Betting Odds Explained: How Betting Odds Work
In this article, we're going to look at how betting odds work so that you can understand bookmaker prices before placing a wager on a particular outcome.
Odds are always subject to change and you will find that betting sites offer different prices for the same markets. Every time someone bets, they stake a certain amount of money at particular odds and get a payout from the bookie if their selection proves to be a winner. The return is calculated according to the stake and the price that was accepted.
Here you will learn about how to read betting odds, how types of odds differ and how they help you calculate your potential winnings.
What do Betting Odds Mean?
If you're looking to bet on a particular football team to win their match, you can see what their betting odds are before placing your wager. If you stake £1 on a team that has odds of 2/1 or 3.0 to win their game, you would make a £2 profit but you would also get your £1 back, meaning a total return of £3.
The odds reflect the theoretical probability of each selection winning according to the bookie. Bookmakers set the betting odds according to their own prediction for what is going to happen based on historical data and other modelling software. The best punters will manage to spot when the betting odds are too high.
There are different ways of viewing betting odds when you visit an online bookmaker and you can nearly always choose between fractional and decimal, while there might also be the option to use American odds instead. A lot of UK and Irish-based customers will traditionally use fractional odds such as 5/1 or 10/1.
Betting at 5/1 would mean a £1 bet would earn a profit of £5 and an overall return of £6. A winning £1 bet at 10/1 would mean a return of £11, while you might find a bet available at odds of 15/2 which is halfway between 7/1 and 8/1. Therefore a £1 bet at 15/2 would return a profit of £7.50.
Decimal odds have become increasingly popular in the modern age and work in exactly the same way as fractional odds. For example, 2/1 in fractional odds is 3.0 in decimal odds and it simply takes into account your overall return, which would be £3 if you staked £1 at the above odds.
Sometimes decimal odds can be easier to understand, especially when you're trying to work out the difference between 13/8 and 7/4 from a fractional point-of-view. Many customers will use decimals when it comes to exchange betting, which is better suited to this betting odds format.
American odds are widely used in North America and if you're a fan of sports betting, you might come across these prices when placing a bet on American Football, baseball, basketball and ice hockey. Also known as 'moneyline odds', they work exactly the same as fractional and decimal betting odds but are just phrased in a different way.
For example, a sports betting site might have PSG priced at 4/1 to win a football match in fractional odds, although their American odds would be +400. It means that a £100 bet would make you a profit of £400. However, Manchester City might be 8/13 to win the same match and their American odds would be expressed as -163, which would mean you would make a profit of £63, as the negative symbol takes away the £100.
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Using Probability to Understand Betting Odds
You will have realised that betting favourites have the shortest odds and the underdog will have the largest odds. However, it is also clear that favourites don't always win a particular sporting event. Otherwise landing a winning bet would be ridiculously easy and we all know it's a lot trickier than that.
A bookmaker applies betting odds for each market by calculating the probability of an outcome. For example, if a football team is priced at even money (2.0) to win a match, that suggests the bookie is giving them a 50% chance of winning the game. Bookmakers use something called implied probability when setting the odds. This basically means that a bookie will offer customers odds that are slightly lower than the actual probability of the outcome, and so the odds you encounter on any sportsbook will reflect this implied probability.
As a customer, we therefore have to consider certain odds and work out where the prices are too big for certain selections. Again using sports betting as an example, if you think a football team priced at evens has a 60% chance of winning their game, then you might regard this price as 'value' and bet on it based on the fact that you have a better chance of winning than the prices suggest.
How to Convert Odds
Many bookmakers give customers the choice of odds format when they sign up for a betting account. However, it's usually pretty easy to convert this should you wish to see the prices in a different format.
Once you get used to online betting, it can become second nature to convert the fractional odds to decimal and vice-versa. You just need to understand the subtle difference between the two most popular forms of odds and decide which one you're most comfortable with from a betting point-of-view.
Fractional to Decimal Odds
When you see fractional odds such as 10/3, it can often be confusing working out the potential profit from your stake. However, on the basis that 3/1 becomes 4.0 in decimal odds (including your return as well as profit), then you can also convert 10/3 into 4.33 and it now reveals that you will get £4.33 as a return should you successfully bet £1 on this selection.
Decimal to Fractional Odds
Should you wish to convert decimal into fraction, you simply do the reverse of the above. So taking horse racing as an example, if you're looking at a horse that is trading at 8.0 in decimal terms to win a race, that would imply that a £1 stake would win you a return of £8. However, to calculate the fractional odds, you simply deduct the stake from the £8 winnings and it is therefore expressed at 7/1 instead.
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American vs European Odds
American betting odds may initially look confusing, although the first port of call is to remember that the favourite's odds always start with a minus symbol in front of them such as -163. It doesn't mean that you actually lose money but that you would effectively win £63 should you stake £100 on this selection.
When it comes to a selection at bigger odds such as +300, this is the amount of money that you would win if you staked £100. Just remember that these moneyline odds always use a baseline of £100 and that is something which might benefit higher-staking customers, although European decimal odds are probably easier to understand.
Use Betting Odds to Increase Potential Profit
We hope you now have a stronger understanding of how betting odds are calculated by the bookies and would recommend comparing bookmakers before choosing a top betting site, to make sure you always get the best possible price for the highest potential payout on the selections you wish to back. By getting the highest odds, your potential profit increases and you won't need to back as many winners to make money.
There is also the opportunity to gain a grasp of betting odds by clicking on a selection and adding it to your online bet slip. You can then add a stake to see the potential profit or return and that will help you get to grips with how the odds work. Just remember to always weigh up whether the odds are an accurate reflection of the probable outcome.
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Hi, I'm Dean Ryan
"A passionate sports betting broadcaster and journalist with over 15 years spent in the gambling industry."
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