The meaning of ROI and Yield in betting
Every player should know whether he has a profit or deficit on his sportsbook's accounts.
Most of the players calculate their earnings or losses by checking their account's balances. This is an amateur approach as they often select their next betting sums according to the current balance.
Table of Contents
A lot of people think that profit is the most important indicator in sport's betting. However, in the long term, the factors of the ROI and the Yield are the true leads if someone has betting success.
ROI and Yield are often mistakenly confused in terms. Even on some online betting websites, so let's explain it further:
What is ROI?
ROI stands for the Return on Investment. A very important indicator not only in betting but in the everyday economy since it reflects the profitability of any kind of investment over a certain period of time.
Just like when you buy a shop, make your effort to improve it and at the end of the financial season, you want to see if the value of your investment has increased.
Exactly the same goes for betting. ROI is an indicator showing the rate of increase or decrease of your capital invested in betting.
It's the ratio of money which is lost or won on an investment. In other words, ROI is the profit/loss ratio as a function for investment (capital employed).
In betting, the ROI formula seems similar to the Yield formula, however here profit/loss is related to the actual investment (starting bankroll).
How do you calculate ROI?
To calculate your ROI right for a single-period review, you need to divide the return (net profit) by the resources that were committed (starting bankroll).
Let's say John has a starting bankroll of 1000 € and after 30 days of betting he has 1250 € on his sportsbook's balance, after taking a bet of 100 € in each day.
His ROI would be, since he made 250 € profit, with the starting money of 1000 €:
250 / 1000 x 100 = 25.00 %.
With ROI you want to see how much you gained in some period. In John's case, it's 25.00% in a month.
It's an investment index that gives you the idea whether you're doing well compared to the starting bankroll you invested into betting.
What is the Yield?
Yield measures betting efficiency compared to total turnover. Calculating Yield will give you a clear detail of your betting efficiency.
It's a profit/sum of all stakes. Comparing to ROI, yield formula is a function of profit/loss related to the total stakes employed.
As for betting a yield is usually one of the better points to decide whether a tipster is good or not.
To get a really good tipster, he should be having a yield of 5-6% at least, for a total of 100+ bets in order to be considered positive and constant tipster.
How do you calculate Yield?
To calculate yield right, you first need to calculate your net earnings or losses. It's done simply by removing the original investment of yours. Also, you need to calculate the total sum of your stakes.
In John's case he had a sum of all stakes (total turnover) of 30 x 100 € = 3000 € since he earned 250 € his yield will be:
250 / 3000 x 100 = 8.33 %
Both of the indicators are very important in betting as these represent the long-term profitability of someone you might wanna start following in betting.
However, in order to be able to apply them in your betting life, you should keep a book with the bets placed and manage your bankroll correctly.
It's very important to understand that in betting, the more bets you have it's logical that your yield will go down.
That doesn't mean you are doing worse - on the contrary: it's much more profitable to have a 10% Yield with 500 bets, than 15% Yield with 50 bets.