One major challenge for sports bettors looking for handicappers is how can they determine if the capper is any good? Most bettors look at two things; winning percentage and units earned, i.e.; profit. Both of these are very important, but can be misleading on the surface. But what if a high winning percentage doesn't translate into profits, meaning what if a handicapper loses a disproportionate number of high unit games but still shows a nice record? Or, what if a handicapper has a high unit total but it took a boat load of games to achieve it? Many cappers put the maximum values on every game with sports monitors because they know that most bettors do a search based on units earned. Of course if they lose, they'll be at the bottom.
For example, which one of these is the better handicapper?
Capper #1: 30 Units earned with a winning percentage of 55% over 300 games
Capper #2: 20 Units earned with a slightly higher winning percentage of 55% over 250 games
In absolute terms, capper #1 appears to be better. But is he really since it took an extra 50 games to do it?
Well, I am writing this article to inform you of a new way to compare handicappers, apples to apples if you will. It is actually a concept taken right out a finance text book called the €Sharpe Ratio€. This ratio measures profit/risk, or return/standard deviation. Allow me to introduce you to a similar concept in evaluation handicappers; the ROI, or Return on Investment. This is simply the units earned/units risked. The best way to demonstrate this is through an example.
Using the information from above, assuming each game is 1 unit:
Capper #1: 300*.55=165 units won and 300*.45*1.1=148.5 units lost, for a net of 16.5 Units.
Capper #2: 250*.55=137.5 units won and 250*.45*1.1=123.75 units lost, for a net of 13.75 Units.
ROI Capper #1: Units risked: 300*1.1=330: 16.5/330 = 5.0%
ROI Capper #2: Units risked: 250*1.1=275: 13.75/275= 5.0%
As you can see they are the same. We actually could have determined this without any calculations because the winning percentages were the same and the units risked were also the same. The value of this measure comes when winning percentages are not the same and/or the units risked are not the same. If you are verifying a handicapper record on a sports monitor and it does not provide the ROI, a simple comparison is to multiply the totals games by 1.1 (1 unit risked on each game). Divide the units earned by this number and you will get a rough idea of their ROI.
This simple measure gives an idea if the handicapper is any good or the units are just an accumulation of a lot of bets. ALWAYS VERIFY A HANDICAPPER'S RECORD WITH A SPORTS MONITOR TO PROVE THEY ARE LEGIT. It should be posted somewhere on the home page of the cappers website or there should be a banner listed. Unfortunately, this industry has a bad reputation of scamming people by providing false information and making unsubstantiated claims.
By now, you may be wondering what constitutes a good or very good ROI. A good year for a handicapper is 54% overall with 58% on best bets (20% of all bets). A very good year is 56% overall with 60% on best bets. If you do the math, a good ROI in 4.4% and a very good ROI is 8.2%.