How do betting odds work? - Understanding Betting Odds

April 03, 2020

Let's find out how betting odds work in this article. Betting odds tell you how likely it is that an event is going to occur and how much money you will be able to make if you win.

What are the betting odds?

The era of gambling has progressed and evolved immensely over the years and now there is a huge number of revolutionary bookmakers that offer top-tier gambling services and games. If you are new to this world and do not know your way around, the best place to start is by understanding and learning the basics. All betting sports such as Football, cricket, tennis, basketball, horse racing, etc., come with odds attached to all of their matches.

To start with, it is imperative that you comprehensively understand what betting odds are and how they word because betting odds are one of the most crucial elements of gambling. The odds language was founded in the sixteenth century by Gerolamo Cardano. Betting odds are numerically expressed, and in the simplest words, they tell you how likely it is that an event is going to occur and how much money you will be able to make if you win.

Understanding how betting odds work may seem a bit confusing and tricky at first, but worry not, we will guide you thoroughly on how they work and how you can comprehend your game’s betting odds to win. The whole concept is based on the mathematical concept of probability which is the ability to predict the outcome of any event. If your prediction is right, you are going to win money from the event.

Two common terms for outcomes of events that are worth mentioning here are – favorites and underdogs, where favorites are those which are expected to win while underdogs are expected to lose. It is extremely risky to bet on an underdog compared to betting on a favorite. However, the higher the risk is, the more the profit will be.

Common Terms for Odds

  • Odds Against: This refers to the odds of being against an event from happening, which means that the probability of an event not occurring is more than the probability that it will occur. For a gambler, odds against means that the amount won will be more than the amount which was wagered. In simple terms, you are betting on the underdog as your team or player is not expected to win. These are also referred to as ‘long odds’ in some parts of the world.
  • Odds On: The opposite of Odds against is Odds on. It represents that the probability of the event occurring is more than its probability of not occurring. The gambler betting at ‘odds on’ will win his profit and also get his stake back. These are also referred to as ‘short odds’ in some parts of the world.
  • Even Odds: The term here is self-explanatory. Even odds refer to a 50-50 chance of an event’s occurrence. So, the probability is equal for both the likelihood of the event to happen or the likelihood of it to not occur. Even Odds are also referred to as ‘even money’ in the gambling industry. The final payout will be double the stake always. So, if a gambler bets £100, if he wins, his total payout will be double. 

Betting odds can be represented in three different methods which are commonly used- The Fractional (British) method which is popular in Irish and British sportsbooks, The Decimal odds (European odds) which is used all over Australia, Canada, continental Europe, and New Zealand, and finally, The American odds ( Money line odd)  which is, of course, popular in the US.

There are other types too, such as the Hong Kong Odds which are similar to fractional odds. Then we have the Indonesian or Indo Odds which are used by Indonesian gamblers and are based on a similar pattern of numerical odds accompanied by plus and minus signs. Another type includes the Malaysian or Malay Odds which also split into negative and positive odds.

Which bookmakers offer the best odds?

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Calculating probability and winnings from fractional betting odds

Two numbers separated by a slash represents fractional betting odds, such as 4/1. If the team is an underdog, the fraction will be greater than one. The formula for calculating probability is:

(%) = B/A+B

Where 4 is A and 1 is B

With this formula, we can calculate the probability of an event’s likely occurrence. Here are a few examples:

  • 4/1 odds – 1/ (4+1) = 0.20 (20% chance of the event occurring)
  • 10/2 odds- 2/ (10+2) = 0.16 (16% probability)
  • 1/4 odds- 4/ (4+1) = 0.80 (80% probability)

Now to determine the amount of money you win by betting on the odds you have selected, the formula is:

Total Return= [Stake x (A/B)] + Initial Stake

A few examples include:

  • 1/4 – You will win £1 on every £4 that you have bet. If you bet £10, the total return would be – [10 x (1/4)] + 10 = £12.5.
  • 9/4 – You will win £9 on every £4 that you have bet. If you bet £100, the total return would be: [100 x (9/4)] + 100 = £325.
  • 2/3 – You will win £2 on every £3 that you have bet. If you bet £100, the total return would be: [100 x (2/3)] + 100 = £166.7.

Calculating total return using decimal betting odds

Recently, the majority of the bookmakers have turned towards decimal odds from fractional odds, making decimal odds the most widely used method now as they are easier to understand compared to fractions and are quicker to work with.

The decimal number in a betting odds represents how much money a person will acquire by winning for every £1 he bets. This method is more convenient to use because you are not required to separately include your stake into your profit as the decimal odds number represents the full return. The formula is as follows:

Total return = Decimal Odd Number X Stake

Examples include:

  • Odds of 4.00 – for every £100 wagered on any event with these betting odds, your total return would be – 4.00 x 100 = £400.
  • Odds of 1.25 – For every £10 wagered on any event with these betting odds, your total return would be – 1.25 x 10 - £12.5.
  • Odds of 9.00 – For every £1000 wagered on any event with these betting odds, your total return would be – 9.00 x 1000 - £9000.

Working with American betting odds

The Moneyline odds are quite different from the fractional and decimal betting odds. Moneyline betting odds are presented using a plus (+) or a minus (-) sign and the moneyline guides you how much you need to wager to win £100. The team with the minus sign before the numerical is the favorite. For example:

If the odds for two teams, A and B are +500 and -700, respectively, this means that you need to risk £100 on team A’s victory to make a potential win of £500, making your total return to be £600. Similarly, if you bet on Team B losing the game, you need to wager £700 to win £100, making the total return of £800.

The formula for calculating total return using Moneyline betting odds is:

Total Return = [Stake x (odds/100)] + stake

For example:

With odds of +300, if you bet £10, your total return would look like – [£10 x (300/100) ­+ 10] = £40.

Converting Fractional Odds to Decimal Odds

As decimal odds are becoming more and more common now, most bookies offer all the three methods of odds representation. This makes it easier for you to choose whichever one works best for you. If you prefer using and playing with decimal odds and want to convert fractional into decimal odds manually, here is how you can do it easily using this formula:

Decimal Odds = (A/B) + 1

For example, if you have fractional odds of 5/1, and you want to convert it into decimal odds, simply divide the numerator by the denominator and add one to it.

  • (5/1) + 1 = 5,
  • (5) + 1 = 6.00

The final answer is 6.00 which represents your decimal odds.

More examples include:

  • Fractional odds 9/1 à 9/1 + 1 = 10.00 decimal odds
  • Fractional odds 8/4 à 8/4 + 1 = 3.00 decimal odds
  • Fractional odds of 6/4 à 6/4 + 1 = 2.50 decimal odds

What to conclude betting odds?

In order to become a punter, it is quite important that you understand how betting odds work because all sportsbooks offer pre-set odds on their betting events and you have to simply place your bets once you calculate and figure out your probability of winning and the amount of profit you will make.

In booking exchanges, one great advantage is that you get to create your odds for any event, provided that you find any player willing to play at those odds. This makes the matches so much more interesting.

Hence, if you plan to win some big bucks, it is a smart idea to practice and learn how to read and work around odds while placing your bets on even events or matches on online gambling websites. As the decimal betting odds system is becoming more widely used, we suggest you get a firm grip on working well with them.