If you are entering the world of sports betting, there are several things that you will need to master before plunging into the process. Knowing a thing or two about the sport in question is helpful, but it’s not the only knowledge that will enhance your experience. One essential thing you’ll need to understand is the mechanism behind the betting odds. So how do betting odds work?
Bookmakers use betting odds to express the probability of a certain outcome. Knowing how to read them and use them for your bets makes your game more informed and helps you make more balanced decisions. It also helps you calculate potential winnings and risks before placing any bets.
While not impossible, betting randomly isn’t a viable strategy, that’s why it is strongly recommended you learn your way around odds first. They may seem complicated at a first glance, but our comprehensive guide will walk you through odds, their meanings, how to read them, and how to understand every format.
What Are Betting Odds?
The definition of odds comes from probability theory. Odds are a measure of how likely a certain outcome is to occur. In the case of sports betting, bookmakers use odds to show how likely they think this or that event will take place during a specific game. Odds also indicate how much a bettor can potentially win.
To put it simply, low odds mean the bookmakers think this outcome has more chances to take place. Correspondingly, if you place your bet and win, the return on your stake won’t be high.
On the other hand, high odds mean that bookmakers find this result unlikely. If you decide to bet on this market and win, your payout will be quite high.
Different Types of Betting Odds Formats
There are three main types of betting odds formats: decimal, fractional, and moneyline. While they all serve the same purpose, reading them may vary.
Decimal Odds
Most commonly used in Europe, decimal odds are considered to be the most straightforward to read and understand. The number in the decimal odds shows how much return you will get on each £1 you bet on this market. It also already includes your stake, so you don’t have to do additional calculations.
It is also very easy to understand through decimal odds how likely the bookmakers think this particular outcome to occur. Markets with odds higher than 2.00 are less probable in the opinion of the bookmakers, while anything below 2.00 shows that the outcome has higher chances (but lower payout).
Fractional Odds
Fractional odds are most widely used in the UK. Reading them is not as straightforward as decimals but they are still fairly uncomplicated to understand. The first number in the fraction indicates how much you can win if you bet a certain amount that is shown in the second number. For example, if the odds on a market are 7/1, it means you will win £7 if you stake £1. With the fractional odds, your stake isn’t included in the payout number, so you have to add it yourself. In the case of our example, your total winning is £7+£1 (your stake).
Same as decimals, fractional odds show the probability of the outcome. If the top number is higher (heavier) than the bottom number, there are fewer chances for the outcome. If the bottom number is higher than the top, the outcome is more likely to occur.
Moneyline Odds
Moneyline odds are often referred to as American odds as they are most popular in the United States. Numbers here are presented either with a plus (+) or a minus (-). The negative numbers represent favourites and the positive numbers show who the underdogs are.
Reading them slightly differs from decimal and fractional odds. The negative numbers show how much you need to stake to win £100 (or $100). The positive numbers show how much you will get if you bet £100 (or $100).
While different types of odds are used in different regions as described above, their use can also vary depending on the format of an event. That’s why understanding all of them is a good practice.
How to Calculate Potential Winnings Using Odds
As different types of odds are read in different ways, the calculation of potential winnings also requires different methods. Let’s take a look at each of them.
Decimal Odds Calculation
The formula for calculating potential winnings with decimal odds is very simple. Multiply you stake (A) by the odds (B) to get the potential winnings (W). For example:
- If you bet £1 on a market with 5.00 odds, it means that in case of winning, you will get £5 (£1×5.00). As the stake is already included in the amount, your net profit will be £4.
- If you bet £2 on a market with 1.75 odds, winning the bet will bring you £3.50 (£2×1.75), and your net profit is £3.50 – £2 = £1.5.
Fractional Odds Calculation
To calculate the potential winnings with the fractional odds, you first divide the top number in the fraction (numerator) by the bottom number (denominator), then multiply the result by your stake. Add your initial stake to this number to get the final payout. For example:
- If you bet £10 on a market with odds 7/2, your final payout is (7/2)x10+10=£45 (of which £35 is your net profit).
