Importance of ROI in Sports Betting
Return on investment or ROI is an extremely important mathematics term which is critical for any business or investment opportunity. You cannot overlook the calculation of return on investment whenever you’re thinking of finalising any major financial deal. Let’s take a non-sports betting example- whenever you buy a house, you must buy it at a price and hold onto it for a time period that’ll generate a handsome return on your investment when you sell it at a later date. Although a house may provide you and your loved ones a place to stay in, it’s also a kind of financial investment which can make you lose/earn money over a period of time, depending on how you handle your asset.
Taking good care of your home, making regular improvements to it, paying heed to aspects like landscaping etc., can increase its value over a period of time. It is also important to do all these because you’d obviously like to sell your house at a profit (when you sell it). So, the difference between the higher sale price of your house and the price you had originally paid for it, is your actual return on investment (after taking all related overheads into account). So, if you had paid £ 200,000 for a home, and successfully managed to dispose it off at £ 300,000 (after all expenses), your effective ROI would be £ 100,000.
Coming back to the sports betting world, it is also important for punters to consider their ROI whenever they bet on sports events. Although you can continue handicapping games until you bet even your undergarment, you’ll never be a long-term success in sports betting if you don’t understand and pay heed to the returns from your investments.
About stock markets, sports betting and return on investment
If you carefully study sports betting, you’ll understand that handicapping sports events holds great similarity to stock market investments. A sports bettor’s actually like a stock investor who puts his capital at risk by investing into a certain amount of company stock. On the other hand, you may consider a stock investor a gambler who puts his bankroll at risk by betting on a team, instead of a financial product. In both cases, the sports bettor and the stock investor, good performance of the team/stock is essential for profit booking.
Why is it then that a large number of stock investors book handsome profits over the long term, while majority of sports bettors find themselves in the red over that period of time? This is because sports handicappers don’t often view and approach their investments/bets with the same focus that stock traders do.
While a stock investor purchases a certain amount of stock of a company at a certain price, hoping to make some financial gains at a later date, majority of sports punters place bets based solely on aspects like gut feeling and emotion, instead of discipline, research and a long-term view of their investments. Failing to manage bankroll and betting on multiple games simultaneously are two of the biggest reasons why many sports bettors fail.
Understanding the concept of ROI requires the willingness to look at some simple calculations and numbers, apart from some time. Even if you’re a casual sports punter, you can gain a better understanding of your bets by understanding things needed for profiting from your sports bets, instead of blindly trying to win every bet you place.
How to calculate the return on investment from sports bets
All it requires is attending perhaps a single college lecture in mathematics and you’ll be a pro at ROI! Let’s explain it better with an example for people who’re not too comfortable with mathematics.
Let’s assume that Bob is a sports punter who regularly bets £ 100 on every session. Provided that he gets lucky every now and then, 50 of Bob’s bets are losers, while the remaining 50 are winners. If we calculate the bookmaker margins for all these bets, which normally is 11/10, Bob, the sports punter would actually be £ 500 down after the results of all those 100 bets come out. This is regardless of the fact that he was successful in 50% of his bets. His ROI in this scenario would be on the negative side - around -4.5%. It means that he’d lose £ 500 on an investment of £ 11,000, including the bookmaker margins/juice.
If you take the bookmaker’s margin into account, any sports punter can only register a profit if his winning percentage is a minimum 53% of all his bets. Hence, this is the minimum he can work with if he wishes to have a profitable ROI in his sports betting endeavour. Speaking more accurately, his ROI would be +1.2% by maintaining that winning percentage of 53%. Although that’s not a huge figure, it is any day better than paying £ 500 from your own pocket!
If Bob needs better returns from his sports betting investments, he’d be better off having 55% winners on his straight bets. Having that sort of winning percentage would result in an ROI of around +5%. In the unlikely event that Bob’s success rate is 60%, he would earn a handsome ROI of around +14.5% on all his bets.
Whenever you’re calculating ROI from your sports bets, you must take into account your returns throughout the season, including a strict and specific bankroll, a normal bet size (which is no higher than 1% of the bankroll) and an overall disciplined betting behaviour. Combining all such tactics, with the ability of shopping for the best odds, would give you a formula that’ll consistently help you profit from various sports bets.