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Use settled bets to calculate these figures: net profit = total returns − total stakes; betting ROI = net profit ÷ total stakes × 100; and strike rate = winning settled bets ÷ settled bets × 100. Keep total return separate from profit, state how you treat voids and special settlements, and show the sample size and odds alongside the percentages.
Calculate profit, ROI and strike rate from settled bets
Start with a bet log that records each wager’s actual stake and settled return. Total return includes the stake returned on a winning bet; net profit does not.
- Net profit = total returns − total stakes. A losing bet has no return and loses its stake. For a winning bet, subtract the stake from its total return to find its profit.
- Betting ROI = net profit ÷ total stakes × 100. The denominator is the amount staked, also called turnover. Smart Betting Club defines ROI as profit divided by total stakes: Smart Betting Club glossary. Return on your starting bankroll is a different measure; label it separately rather than calling it betting ROI.
- Strike rate = winning settled bets ÷ settled bets × 100. A straightforward convention is to exclude void bets from both the number of winners and the settled-bet count, then report the number of voids separately.
Worked example: 100 equal-stake bets
Suppose a model has 100 settled bets at £1 each, including 20 winners, and those winners produce £108 in total returns. Total stakes are £100, so net profit is £108 − £100 = £8. Betting ROI is £8 ÷ £100 × 100 = 8%, and strike rate is 20 ÷ 100 × 100 = 20%. These figures illustrate the arithmetic; they are not observed model performance.
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The £108 is total return, not profit. If you divide the £8 profit by a starting bankroll instead of the £100 staked, you are calculating a capital-return measure, not betting ROI.
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Account for odds and bet type
Decimal and fractional odds
For a winning single bet at decimal odds, total return is stake × decimal odds, including the stake. Net profit is stake × (decimal odds − 1). With fractional odds of 4/1, a £1 stake earns £4 profit; the £1 stake is added back, making £5 total return. Racing Post’s odds guide explains this distinction.
Each-way bets
An each-way bet consists of a win bet and a place bet. A £5 each-way amount therefore costs £10 in total. Settle each part using the applicable place terms, add the two returns, and subtract the combined £10 stake to find net profit or loss. Place terms depend on the market and bookmaker. A non-runner can also lead to a Rule 4 deduction under applicable bookmaker rules, reducing winnings; use the amount actually credited after settlement.
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Other settlement adjustments
For tote or pari-mutuel bets, exchange bets with commission, free bets, cash-outs, dead heats, voids and other special settlements, base the calculation on amounts actually staked and settled. Record deductions, commissions and cash-out amounts, state your accounting convention, and apply it consistently. Do not mix quoted odds or projected returns with settled cash results.
Put a strike rate in context
Strike rate measures how often bets win, not whether they make money. A lower hit rate at longer average prices can produce a different financial result from a higher hit rate at short odds. Report the strike rate with the number of bets, average odds, total stakes, net profit and ROI. British Racecourses’ guidance recommends considering odds and sample size when assessing strike rate: British Racecourses betting-systems guide.
Include drawdown and losing runs as well. A headline profit can hide a long losing sequence or depend heavily on a small number of large winners. Where the sample permits, break results down by meaningful time periods or odds groups so readers can see how broadly the performance is distributed.
Test whether backtest results are informative
A profitable backtest does not prove that a model has a durable edge. To reduce the risk of mistaking a fit to historical data for genuine performance:
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- Keep the data used to develop the model separate from a test set the model did not use.
- Freeze the model rules before evaluating that test set.
- Ensure each feature uses only information that would have been available when the bet was placed.
- Where practical, keep a forward record of bets and their settlements.
- Report performance over separate periods or odds groups when there are enough bets for those comparisons to be meaningful.
These safeguards help reveal overfitting and unrealistic assumptions; they cannot guarantee future results. British Racecourses also advises examining unseen data and sample size in its guide to horse-racing betting systems.
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A spreadsheet is enough to calculate the measures, provided it contains the details needed to reconstruct each settlement. Record at least:
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- Date, race and selection
- Model version and bet type
- Stake and odds taken
- Result and settled total return
- Relevant deductions, commission, voids or cash-outs
Use one row per bet, with a consistent convention for each type of settlement. The resulting record lets another reader verify the totals and calculate the same profit, ROI and strike rate. British Racecourses’ guidance also recommends tracking bets and outcomes when evaluating a system: British Racecourses betting-systems guide.
Compare models on matching measures
When comparing model versions or strategies, use the same settlement rules and denominators for each. A useful comparison includes:
- Number of settled bets and strike rate
- Average odds
- Total stakes, net profit and betting ROI
- Maximum drawdown
- Performance across separate periods
A percentage without its denominator, sample size and settlement convention is not a reliable basis for comparison. Historical results describe the recorded bets; neither a high strike rate nor past profit establishes that a model will remain profitable.
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