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Originally Posted by BCOURTNEY
I was having what I thought was a pretty strange discussion with someone today. I then realized they live in an alternate universe from mine.
This is the right formula: ROI = (revenue – cost) / (cost)
This is the wrong formula: ROI = (revenue) / (cost)
No, I really don't think this is subjective.
e.g. a 15/1 odds horse pays $32.00.
The ROI for the investment is = ((32-2)/2) = 1500% (15:1)
The ROI for the investment is not (32/2) = 1600% (16:1)
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You are correct. I think there would be less confusion if you used the terminology profit and amount bet(risked) rather than revenue and cost. roi is simply total profit(or loss)/total dollars bet. So over 100 races if you bet $10 on each horse it would cost you $1000. If you only got back $900 your roi is -10%(-100/1000) if you get back $1043, your roi is 4.3% (43/1000) In your example the profit was $30 the amount bet $2 so the roi is as you stated...............Sports bettors especially might get confused. Lets say you bet 100 games at $110/100 and win 51. You win $5100 on your winning games and lose $5390 on your losing games, you lost $290. The roi is -290/11000(as you risked $110 a game and not $100 a game) or an roi of -2.636%.
