If you are like most of us, you don’t have an unlimited bankroll. So for every bet you make, you might be asking yourself if it is a worthwhile use of your gambling capital. Or maybe you are trying to decide between two different bets and looking for some way to determine which one offers more bang for your buck. In those cases, an ROI calculator might be just the thing to help with those difficult decisions.
What Is ROI
ROI is short for return on investment. While it may seem strange to think of our bets as investments, that is precisely what they are. We are expending money with the expectation of making a profit but like all investments, that profit is not guaranteed.
ROI is a way to quantify what the expected profit or loss is for a bet. We do not know what the outcome of any one particular bet will be but ROI can tell us if this would be a profitable bet on average if we were to make it many times. If you are consistently making bets that have a positive ROI then you can expect to be a profitable bettor over the long term.
What Is An ROI Calculator
An ROI calculator is a way to determine the expected profit or loss of a given bet. To use the calculator you need to input a bet amount, the odds as well as your estimated probability of winning. The ROI calculator will calculate the implied probability, the expected return as a dollar amount, and the ROI as a percentage of the bet amount.
It is important to understand that the outputs of the ROI calculator represent the expected value and not the outcome of any one particular bet. For example, the ROI calculator would tell us that a $100 bet at -110 odds on an outcome that we think has a 60% chance of winning has an expected return of $114.55 for an ROI of 14.55%.
However, it is impossible for the actual outcome of our one bet to actually be $114.55. Our bet will return $191.90 in cash 60% of the time it wins and $0 the other 40% of the time. It helps to think in terms of the long run and imagine that we made this bet 1000 times. Our investment of $100,000 would return around $114,545.
How To Use An ROI Calculator
The bet amount can be chosen freely and the odds will be set by the site offering the bet. The most difficult input to determine is the probability of winning. You can base this on your own gut feeling, a computer model, or your past performance of picking winners.
Once you enter the Betting Amount ($), Your Probability of Winning (%), and the Odds (any format), you just click the calculate button, and the calculator will do the rest.
The outputs will show you the implied probability which is the probability that the bet would need to win to break exactly even at the stated odds. The next output is the winnings that you can expect to receive on average for your bet. Note that this includes your stake. So, winnings that are greater than the bet amount represent an expected profit, and winnings less than the bet amount would be an expected loss.
The final output in the Return, which is your ROI. This is the expected profit or loss (not including the stake) expressed as a percentage of your bet amount. The final step is to enter the American odds:
Steps For Calculating With Examples
Calculating ROI is actually one of the easier ones, especially if you are familiar with implied probability. Let’s work through a quick example. You are going to place a $100 spread bet at -110 odds. Though the odds for both sides of the bet indicate it is 50/50, you know that your long-term winning percentage on spread bets is 55%. What the ROI calculator is going to indicate to us is the ideal outcome, over the long term, of a bet like this. Here are the steps for calculating:
1) Calculate The Implied Probability
This one is pretty easy. To cheat, please use the Implied Probability Calculator
Implied Probability = (-1*(Odds)) / (-1(Odds) + 100)
Which looks like this:
Implied Probability = (-1*(-110)) / (-1(-110) + 100)
52.4% or 0.524 = 110 / 210
2) Calculate The Expected Average Winnings
This one is easier than it sounds. First we need the decimal odds:
Decimal Odds = 100 /(-1 * Odds) + 1 (for negative odds)
1.9091 = 100 / (-1*-110) + 1
Then we plug them into this equation
Winnings = Decimal Odds * Probability of Winning / 100 * Bet
$114.60 = 1.9091 * 60% / 100 * $100
3) Calculate The ROI Using The Winnings
All the hard work is done. Now we simply get the ROI
ROI = Winnings / Bet – 1
ROI = $114.60 / 100 – 1
ROI = 0.146 or 14.6%
The advice that ROI is giving you, is if you should place a wager based on your estimated winning percentage. If your winning percentage is too low, then some favorite bets may not be worth the risk. The trick is always accurately predicting your estimated winning percentage.
ROI Calculator FAQs
You should use an ROI calculator when you are trying to decide whether a particular bet will be profitable on average.
No. An ROI calculator will not determine the probability that a bet will win. You need to supply that probability and the ROI calculator will tell you the expected return of the bet based on the combination of that probability and the stated odds.
That is up to your and your personal risk preferences. Generally speaking, any positive ROI represents a bet that is profitable in the long term, and the higher the ROI the better. Sometimes a bet that has a 10% ROI is great but not if it costs you the opportunity to make a bet that is 20% ROI.