In the sports betting world the Yield or ROI(return on investment) is often confused with the Return of your betting portfolio or ROC (return on capital). In fact, they are 2 different things:
Let’s imagine we have won 2,400 € in one year, as we have been able to grow our bankroll from 3,000€ to 5,400€. The return of our investment has been (2,400/3,000) = 80%. When talking about betting, the Yield is the ratio of total profits to total money bet; that is, how much we win (or lose) for each euro waged. If we have made 500 bets in one year, with an average bet of 50€, we have bet a total of 25,000 €. Our Yield is 2,400€ / 25,000€ = 0.096 = 9.6%.
We can easily link Yield and Return with the following formulas:
Profit = Initial Bankroll x Average Stake (%) x Yield x No. of picks
Portfolio Return = Profit / Initial Bankroll
Let’s see it with an example:
The initial bankroll of a bettor is 2,000€. He wants to know how much he could win in one year, taking into account that he thinks he can generate a 7% yield in 600 bets. He has decided to bet on average 2% of his bankroll. He carries out a Fixed Bankroll strategy, that is, he always bet a 2% of his initial bankroll or 40€ (2% of 2,000€). With these figures this is his profit estimates for the year:
Profit = 2,000 x 2% x 7% x 600 = 1,680€
and his portfolio return:
Return = 1,680€ / 2,000€ = 84.0%
The higher his yield, his average stake and the number of picks made the higher his portfolio return. That is, if you are able to generate a positive yield, the higher your stake the more money you will win. The negative point is that the bankruptcy risk also grows. He has to think about his trade-off between profit and risk. On the other hand, if he makes more bets he will also win more. However, if he “forces up” his number of picks the yield is very likely to be negativelly affected. This is called “overbetting”.