ROI and ROC in sports betting, what exactly are they ?

In the field of sports betting, it is common for players to confuse the concepts of Return on Investment (ROI) and Return on Capital (ROC) when evaluating their betting performance. It is therefore important to note that these two measures are quite distinct from each other.

Let's dive into a complete explanation…

THE DIFFERENCE BETWEEN ROI AND ROC IN SPORTS BETTING

To illustrate this, let's consider a scenario where we managed to increase our bankroll from €2,000 to €3,000, resulting in a profit of €1,000 over a year. In this case, our Return on Capital (ROC) can be calculated by dividing the profit (€1,000) by the initial bankroll (€2,000), giving a percentage of 50%. Return on Capital represents the growth of your bankroll over a given period.

Conversely, when it comes to betting, the concept of Return on Investment refers to the ratio between total profits and the total amount of money wagered. It explains how much we earn or lose for every euro we place in bets. Suppose we placed 300 bets over a year, with an average bet of €50. Therefore, the total amount wagered would be €15,000 (300x50). Dividing the gain (€1,000) by the total amount wagered (€15,000) results in a return (or ROI) of 6.67%.

HOW TO LINK ROI AND ROC ?

We can establish a correlation between Return on Capital and Return on Investment using the following formulas:

Return on Investment = Profit / Total Amount Wagered

Assumed Profit = Initial Bankroll x Average Bet (%) x % ROI x Number of Choices

Return on Capital = Profit / Initial Bankroll

To further illustrate this relationship, let's examine an example:

Consider a bettor who starts with an initial bankroll of €2,000. This individual wants to determine their potential gains over a year, with an expected return of 6% on 500 bets. They decide to adopt a fixed bankroll strategy, consistently betting 1% of their initial bankroll, or €20 (1% of €2,000) on each bet. Based on these figures, we can estimate their profits for the following year as follows:

Profit = €2,000 x 1% x 6% x 500 = €600

Now, let's calculate the Return on Capital of the portfolio:

ROC = €600 / €2,000 = 30.0%

It should be noted that a higher ROI, average bet, and number of predictions will consequently increase the portfolio's Return on Capital.

MAXIMIZING YOUR CHANCES OF WINNING IN SPORTS BETTING

Simply put, generating a positive return allows you to maximize your gains by increasing your bet. However, it is important to specify that this also increases the risk of potential loss.

Achieving a balance between profitability and risk is a crucial aspect in the world of sports betting. Increasing the number of bets will normally result in higher gains. Nevertheless, if one excessively increases the number of predictions, it is very likely that the return will be negatively impacted. This is commonly referred to as "overbetting."

THE SECRETS TO BEING PROFITABLE WITH YOUR PREDICTIONS

All the above explanation revolves around several elements to consider when you decide to "professionalize" your way of betting.

The first thing to remember in this regard is to never get carried away. Have you done some tests, started to have a significant number of bets, and your ROI is quite noticeably positive?

Then congratulations, that's excellent news. Nonetheless, remember that betting is a marathon; you need to think long-term. If your test was based on fewer than 1,000 or 2,000 bets, then the sample is still too small to be exploitable. Ensure your profitability over time before you start increasing your volume and base bet.

The second thing to include in your reflection and way of betting is, of course, keeping your cool. Even with a significant sample, it is almost mandatory to experience dry spells in sports betting, known as “variance”

You must remain calm and not play too much on the pretext that you are in a good period and your recent ROI is significantly positive. Keep in mind regularity, which will make you a better bettor.

To summarize the content of this article, note that many factors come into play during your life as a sports bettor.

To be the best, it will not be enough to simply select the right bets. You will also need to remember that statistics are inseparable from a good overall performance of your bankroll. Stay simple, do not change your ways if they work, and try to be as clear-headed as possible throughout your journey as a sports bettor.

Feel free to tell us in the comments what you think are the essential qualities of a good bettor... We look forward to reading you!