Use a settled bet log to calculate net profit, betting ROI and strike rate: subtract total stakes from total returns, divide net profit by total stakes for ROI, and divide winning settled bets by settled bets for strike rate. Keep the accounting rules consistent and show the bet count and odds alongside the percentages; none of these historical figures guarantees future results.
Calculate profit, ROI and strike rate from settled bets
Start with one row per bet and use actual settlement figures rather than projected winnings. A winning return includes the stake returned; profit does not.
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- Net profit = total returns − total stakes. A losing bet has no return and loses its stake.
- Betting ROI = net profit ÷ total stakes × 100. This is also called yield or profit on turnover. The denominator is the amount staked, not the starting bankroll; return on bankroll is a different measure. Smart Betting Club’s glossary defines ROI against total stakes.
- Strike rate = winning settled bets ÷ settled bets × 100. A practical convention is to exclude void bets from both the wins and settled-bet count, then report voids separately.
Worked example
Suppose a model has 100 settled bets at £1 each, with 20 winners and £108 in total returns, including stakes returned. 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 numbers illustrate the arithmetic; they are not observed model performance.
Calling the £108 return “profit” would overstate the result by the £100 staked. For the distinction between winnings and returned stake, see Racing Post’s explanation of horse-racing odds.
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Apply the right settlement arithmetic to each bet type
Decimal and fractional odds
For a winning single at decimal odds, total return is stake × decimal odds, including the original stake. Net profit is stake × (decimal odds − 1). Fractional odds such as 4/1 mean £4 profit for each £1 staked; the stake is added back for a £5 total return. Racing Post explains this distinction.
Each-way bets
An each-way bet consists of a win bet and a place bet. A £5 each-way stake costs £10 in total. Settle both parts under the actual place terms, add their returns, and subtract the combined £10 stake to calculate profit or loss. Place terms vary by market and bookmaker. A non-runner can also result in a Rule 4 deduction under the applicable bookmaker rules, reducing winnings.
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Other settlements
For tote or pari-mutuel bets, exchange bets subject to commission, free bets, cash-outs, dead heats, voids and other special cases, use the amount actually staked and the settled amount actually credited or debited. Record your convention and apply it consistently; do not mix quoted odds or projected returns with settled cash results.
Put the headline percentages in context
Strike rate alone does not establish profitability. A model with fewer winners at longer average prices can produce a different result from one with more winners at short odds. Report strike rate alongside average odds, number of bets, total stakes, net profit and ROI.
Also examine losing runs and drawdown—the decline from a previous high point in the model’s results. Sample size matters: a percentage based on a small number of bets tells you less than the same percentage supported by a larger record. British Racecourses recommends considering strike rate alongside odds and sample size. Its horse-racing systems guidance also discusses drawdown and testing on unseen data.
Compare model versions on matching terms
When comparing strategies or model versions, align the same measures for each. Do not compare percentages if their denominators or settlement conventions differ.
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| Measure | What to report |
|---|---|
| Sample | Number of settled bets and the period covered |
| Outcomes | Strike rate and average odds |
| Money | Total stakes, net profit and betting ROI |
| Risk and consistency | Maximum drawdown and results across separate periods |
Test a backtest without overstating what it proves
A profitable backtest is not proof that a model has a durable edge. Separate the data used to develop the model from a test set the model did not use, and freeze the rules before testing. Make sure each feature uses only information that would have been available when the bet was placed. Where practical, keep a forward record of predictions and settled bets.
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Break results down by meaningful time periods or odds groups when there are enough bets to make those comparisons useful. This can reveal whether a headline result depends on a narrow slice of the record or a few large winners. These checks help expose overfitting and unrealistic assumptions; they cannot guarantee future performance.
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Keep a log that lets you reproduce the result
A spreadsheet is enough to calculate the measures if it captures the inputs and settlement details. Record at least:
- 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
That record lets you reconstruct total stakes, total returns, profit and ROI rather than relying on remembered or displayed headline figures. British Racecourses’ guidance on betting systems also recommends tracking bets and outcomes to assess performance.
Report the conventions, not just the result
Show the complete sample and state how you treated voids, each-way stakes, deductions, commission and cash-outs. Label ROI as profit divided by total stakes if that is the measure you mean. Historical profit and a high strike rate describe past records; they do not establish that the model will keep winning.
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