Profitability and Hit Rate
There are a few important factors that divide winners and losers in betting, such as the return of investment & yield, but also profitability and hit rate.
These two factors have also to be taken strongly when considering someone's betting records and when deciding if some of the tipsters are good enough to be followed.
What is the profitability?
It can be described as the ability of a business (in our case betting) to earn a profit. Without profitability, in sports betting, you will not last in the long term. It's measured when you divide your profit to all your losses.
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.
Let's say he won 18 bets and lost 12 on the period of 30 days. It would mean he has a profit of 250 € and a total sum of lost money of his bets is 1200 €.
His profitability would be:
250 / 1200 = 0.2083 or 20.83%
In other words, profitability is an index of measuring the financial success in relation to the costs of the business. It is more of an economic factor, however, gives every bettor a fine idea of what he is risking overall in order to profit some.
Stakes are just depositing payments done in order to bet and are returned to the punter in case he wins a bet (when we consider yield in betting). Investment or a starting bank in betting can be anything and can vary (when we consider ROI).
However, profitability is the same for all and could be a much stronger indicator than ROI or yield calculated.
What is the hit rate?
Hit rate is not an indicator of any profits or losses in betting. Simply put, it's the number of winning bets in relation to all placed bets.
In John's case, since he had 30 bets, 18 won and 12 lost - his hit rate would be:
18/30 = 0.60 or 60.00%
It's just a calculation in percentages to understand how often will your bet be won. As said, it has no connection with the profit or losses, but also no connection with the quality of bets taken.
It's something to consider when choosing the tipster, but everyone must know that the betting success depends on both the hit rate and odds taken.
For example, a hit rate of 80% will not lead you to profit in case you are taking odds of 1.20 and less on average. On contrary, hit rate of 40% can bring you huge profit in case you are picking bet with odds 2.50 and higher on average.
So, it's completely logical to expect a better hit rate between the tipsters which choose to pick lower odds - even though it might not mean that they are profiting from it.
On the other side, those who are below 50% hit rate, are surely aiming for odds of 2.00 and above and need a lower hit rate to be successful. Bigger the odds are - you need less of a hit rate and vise-versa.
Hit rate is interpreted as a sign of successful bettor due to misunderstanding. It surely isn't! It needs further coloration with average odds taken.
However, it can play an important morale factor, since nobody wants poor periods or to lose money more frequently than his morale "tells" him he can afford to.