Jimmy Boyd in 
I have talked about edges in sports betting in the past and how professional bettors like myself typically achieve about a 2% ROI over the course of a year.
Some people think that’s great, but other people think that’s too small to make it worth it.
While I agree 2% ROI sounds less than a 10% ROI in the real world things can play out much differently due to how fast the compounding occurs.
Let’s take a look at why having daily action really adds up compared to getting a ROI over the course of an entire year.
Why Do Sports Betting Returns Outpace the Stock Market?
Why would you want a 2% return on your money when you can throw it in the stock market and make 10%?
Well the difference is how often that money compounds on itself.
Albert Einstein once said compound interest is the eighth wonder of the world and I totally agree. I’ll show you why below.
Let’s say you start with $10,000. If you invest that money in the stock market and get your 10% return for the year you end up with $11,000 (your original $10,000 plus the $1,000 in gains.)
Now sports betting has binary outcomes. You either win or you lose so your stake is either approximately doubled or lost entirely.
So for the sake of this example let’s say you start with $10,000 and get it all in play every day, but with enough balance that you aren’t risking going broke with a bad run.
You take that $10,000 and after the first day of earning a 2% ROI you would have $10,200. The next day you would have $10,404, then $10,612, and so on.
Do you know how much you’d have at the end of a year? $13,774,082!
Real World Returns and Theoretical ROI of Sports Betting Vary Widely
This is an extreme example just to make a point, but hopefully the logic got through.
In the real world you would run into all kinds of limitations such as managing your bankroll, running into wager limits, and not having enough action to put the entire balance into play every day.
But the point is, that 2% ROI on each bet adds up fast. That’s what makes sports betting so profitable over the long term and why professional bettors can make millions of dollars in a single year.
Caveat: It Works the Opposite Way As Well
Just to be totally upfront and transparent with you, if you are a losing bettor that edge works the opposite way. You might see a negative 2% ROI and think it’s tough for you to lose much of your bankroll, but it really is.
Now hopefully you can’t lose it as fast as you win it because you’d be decreasing your bet size to match your lower bankroll, you wouldn’t put your entire wad into play on a single day, but you would be more likely to mismanage your bankroll as a recreational bettor.
That’s what make sports betting so tricky. The edge or disadvantage players have doesn’t seem that big, but when you compound it on a daily basis the swings start to occur pretty fast.