When it comes to betting, we’re forever delivered jargon and various terms, and when you’re new to it all it can be a little daunting.
Fortunately, most betting terms are relatively simple to understand, particularly when it comes to terms that involve placing your bets and the returns you make.
Stake, yield, return on investment (ROI) and profitability are all terms commonly associated with betting and below we’ve highlighted the meaning and the formulas behind them…
Stake is perhaps the easiest term to understand and is ultimately the amount of money you’re placing on an outcome.
So, if you were betting on a football fixture for example and the To Win market, the stake would be the figure you place on the team to win the game.
If your chosen team does win the game, then you will receive your winnings alongside seeing your stake returned. If you lose, you lose your bet and your stake money.
Yield is a formula that represents the profit to loss ratio in relation to the total amount staked with a bookmaker.
This allows you to essentially monitor your betting efficiency and it’s generally considered that a good yield is around 10% profit over a long time period.
To calculate yield, you use the following formula:
Profit or Loss / Total Money Staked = Yield
For example, let’s say you’d made 200 bets of £5 across a year and wanted to calculate your yield. During this period you’d received a profit of £245. To calculate the yield of this, you’d use the following calculation:
245/1000 = 0.245
This would therefore give you a yield of 25%.
Return on Investment (ROI)
Return of investment is similar to yield, but is a percentage of the investment you’ve put in rather than the total number and amount of bets placed. For example, if you win a bet, you will likely rewager that money. For example, you might stake £5 on a bet and win £15, giving you a return of £20.
You might then place that £20 on another bet and win £25, with a £45 return. During this period, while you’ve staked £25, you have only in fact invested £5.
To calculate return on investment, you use the following formula:
Profit or Loss / Investment = ROI
Therefore using the example above, you would use the calculation below:
40/5 = 8
This means you’d have a return on investment of 800% in this instance.
Profitability is what most people use to measure success when it comes to betting and is essentially the relation of money lost or profited in comparison to the number of bets lost.
Essentially what you’re calculating is the profit or loss in total against the total money lost across your betting. The formula to do so is:
Profit or Loss / All Money Lost = Profitability
Therefore, if you were to place 40 different bets and made a profit of £24. However, within those 40 bets you lost five bets all staked at £5.
The sum to calculate profitability would be.
24/25 = 0.96
This would give you profitability of 96%.