!NAME_COMMA!
 Week
14 Recap
The roll continues. We went 3-1 in week 14 for +185 units. Winners included Detroit,
Carolina and Kansas City on Monday night and we lost with the Jets. Overall we're
17-5-1 on NFL picks since Thanksgiving. You
can view all of my previous picks and prior newsletters/write-ups here.
This
weekend I like six games - one on Saturday, four on Sunday
and the Monday night contest. But first, a few thoughts on
calculating your return on investment...
Calculating
Return On Invstment (ROI) in Sports Betting
Ever
wonder how to calculate your return on investment? What can you
realistically expect at various winning percentages? Read on...
The “investment” we
are speaking of is the money laid to win a bet (for example
$110 to win $100) and, if applicable, the cost of a sports
picking service. The “return” is the net winnings
or losses based on that investment. We
can look at historical average returns for common stocks
as a reasonable benchmark. Over the past 75 years stocks
have returned around 10%.
Now
what about sports betting? ROI is calculated simply by
taking the net winnings or losses and dividing by the amount
risked (invested). So, if you put up $110 to win $100 and
win the bet, your ROI on that single bet is 90.9% ($100 /
$110). So, if you have 100% win rate, your ROI is 90.9% -
not too shabby!
But,
as we know, a more realistic expected win rate over the course
of a season is probably in the 50%-60% range. With a 10%
vigorish, you need to hit 52.38% to break exactly even – an
ROI of 0%. Here’s the ROI at various win rates assuming
a 110 risk to win 100:
50%:
-4.55%
52%: -0.73%
54%: 3.09%
56%: 6.91%
58%: 10.73%
60%: 14.55%
62%: 18.36%
64%: 22.18%
66%: 26.00%
68%: 29.82%
70%: 33.64%
So
if we come back to stocks as a benchmark, you need to hit
around 58% to match the benchmark return for stocks (57.6%
nets
you
exactly a 10% return).
You
probably detected a pattern there as well. Basically, for
every 1% increase in win percentage, you can expect a 1.9%
increase in ROI.
Most
analyses of ROI don’t ever calculate
in the cost of a service. The above analysis assumes you
invest $110 to win $100. What if you pay for a sports handicapping
service as a way to increase your winning percentage? You
need to
add
the cost of the service into the “investment” portion
of the ROI calculation. Here’s an example:
Let’s
assume you play $100 games and invest $500 for a season subscription
to a sports service. Let’s also assume you play about
five games/week (120 games over the course of a season).
Your investment per game has now increased $4.17 per game
($500/120 games). So you are now investing $114.17 to win
$100 on each game. To break even now, you need a 54.37% winning
percentage (versus 52.38% without a service) and a 59.8%
rate to earn a 10% return (versus 57.6%).
These
calculations vary depending on the amount bet, number of
games, and amount of the service. But as you can see, at
these levels, if you believe a sports service can increase
your winning percentage 2-3%, it makes financial sense to
invest in the service. For example, if you paid $500 for
a sports service that helped you go from 56% to 59%, the
$500 investment in the service would result in additional
winnings of $756. If the service helped you go from 56% to
62%, the $500 investment would result in $1512 additional
winnings. And, if a sports service could help you turn a
losing season (50%) into a winning one (60%), the sports
service investment would net you $1920 in winnings versus
a $600 loss on your own ($2520 difference). The less the
sports service costs relative to the amount you bet, the
better these numbers become and vice versa.
I
hope this helps shed some light on what you can expect to
net at various winning percentages with and without a sports
service.
Good
luck this weekend!COMMA_NAME!!
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