It is important to know your return on investment (ROI), but when it comes to lay bets you must make sure that you calculate it properly. When calculating ROI you usually add to together all your bets and divide the amount of profit you have made by the amount you have bet.
Unfortunately this does not work for lay bets and you can find that your ROI can look much more impressive than it actually is. There is nothing more dangerous in betting than thinking that you are doing better than you are. In fact if you think it is too good to be true, then there is probably something wrong!
The reason we cannot calculate the ROI in the same way as normal is because you must base your calculation on the risk you have taken.
If you are lay betting 1 unit at odds of 5.00 then you have not risked 1 unit, you have actually risked 4.
At odds of 5.00 then if the horse wins you are going to be paying out 4 units. If the horse wins then you are going to be winning 1 unit. I am going to ignore the commission in my examples to keep them simpler but you should also take this into account in your own results.
In order to calculate the ROI for lay bets we must add up the total risk that we have put ourselves under and then divide this by our profit.
Let me show you an example…
|Lay Odds||Bet Win / Lose||Profit||Risk|
The total profit is 0.88 units from 8 bets. Our risk is not 8 units however. The risk column shows what has been risked on each bet should we lose it. This is where lay betting can become slightly confusing but once you get your head around it then the world of successful laying will open up to you.
Because we are becoming the bookmakers with a lay bet then if the horse wins we are paying out and if the horse loses we are taking the persons stake that we have been matched with on Betfair.
Looking at the first bet in our table we lay the horse at odds of 3.5 for 1 unit. This means that we have taken a bet from someone offering them odds of 3.5 which means that if the horse loses we take their 1 unit bet and if the horse wins we pay them out at odds of 3.5. Paying out at these odds means we give them 2.5 units and their original stake of 1 unit. Therefore our risk on this bet is 2.5 units.
We calculate our risk like this for every single bet and put the amount in the risk column. Adding these up we can see what we have risked across all our selections. In the example above we have risked 25.37 units across 8 bets.
With a profit of 0.88 units we can now calculate our ROI as…
0.88 / 25.37 = 0.0347
We multiply this by 100 to make it into a percent and we have 3.47%. This is very different to the 11% we got by calculating it the wrong way!
Now that you know how to calculate the ROI for lay bets successfully you can double check that you are doing this for any lay strategies currently. If you are ever getting lay systems or tips then it is always worth asking for results to make sure that the lay ROI calculations are being done correctly.