is Yield important?
Yield is very important, as it can help you understand the success of your betting strategy. The higher your Yield, the more successful you are as a bettor/investor. You can use yield to analyse various aspects of your betting strategy, for example if you bet on different markets, different types of events, different sports, etc.
What is a Good Yield in Sports Betting?
A good Yield depends a lot on the sports and markets you play on, as well as the total number and amount of bets you have placed. An average a yield between 4% and 10% is a realistic way to make a consistent profit. If you can get a yield of 6% or more for a football betting season, you can consider yourself a successful punter!
How to use Yield and ROI to Monitor your Betting Strategy
In general, Yield and ROI will give you a similar percentage. What matters is that you are able to perform consistently. Calculating your returns shows how good a handicapper you really are. Once you have proven you can win consistently, over hundreds of smaller bets, you can consider upping the ante and taking steps towards being a professional gambler. Remember to divide your bankroll into units so you do not bet your whole bankroll at once. Read our article on Bankroll Management for the full explanation.
ROI & Yield in Betting FAQs
Realisticly, you will need a considerable bankroll, plenty of football knowledge, and time to analyse players and matches, as well as statistics for value. Most successful punters have an ROI between 4% and 10%. So we should assume your bankroll should be at least £10,000
There are thousands of professional sports and horse bettors in the UK. A good handicapper could have an average yield of 5% to 10%. Read our guides help you find the best betting strategy to become a real pro.
Yes. One thing you should realize is that sports betting is an investment like any other. It is also a profession like any other. It requires time, patience, skill as well and funds to invest. The bigger your skill and the bigger your bankroll, the more money you can make.
In theory, there is no limit to how much money you can make as a professional gambler. A pro gambler can make anywhere between £1,500 to £10,000 per month. Some gambling sites limit the size of bets, especially for successful players, which is why we recommend spreading your large bets over various gambling sites.
Yield and ROI have a very similar formula. The difference is that ROI gives you your profit/loss ratio related to your initial investment, while yield gives you your average win on the turnover, for each of your individual bets.
ThePuntersPage Final Say
Whether you get an ROI of 10%, 5% or 20%, what really matters is absolute profit, in terms of real money. 20% is a high ROI, but 20% of £100 is still just £20. In order to make enough money to justify the time you spend on handicapping, you need a considerable bankroll. The bottom line for betting, just like any investment is real profits. If you are able to make a consistent profit on your wagers, whether no matter the percentage, you can consider increasing your bankroll.