Your Return of Investment

 This article addresses the Return of Investment (ROI) a player can expect at various winning percentages. Ever wonder how to calculate your return of Investment? What can you realistically expect at various winning percentages? Read on….

 

The “ Investment” we are speaking f is the money laid to win a bet (for example $ 110 to win $100) and, if applicable, the cost of a sports service. The “return” is the net winnings or losses based on that investment. We can look at historical average returns for common stocks as a reasonable benchmark. Over the past 75 years stocks have returned around 10% per year.

 

Now what about sports betting? ROI is calculated simply by taking the net winnings or losses and dividing by the amount asked(invested). So, if you put $110 to win $100 and win the bet, your ROI on that single bet is 90.9% ($100/$110). So, if you have 100% win rate, your ROI is 90.9% - not too shabby!

 

But, as we know a more realistic expected win rate over the course at a season is probable in the 50% - 60% range, with a 10% vigorish, you need to hit 52.38% in break exactly even – an ROI of 0%. Here’s the ROI at various win rates assuming a 110 risk to win 100:

 

 

Now, let’s quickly talk about timeframe here. When we refer to the stock market returning 10%, that means 10% per year – or 5% for six months. Since most sporting event seasons are about six months, our benchmark, to do as well as stockmarket, is really just a 5% return. So if we use stocks as a benchmark, you need to hit around 55% to match the benchmark return for stocks. A 57.6% winning percentage nets you exactly a 10% return – or double what you could expect from the stock market. Not bad!

 

You probable detected a pattern there as well. Basically, for every 1% increase in win percentage, you can expect a 1.9% increase in ROI.

 

Now, as we have most analyses of ROI don’t ever calculate in the cost of service. The above analysis assumes you invest $110 to win %100. What if you pay for a service as a a way to increase your winning percentage? You need to add the cost of the service to “invest” portion of the ROI calculation. Here’s and example:

 

Let’s assume you play $100 games and invest $750 for a season subscription to a sports service. Let’s also assume you play about five games/week (120 games over the course of a season). Your Investment per game has now increase $6.25 per game($500/120 games). So you are now investing $116.25 to win $100 on each game. To break even now, you need a 53.76% winning percentage (versus 52.38% without a service) and a 59.1% rate to earn a 10% return (versus 57.6%)

 

These calculations vary depending on the amount bet, number of games, and amount of the service. But as you can see, at these levels, if you believe a sports service can increase your winning percentage 2-3% makes financial sense to invest in the service. For example, if you paid $750 for a sports service that helped you go from 56% to 59%, the $750 investment in the service would result in additional winnings at $450. If the service helped you go from 56% to 62%, the $500 investment would result in $1,225 additional winnings, And, if a sports service could help you turn a losing season (50%) into a winning one ( 60%), the sports service investment would net you $1620 in winnings versus a $600 loss on your own ($2,220 difference). The less the sports service costs relative to the amount you bet, the better these numbers become and vice versa.