In business, the return on investment (ROI) analyzes the investment’s effectiveness in creating profit. In sports betting, the return on investment (ROI) measures the effectiveness of a wager in generating profit.

This profit can be seen in the form of increased revenue or decreased losses, which is often the measure used by analysts and gamblers when assessing the success of an investment. The ROI is a critical metric, especially for sportsbooks, as it allows them to determine the profitability of a wager. In fact, many books will not take your wager unless they feel you have a proven track record of profitability. The ROI serves as a critical basis for determining whether you will be approved for a sportsbook account or whether you have sufficient funds to remain a member if you become profitable.

## The Basics Of ROI

As mentioned, the return on investment (ROI) quantifies the profitability of an investment. The formula is expressed in terms of the following four basic components:

- The amount you initially invested;
- The amount you eventually earned (or lost);
- The amount of time it took to accumulate your earnings;
- The annual rate of return (i.e., the profit, expressed as a percentage);

When applied to sports betting, the acronym ROI can be used to measure the effectiveness of a wager (i.e., the win/loss outcome) given the following points:

- The amount invested;
- The amount won (i.e., the profit, if any);
- The amount lost (i.e., the loss, if any);
- The time (i.e., the elapsed time) it took to make the wager;
- The annual rate of return (i.e., the profit, expressed as a percentage);

The purpose of this article is to describe how to compute and interpret the basic components of the ROI formula in relation to sports betting.

## The Amount You Invested

Whether you are a novice or experienced sports bettor, you must always approach casino-type wagering with caution. Indeed, you should never assume that just because a game is listed as an “odds-shy” proposition that you will automatically profit or escape risk. The amount you invested is key to understanding the ROI of your wager.

To begin with, some basics. When you make a wager, you are essentially placing a “bet” on the outcome of the game. This outcome will then have a “line” attached to it that is representative of the book’s estimate of the final result (i.e., the outcome) of the game. If you bet on a winner, your stake is considered “credited” (i.e., you earn a profit) while the stake on a loser is “debited” (i.e., you incur a loss).

Let’s examine these terms in relation to a simple example:

If you wager $100 on the New York Giants to win the Superbowl and they win, your profit is $100 (i.e., you win $100). If the Giants lose, you lose your $100 stake.

In this example, your stake has been credited with the successful outcome of the game. You can also examine this in terms of the following:

- The amount you initially put down (i.e., $100);
- The amount eventually recovered (i.e., your winnings);
- The actual money you spent to place the bet (i.e., $100);
- The amount you could have earned had the game not finished (i.e., the spread, if any) + your stake value;
- The amount of time it took to place the bet (i.e., 5 days, which is equivalent to approximately 71 hours of constant play).

In relation to the amount you invested, it is important to keep in mind that your profit or loss is expressed in relation to the stake you originally placed. This is why, in the example above, you initially risked $100 to win $100. When viewing your return on investment (ROI), you must look at the performance of the wager in light of what you originally risked (i.e., the initial stake).

## Your Amount Won (Or Lost)

Your amount won (or lost) relates to the profit or loss you incur as a result of a particular wager. When you win, your stake is considered “credited” (i.e., you earn a profit). When you lose, your stake is considered “debited” (i.e., you incur a loss).

Some examples:

- If you bet $100 on the New York Jets to win the Superbowl and they win, you win $100 and your stake is credited;
- If the Jets lose, you lose your $100 stake;
- If you bet $100 on the Kansas City Chiefs to win the Superbowl and they lose, you win $100 and your stake is debited;
- If the Chiefs win, you win your $100 stake;
- If you bet $100 on the Arizona Cardinals to win the Superbowl and they lose, you lose your $100 stake;
- If the Cardinals win, you lose your $100 stake.

What if you had placed a $100 bet on the San Francisco 49ers to win the Superbowl and they don’t win? In this case, you would not have earned any profit, but your $100 would not be considered lost either (i.e., it would be neutral).

Your amount won (or lost) can be a good indication of whether or not you achieved your intended result from a particular wager. If you bet $100 on the New York Jets to win the Superbowl and they win, you win $100 and your stake is credited. If they don’t win, you don’t earn any profit, but your $100 stake is not considered lost (i.e., it is neutral). In this case, your wager was not successful in generating the desired outcome in relation to your $100 investment.

When you are presented with the results of your sports wagers, the amount you won (or lost) will appear in the following way:

- For wins: Your stake is considered “credited” (i.e., you earn a profit) + the amount wagered;
- For losses: Your stake is considered “debited” (i.e., you incur a loss) – the amount wagered;
- For ties: Your stake is considered “credited” (i.e., you earn a profit) + the amount wagered;
- For no wins: Your stake is considered “debited” (i.e., you incur a loss) + the amount wagered.

As you can see above, you must earn at least as much as you risked to win or lose. For example, if you bet $100 on the Kansas City Chiefs to win the Superbowl and they win, you win $100 and your $100 stake is credited. If they lose, you do not earn any profit, but your $100 stake is not considered lost (i.e., it is neutral). In this scenario, your money was not at risk, as you would not have lost anything had they not won the game. In general, you must always consider the possibility of someone winning (or losing) more (or less) than you. The key is to remain aware of this possibility and understand what your win/loss record means in relation to your investment.

## The Amount Of Time (Elapsed) It Took To Accumulate Your Earnings

The amount of time it took to accumulate your earnings is represented by the following variables: