ROI (return on investment, for its acronym in English) is a term belonging to the area of finance and is used to designate the return on an investment. With the entry of many investors in the gaming sector, this same term has been used in the world of sports betting. Due to the huge increase in the number of people participating in sports betting, it is increasingly common to see players calling themselves investors.
Being an investment rather than a game, sports betting can use financial techniques to help understand a player’s performance and his financial performance.
In this article we will look at how to use ROI, or return on investment, for betting, as well as learn how to calculate its value. Let’s go!
What is ROI in online sports betting?
ROI is used to measure the performance of a particular player. This performance, as we will see, can be expressed in many ways. The important thing is to understand that a player can easily follow the evolution of his performance.
By knowing the amounts spent on bets and the prizes received, it is possible to calculate the ROI of any player and even use these figures to compare the evolution of his career.
ROI in the business world
In the business world, return on investment (ROI) defines the return that a particular company has brought to an investor. These values are usually analyzed only after the closing of a certain operation, since, while it is running, the investment and profitability values change all the time.
ROI is also often used somewhat less precisely, but no less importantly, subjectively. For example, a certain investor says that the business he invested in gave him great results, even though sometimes financially it was not so advantageous.
How ROI is calculated
ROI is easy to calculate, but sometimes it’s confusing because the values are expressed differently. For any analysis to be possible, it is necessary that the values examined are all expressed in the same way. You cannot compare an ROI in percentage with one of direct monetary value. So let’s explain some ways to do the calculation.
- Calculation in monetary value (reals, dollars, pesos).
- ROI$ = Amount Received – Amount Invested.
In this case we have the example of ROI in an absolute monetary value. Let’s give an example: A player deposits in an account in Bodog the amount of 100 reais, after one month, the balance of this account rises to 143 reais.
In this case, we have a ROI of = R$143 – R$100. Therefore, the return on investment in this case was 43 reais.
Calculation of percentages
ROI% = [ (Amount Received – Amount Invested) / Amount Invested] * 100
Now let’s see an example in percentage: a player deposits 200 reais and a month later his account balance is 230 reais.
We have an ROI% of = [ (230 – 200)/ 200 ] * 100% = (30/200) *100 = (15/100) * 100% = 15%
Therefore, in this example the player’s ROI is 15%.
Calculation in multiples
ROI = 1 + [ (Amount Received – Amount Invested) / Amount Invested]
Let’s examine the ROI calculation in multiples: a player deposits 500 reais, after a month he has 750 reais in his account.
We have an ROI of = 1 + [ (R$750 – R$500) / R$500 ] = 1 + (R$250 / R$500) = 1 + (25/50) = 1 +½ = 3/2 = 1.5
Therefore, in this example the bettor has an ROI of 1.5. Remark: In this example, negative ROI will not occur with negative values, but with values less than 1.