Betting Friend

Business Angles and Sportsbetting
By Michael Kindt

Sports betting, like any investment, carries risks and rewards. The parallels between betting on sports and playing the stock market are many. In fact, I would argue that they are exactly the same for all intents and purposes.

Placing a bet on a team and hoping for a win is no different than buying a particular stock and hoping for a rise in price. There are few differences between sportsbooks and brokerage firms. Both are middlemen who charge you a fee for their services. Both the sports bettor and the stock player are after a return on their investment (profit).

If a person buys a stock and it falls instead of rises in price, he loses money, or has a negative return on investment. If a sports bettor bets a team to win and that team loses, he also has a negative return on investment.

Calculating a return on investment is simple. Divide any profit by the amount risked to get it. If you bet $100 on the Colts to cover -3 at -110 versus the Patriots and they do, you have a ROI of 91% for that particular bet:

$91/$100 = 91%

But where ROI really can help you is over the course of many bets. Let’s say you made 50 bets at -110, risking $100 each time, over the course of the NFL season. You won 30 bets and lost 20. Your total investment for the season would be $5000:

$100*50 = $5000

Your total profit would be $730:

($91*30) - $2000 = $730

Where $2000 are your 20 losses. This would give you a return on investment of 14.6%:

$730/$5000 = 14.6%

Applying ROI to different aspects of your sports betting can reveal many things. It can reveal how good of a handicapper you are and where your strengths and weaknesses lie. It’s most useful, I think, as it relates to money management and how favorites and underdogs affect your bottom line.

Risking $100 each time, if you make 10 bets on -150 favorites and win seven of them and lose the other three, you have a profit of $166.69 and a ROI of 16.67%. Not too shabby. But if you shopped around and were able to get those same bets at -145, your ROI would increase to 18.30%.

As a tool for the sport bettor, ROI can’t be underestimated. Try applying to individual sports or various timeframes. It can reveal a lot and help you make better decisions regarding bets and bankroll management in the future.

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