Sports Betting ROI: Bankroll, Betting Volume & Expected Returns

A bettor's financial return depends on several things working together: the size of the bankroll, the amount wagered per bet, the number of wagers made, the prices paid and, ultimately, the bettor's ability to win.

Sports betting is the same as any other business: How many widgets did you sell, and how much did you gross per widget?

 For a sports bettor, the “widgets” are wagers. The number of wagers determines how many times capital gets put to work. The bettor's edge determines what that activity produces over the long run. That's why professional sports betting ROI is not simply a question of: What percentage of my starting bankroll did I win? The more useful question is: How much capital did I put to work during the year, and what return did that betting activity produce?

That is where the economics of professional sports betting start to get interesting.

A bettor can have a legitimate advantage and still not have enough capital to generate a meaningful income. Suppose, for illustration, a bettor has a $50,000 bankroll and wagers $1,000 per game. If that bettor produces a 50% annual return on bankroll, that's $25,000. A 100% return would be $50,000.

Those would be exceptional percentage returns for most businesses. But neither necessarily provides enough income to support a household. A $1,000 wager required substantial working capital, yet even successful betting at that level was better suited for many people as a second income rather than their sole income.

Work Backward from the Business

This is where aspiring professional bettors can get the equation backward. They begin with: “I need to make $100,000 a year. How much should I bet?”

That's the wrong direction. Wanting to make more money does not create a larger bankroll. Start with the capital genuinely available to the betting operation. Determine an appropriate wager size. Estimate realistic betting volume. Then determine what various levels of performance would mean in actual dollars. If the resulting income isn't enough to live on, increasing the wager simply because you need more income doesn't solve the problem. It increases the risk.

Professional Betting Requires Capital

Being able to pick winners is not enough. A bettor also needs enough working capital to convert that advantage into meaningful dollars. That's why bankroll size matters so much when the objective changes from “Can I win?” to “Can I make a living doing this?”

That brings us back to where we started: In sports betting, your inventory is your cash.

The goal is to have a sports betting operation with a bet size and bankroll high enough that profits can be regularly withdrawn without compromising the bankroll. And that's when it starts making sense to do something that sounds remarkably ordinary for an occupation associated with gambling: Put yourself on a salary.

Once the betting operation is large enough to support regular withdrawals, put yourself on a salary. That does two things. First, it creates a clear separation between business capital and personal income. Second, it reduces the temptation to treat every hot streak like a bonus check or every bad month like a financial emergency.

A professional bettor should not be deciding what to withdraw based on how he feels about last week's results. That is not a business plan.