Understanding Betting Odds: A Comprehensive Guide

Understanding Betting Odds: A Comprehensive Guide

Posted on Apr 15, 2024 • Categories:sportsbook

1. What Are Betting Odds?

Betting odds represent the probability of a specific outcome occurring in a sporting event. They also give insights into how much you can potentially win after placing a wager. Here's the key takeaway:

  • Low Odds: Indicate that a bookmaker believes an outcome is more likely to happen. Betting with low odds results in smaller winnings.
  • High Odds: Suggest that an event is less likely to occur. If you wager with high odds and win, you receive a larger payout.

2. Types of Odds Formats

Fractional Odds

What Are Fractional Odds?

Fractional odds, also known as UK odds, are expressed as fractions. They represent the ratio of the profit (winnings) to the stake (bet amount). Here's how they work:

  • The format is numerator/denominator (e.g., 4/5).
  • The numerator (top number) represents the potential profit.
  • The denominator (bottom number) represents the stake.

For example:

  • 4/5: If you bet $5, you'll win $4. The total payout would be $9 ($5 stake + $4 profit).

Reading Fractional Odds

  • When reading fractional odds aloud, start with the numerator and then the denominator.
    • 4/5 is read as "4 to 5 odds."
    • 3/1 is read as "3 to 1 odds."
  • 1/1 is called "evens" because the bet amount and winnings are equal.

Calculating Winnings with Fractional Odds

To calculate your winnings using fractional odds:

  • Winnings = (Numerator × Bet Amount) / Denominator

Examples:

  1. LA Galaxy vs. LA FC:
    • LA Galaxy: 5/6 (Bet $100 → Winnings: $83.33, Total Payout: $183.33)
    • LA FC: 6/5 (Bet $100 → Winnings: $120, Total Payout: $220)

Decimal Odds

What Are Decimal Odds?

Decimal odds, also known as European odds, are widely used globally. They represent the total return for every $1 wagered, including the original stake. Here's how they work:

  • Decimal odds are simple to calculate: Stake × Odds = Payout.
  • The return includes your original stake.

Examples:

  1. Manchester United vs. Newcastle United:
    • Odds: 1.82 (Bet $100 → Winnings: $82, Total Payout: $182)
  2. Tottenham Hotspur vs. Manchester City:
    • Odds: 2.75 (Bet $100 → Winnings: $175, Total Payout: $275)

Why Use Decimal Odds?

  • Easy conversion to probabilities: Implied Probability (%) = 100 / Decimal Odds
  • Suitable for parlays (multiple bets) due to accurate odds calculation.

American Odds (Moneyline Odds)

a. How American Odds Work

  • American odds use plus (+) and minus (-) symbols to convey the potential return for any bet.
  • These odds always use a baseline value of $100.

b. Favorites and Underdogs

  • Favorites: Represented with a minus (-) sign. The higher the absolute value of the number, the better the chance the bet will win.
    • Example: A -200 favorite has a better chance to win than a -120 favorite.
  • Underdogs: Indicated with a plus (+) sign. The higher the number, the larger the underdog.
    • Example: A +200 underdog has a better chance to win than a +500 underdog.

c. Betting Example

Let's consider an NFL game between the Pittsburgh Steelers and the Kansas City Chiefs:

  • Steelers: +585

  • Chiefs: -760

  • The bookmaker offers odds of +585 for the Steelers, implying a lower probability (about 15%) that they will win the game.

  • If you risk $100 on the Steelers, you could win $585.

  • If the Steelers pull off the upset, you get back your initial stake of $100 in addition to the $585 you won, resulting in a total payout of $685.

  • For the Chiefs—the team with a higher probability of winning—you would need to bet $760 to win $100.

  • Most sports betting sites present odds in multiple formats, allowing you to switch between them and set your preferred format as the default option.

3. How Bookmakers Set Betting Odds

a. Risk Management and Balance:

  • Bookmakers aim to balance the action on both sides of a wager. Their goal is to receive equal betting volume on both outcomes.
  • They make a profit (usually 5-10% on the juice) regardless of the outcome.
  • Oddsmakers are risk management professionals who adjust odds to mitigate the sportsbook's risk.

b. Determining Odds:

  • Bookmakers analyze extensive data, historical performance, and current form to set initial odds.
  • These odds are then adjusted based on market dynamics and incoming bets.
  • The chief function of oddsmakers is not to create an accurate picture of reality but to manage risk.

c. Pricing Up the Market:

  • Bookmakers first calculate the "real" chance of an event (100% probability).
  • They then adjust the prices to include their desired margin (e.g., 107% for popular events).
  • The margin ensures long-term profitability for the bookmaker.

d. Example (England vs. France):

  • Implied probabilities:
    • England: 60.6%
    • Draw: 22.2%
    • France: 17.2%
  • Bookmaker adjusts odds to a total implied probability of 107%:
    • England to win (odds 1.54): Implied probability 64.8%
    • Draw (odds 4.22): Implied probability 23.7%
    • France to win (odds 5.40): Implied probability 18.5%

Remember to pay attention to the margins offered by your chosen bookmaker. If they offer markets greater than 105% (especially in popular leagues), consider shopping around for better odds! 📊📈

Copyright © 2025