# Stake, Yield, Return on Investment (ROI), Investment – Definitions and Formulas

The terms Yield and ROI (Return on Investment) confuse many bettors and what is worse, there are a good number of publications using these terms incorrectly which, only adds to the confusion!

Photo: Lim Yong Hian (Shutterstock)

### Stake (S)

Definition: The sum of money gambled on the outcome of an event.

In the online world of gambling, stakes are electronically placed on a desired outcome with a second party that has agreed to accept your stake, whether this be a bookmaker or an anonymous person/group in a betting exchange. These ‘adversaries’ are effectively backing with their own money against your selection, hoping to make a profit of your stake if your selection in the event turns out to be wrong.

Once the outcome of the event is decided, stakes are returned to you in full if your bet has won (plus the winnings), or if you lose, the stake is lost and either retained by the bookmaker or, transferred to the winning side in the betting exchange.

Technically speaking, stakes are sureties! This means that they are short-term deposit payments to guarantee that the losing party will honour his debt obligation to the winner of the bet.

### Yield (Y)

Definition: Profit/Loss ratio as a function of the total capital employed (total staked)

MS – money staked
ML – money lost (stakes lost)
MW – money won (purely winnings; returned stakes are ‘neutral’, not winnings)
PL – MW minus ML = net profit (or loss); equivalent to your bank growth

Formula Yield:
PL divided by MS = Yield (written as a percentage)

Example: if you staked a total of 760 € on your portfolio of bets, and your bank grew by 70 €…
70 / 760 = 0.092 = 9.2%

To simplify, the term YIELD means profit, earnings, harvest, income or revenue. It measures betting efficiency against the total turnover. The lower your aversion to risk, the higher your probabilities to win, the smaller your yield will be and vice versa.

Generally speaking and depending upon the strategy employed, a good bettor will yield between 5 and 10 percent profit in the long run. In football betting any yield over 7% is considered to be a very, very good yield.

For example, with an average yield of 7%, a starting bank of 100 €, and staking 10 € each bet: in order to win 700 € you would need to turn over your bank 1,000 times (!), or otherwise staking a total of 10,000 € to win 700 €.

Yield is NOT the same as ROI (Return on Investment)!

Last Update: 17 February 2013

Categories:Betting Terminology Odds Calculation