- If you bet £10 on a market with odds 1/2, your final payout is (1/2)x10+10=£15 (of which £5 is your net profit).
Moneyline Odds Calculation
Always be mindful of the sign before the number in moneyline odds before you make a bet. Here your stake isn’t included either, so you need to add it to see your final payout. For example:
- If the odds are +250, you’re betting on an underdog. If your stake is £100 and it wins, you will get £250 net profit plus £100 for your original stake, a total of £350.
- If the odds are -170, you’re betting on a favourite. In this case, you must bet £170 to get £100 if your stake wins. Together with your original stake, you will get £270.
Understanding Probability in Betting Odds
Odds can not only define probability of an outcome in terms of more or less likely, but you can also calculate the quantitative index by using a very simple formula.
First, let’s take a look at fractional odds. The formula here is B/(A+B). If the odds for the market are 4/1, where 4 is A and 1 is B, the calculation looks as follows: 1/(4+1) = 0.20, i.e. this outcome has a 20% probability of happening.
The formula for the decimal odds is different: (10/A)/10 where A is the decimal odds. So if the odds on the market are 1.25, the calculations will look as follows: (10/1.25)/10 = 0.8, i.e. this outcome has an 80% probability of happening.
And finally, with the moneyline odds, you have two different formulas for favourites and underdogs. The formula for underdogs is 100/(Odds +100)*100. If the bookie gives you the odds of 115, the calculation goes like this: 100/(115+100)*100 = 46.51%. This is how likely the team is to win. Then, the formula for favourites is Odds/(Odds +100)*100. Here during calculations we disregard the minus sign. If the this team has odds of -120, the calculation goes like this: 120/(120+100)*100 = 54.54%.
Common Factors That Affect Betting Odds
Now that we have betting odds explained, it is important to understand how bookmakers calculate them, as this can also factor into your betting decisions.
There are many aspects that go into determining the odds for every outcome. Some of the most important ones in sports betting are the team’s or player’s (in case of individual sports) history in a particular tournament, head-to-head statistics between competing teams, any injuries the players might have sustained that will significantly affect the game. Other issues that should also be considered are the composition of the team the coach decided to bring out on the field, recent performance of the teams, and even weather conditions.
Bookies keep collecting insight until a certain point before the match, that’s why the odds are always fluctuating, making it very important to check them right before you place your bet. The more data the bookmakers have, the more it is likely to give them an understanding of a probable outcome and set the odds accordingly.
Responsible Betting and Managing Expectations
The importance of responsible betting can’t be stressed enough. This includes making informed decisions, setting a budget, and understanding the odds before you begin betting.
Always remember that there is no foolproof method of predicting the exact outcome. While some things are more likely to happen than others, there is always room for a chance occurrence. That’s why, a good practice is to perceive odds as information, not as a guarantee.
FAQ
How do betting odds represent probability?
Betting odds show how probable a certain outcome is.
Why do betting odds change over time?
The more information bookmakers gather about the teams, players, and other influencing factors, the more informed opinion they can form about the outcome. That’s why betting odds keep changing.
Is one type of odds format easier to understand than another?
All three types of odds format are fairly easy to understand. While they use different formulas, all of them inform you of your potential winnings and how likely the outcome is. Check our guide above to learn how to read all formats.
Are betting odds accurate predictions of outcomes?
There is no such thing as an accurate prediction. Betting odds can give you a general expected understanding of an outcome, but they aren’t foolproof and shouldn’t be viewed as guarantees.
How can I practice responsible betting with odds?
Betting odds help you understand how likely an outcome is and how much you can potentially win if you place your bet on this market. This helps you make informed decisions and be mindful of your budget, which is essential for responsible betting.
The Bottom Line on Betting Odds
Being able to read betting odds and understand the information they provide is very important for sports betting. However, always bear in mind that they show probabilities, not give you foolproof, guaranteed results.
A good approach towards betting odds is to perceive them as insight into probabilities, not a direct instruction on action.
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