Why more profit doesn’t mean better betting
It might seem like a bettor that makes €500 a month is better than a bettor that makes only €100 a month, but that’s not always the case. For comparisons to be fair in betting, we have to talk about units rather than amounts of money.
Units are worth different amounts depending on the bettor’s bankroll; for example - it is not the same to bet 3 units from a €500 bankroll as it is from a €100 bankroll. It’s also not the same when it comes to winning, as someone who makes the most units is not always the best bettor either.
Instead, the best bettor is the one that has the best yield.
In the betting world, yield is a concept that makes reference to how efficiently you bet with your money, or in other words, what the net benefit of every euro you bet is. This “efficiency measure” is expressed in percentage.
The meaning of yield in betting
To get a better understanding of what yield is, we must first be clear on 2 concepts.
Net profit: this is the amount of money we have left once we take away the amount we had staked from the amount we won in return. For example, if we bet €10 on a market with odds of 3.00 and win, we will get €30 in return. To calculate the net profit of this bet we would have to deduct €10, and so our net profit would be €20.
Total money wagered: this is the sum of all the money that you have wagered, regardless of whether your bets end up winning or losing. For example, let’s say we’ve placed 5 bets, where we have wagered €7, €15, €25, €5 and €18. The total amount of money wagered would be 70, the sum of these bets.
How is yield calculated?
Calculating the yield of our bets is pretty simple. Just use the following formula:
Yield = (net profit / total money wagered) x 100
As you can see, you divide the net profit by the total money wagered. The result is then multiplied by 100 for it to be expressed in percentage.
For example: we have placed 10 bets, where our net profit is €20 and a total of €70 was wagered. First we divide the net profit into the money wagered, 20 / 70 = 0.29. Now we multiply that result by 100, so 0.29 X 100 = 29.
This result indicates that our yield is 29%, which means that for every €1 we wagered we got 29% in profit, and in this case - 29 cents for every €1.
What happens to our yield when we are losing money and we don’t make a profit? Can we still calculate it? Of course we can. It will just be expressed with a negative value.
For example, let’s say we place 3 bets of €10 each, with odds of 2.00. Two of these bets lose and the one wins, so we get -10, -10 and +20 euros. We calculate the net profit from the 3 bets through this would be -10 + -10 + 10 = -10 euros of net profit. Then we calculate the total money wagered which would be 3 x 10 = 30 euros wagered.
Now we can apply our formula to calculate the yield.
-10 (net profit) / 30 (total money wagered) = -0.33. We multiply by 100, -0.33 x 100 = -33. Our result is a negative yield of -33% for those three bets. This means that for every euro we wagered we’ve lost 33 cents.
Why do we use yield?
The main use of yield is to find out how efficient our bets are. It makes a lot more sense long term, when you’ve had time to place a large number of bets. Calculating yield with only a few bets might produce distorted results, conditioned by winning or losing streaks, while in the long term they blur and compensate.
It’s also pretty useful to identify good tipsters, bettors who share their forecasts. A good tipster should be recognised by his yield more than the money he has earned. Ideally a good tipster should be around 5-10% yield in the long run, but any positive yield is a good yield, as it means we are making money.
Which is better to predict profitability, units or yield?
Units won will never reflect the true profitability of a bettor. The profitability is going to be predicted by yield, with a bigger percentage indicating bigger profitability.
Think of it like this for a moment: imagine the money we’ve wagered represents an amount of hours worked, while the “profit” or units are our salary. Obviously, if we had to choose, we would prefer to work for seven hours to make six units, than work for 45 hours to make the same amount, right?
Yield will indicate the efficiency of those working hours, as it does in our case when it comes to the profitability of a bettor.
Imagine you have two tipsters, we’ll call them Henry and Billy. They want to find out who gets better performance using their results:
Henry has a net profit of €1000 with the total amount wagered equalling €8000.
Billy has a net profit of €500 with a total amount wagered equalling €3000.
At first you could say Henry is a better bettor because he had a net profit that is double that of Billy’s. However, when we calculate yield we get the following:
Henry’s yield: (1000 / 8000) X 100 = 12.5%
Billy’s yield: (500 / 3.000) X 100 = 16.7%
Billy has a higher yield, which means he gets more profit for every euro he bets. This indicates to us that Billy has a better betting performance than Henry.
As you can see, taking a look at someone’s yield will help you know whether or not they are trustworthy when it comes to betting, and if they make profits in the long term. Once you've taken this into account and decided upon your tipster, be sure to check out Cloudbet's bitcoin sportsbook and put their picks to the test.