Setting ROI Expectations for Sports Betting

What’s a Reasonable Return on Investment for Sports Betting?

Setting expectations for a Return on Investment when it comes to Sports Betting is important. The vast majority of bettors have expectations of grandeur or even set expectations for returns so high compared to conventional investments that it can negatively impact the decision-making of the bettor. Use this guide as an opportunity to re-assess your objectives.

Before entertaining the subject of Return of Investment, let’s understand some factors that separate sports betting from investing.

Bankrolls Play a Massive Role

The larger your bankroll, the greater the opportunities for managing that bankroll better. With a larger bankroll you can do the following:

Have multiple sportsbook accounts.
Take advantage of sportsbook promotions to maximum effect.
Withdraw funds more regularly.
Play multiple games in a given time slot.
Shop around for the best line for a particular game.
Feel better about the absolute returns that you receive when winning.
Absorb losses with one particular sportsbook while generating a profit with other sportsbook accounts that cover those losses.
Go on a losing streak and be able to mount a comeback without re-loading or being desperate.
Not feel desperate to make big wins.

It does not mean you need an overall bankroll that is $100,000+. It does mean that you need to have enough where the percent of profits you choose to withdraw does not seem meager.

If you deposit $500 and profit $1,200 in a month with a given sportsbook and choose to withdraw $200, it is pretty good compared to someone who only has $50 to deposit with one sportsbook and profited $120 in a month and withdraws $20.

Where you start matters and many do not start with enough to have realistic expectations. Smaller account holders with small bankrolls and undiversified holdings usually end up blowing up their accounts.

Why are you betting on sports?

Ask yourself that question. It is rather important. Are you betting on sports for just fun? If so, you are just throwing good money away. If you are interested in making positive returns, that is a good starting place. Understanding the sports betting market, the sportsbook landscape, and how it all works is a good, basic framework toward a profitable path.

The next step with your interest in positive returns is asking yourself, “What do I want to do with my profits? Where is this money going toward?”

If you have a bankroll of $500 and hoping to turn that money into a Maserati, you’re going to be very disappointed with the results. It is important to have tangible and reasonable expectations with positive returns and also understand that there will be losses as well, it’s entirely possible (and for many – likely) to lose more than you gain.

Let’s do it in a multi-step process to help you set expectations with profits:

What is my original bankroll? This amount has to be an amount you are comfortable losing.
Based on this original bankroll, what would be a week or month changing amount of money to withdraw from one of my sportsbook accounts?
Based on this original bankroll, what could I do with the profits earned to make my life better or easier in some way?
If I lose money in a month or a quarter or a year, would I be crushed over the losses or negatively impacted by the losses, even though I am wagering money that I am comfortable losing?
What is my expected rate of return? What am I expecting to earn? Does it match up with the idea of a week changing or month changing amount of money?

Putting Return on Investment in Perspective

Sports Betting is a HIGH RISK MARKET. Anyone who tells you otherwise is a fool or looking to separate you from your money.

The average ANNUAL Return on Investment for the S&P 500 from 1957 (when they started placing 500 companies in the Index) through 2018 was roughly 8%. This is for an entire calendar year. On average, if you put in $10,000 on January 1, you would receive a return of $800 on your investment.

You could press that -170 button for Liberty in a College Football game at 11:30 AM as a home favorite and if they win you would get a 58.82% return on investment a few hours later. That sounds ridiculous compared to other markets, but that’s sports betting. It’s a derivatives market and it is volatile.

This is a Swap Market. You are making an agreement with the sportsbook (the counterparty) to give them an amount of money upfront (a principal) and if a certain condition is met, they will give you a certain amount of money in return plus your principal.

Only you can determine your acceptable Rate of Return

Everyone has different needs. Given the extreme risk that is in this market, if you have a monthly return that would beat a growth stock in a given 52 week period, you should definitely take stock in the accomplishment and consider taking the profit and consider the month well-done. Is it a rule of thumb? No, but it provides perspective and it helps a bettor understand that turning $500 into tens of thousands of dollars in a short time frame is unreasonable.

Key takeaways from this.