What is ‘ROI’?
‘ROI’ stands for ‘return on investment’. It is the total financial value of investment, minus the cost of acquisition. The term is used in marketing to describe the gains made from advertising, minus the costs of any campaign. In gambling, return on investment is a crucial casino metric for tracking profit. It is also a term used by gamblers, especially in poker, to describe the cost of play subtracted from the cash out amount (or subtracted from zero for a negative balance if the player lost).
If any business talks about their ‘ROI’, they are referring to the ‘return on investment’ generated by that business. All casinos track the cost of their investments minus the money brought in, and these valuable metrics shape everything from marketing to sales decisions. Like any other company, casinos have to consider their own ROI figures at all times.
For the casino, return on investment often means the cost of games and other operating expenses, minus the bets they bring in. In some senses, ROI means how long an investment will take to pay off – and how profitable it will then be in the future. If the casino buys a new game for £100 and the game makes £100 in bets per day, the casino will see a 100% ROI in just one day, after which it will return a £100 profit per day before costs. The ROI value is a big part of marketing. Casinos who spend money on advertising or who offer comps and loyalty schemes need to know that their efforts are bringing in customers. In this sense, ROI is tracked based on sales versus acquisition costs.
Poker players often talk about their own ‘ROI’. They are referring to the cost of entering a match, subtracted from the winnings they make at the cash out (or combined with the losses if relevant). The return on investment can be expressed as a percentage value which covers the win minus the cost – the overall return on the initial investment.