What Is Return On Investment?
Return on Investment is a metric used to measure the profitability of your picks, it is calculated by taking the profit from your bets and dividing it by the amount risked.
Return on Investment (ROI) is known as a “metric”, a number that is intended to measure something. The “something” that ROI measures is the profitability on the picks you make, which basically tells you how effectively you are using your money to generate a profit. The higher the ROI, the better you’re doing!
To calculate your ROI, you first need to figure out if you’re up or if you’re down, and by how much. Say you placed 4 100 bets on markets with a price of 1.91.
If you won 3 of those bets and lost 1, you would have 573 (3x(1.91 x 100)) less the 400 total you risked, giving you 173 profit. We would calcuate ROI by taking the profit and dividing it by the total you wagered:
173/400 = 43%
Notice that the ROI (43%) is not the same as our picking rate (75% for 3/4 matchups picked correctly).
You can have a higher ROI with a lower picking rate if you frequently choose underdogs, because the ROI for an underdog bet is over 100%! Conversely, you can have a very high pick rate but a low ROI if you commonly pick strong favourites.
For sophisticated bet calculations see Pinnacle’s bet calculator.