So, how do betting odds work?
Have you ever had trouble understanding betting odds and what they actually mean when you are placing bets, or do you want to increase your knowledge on the different types of odds, potential payouts and profits as well as what the odds say about the probability of your bet winning?
This article is the best guide for all formats of betting odds explained in depth and will go through the three main types of ways that odds are written, as well as helping you understand how odds work, how to read betting odds and importantly, how to understand betting odds!
Types of odds
When betting, there are three main types of odds, American, Fraction and Decimal.
Fraction Betting Odds Explained
These are typically used in the United Kingdom, or more specifically for our use, with horse races, and can be displayed as 13/4 or 1/2, and said aloud like ‘13 to 4 odds’ or ‘1 to 2 odds’.
How do betting odds work in fraction format? The number on the left of the fraction (13) indicates how many times the bookmakers expect that outcome to fail, compared to the number on the right of the fraction (4) indicating how many times the bookmakers expect that outcome to succeed.
The equation to calculate the profit you would make off a bet is;
Stake x Odds = Profit
Below is the fraction sports odds explained with a horse racing example including profit and payout from a $100 bet;
|Gamine||13/4||$100||$325.00||$425 ($100 stake + $325 profit)|
|Tom’s d’Etat||1/2||$100||$50||$150 ($100 stake + $50 profit)|
Now, this is how odds work when working out the probability that the bookmakers believe a team or horse have of winning a game or race. You add both sides of the fraction together, with the left side of the fraction being how many times the bet wouldn’t win, and the right side of the fraction being how many times the bet would win.
Gamine’s 13/4 odds indicate that if she was to run this exact race 17 times (13 + 4), she wouldn’t win 13 of those times and win the other four (23.5% win).
Tom’s d’Etat’s 1/2 odds indicate that if he were to run this exact race three times (1 + 2), he wouldn’t win one time and win the other two (66.7% win).
Decimal Betting Odds Explained
Decimal odds are the easiest when understanding betting odds compared to both fraction and American formats. Decimal odds are often displayed as $2.89 and said aloud like ‘two dollar eighty-nine odds’.
So, how do betting odds work in decimal format? A baseball example shown below:
|Toronto Blue Jays||2.89|
|Tampa Bay Rays||1.42|
Below is the decimal betting odds explained with the equation to work out what your payout would be;
Stake x Odds
|Team||Odds||Stake||Payout||Profit (payout – stake)|
|Toronto Blue Jays||2.89||$100||$289.00||$189.00|
|Tampa Bay Rays||1.42||$100||$142.00||$42.00|
To work out what the decimal odds mean about the probability the bookmaker has of each team winning;
100 / Odds
Toronto Blue Jays – 100 / 2.89 = 34.60%
Tampa Bay Rays – 100 / 1.42 = 70.42%
|% Chance of Winning||80%||66.67%||50%||40%||33.33%||25%|
American Betting Odds Explained
On all American bookmakers sites, you will see American odds, used exclusively in the United States, with the odds displayed as three numbers with a + or – in front of it.
How do betting odds work in American format?
Using an NBA example;
We will now break down the favourite (Miami) and underdog (Indiana) to see how to read betting odds when they are in this format, which is how the bookmakers display them.
The favourite of any given game will always have the negative odds, and that represents your total stake required to profit $100.
Using the above example, you must bet $260 on the Miami Heat to profit $100 of their win.
To work out how much money you would make when betting on an favourite with American odds, use the following equation;
(Odds / 100) = (Stake / x) where x = profit
(260 / 100) = (20 / x)
260x = 100*20
260x = 2000
x = 2000 / 260
x = 7.69
A $20 bet on the Miami Heat would profit $7.69, meaning your total return would be $27.69 ($20 stake + $7.69 profit).
To calculate the probability the bookmakers have given the favourite to win the contest, use the following equation;
Probability of Winning = Favourite Odds / (Favourite Odds + 100)
260 / (260 + 100)
260 / 360
The bookmakers think that the Miami Heat have a 72.22% chance of winning this game.
The underdog of any given game will always have the positive odds, and that represents the total profit you would make from a $100 bet.
To work out how much many you would make when betting on an underdog with American odds, use the following equation;
(100 / Odds) = (Stake / x) where x = profit
(100 / 220) = (20 / x)
100x = 220*20
100x = 4400
x = 4400/100
x = 44
A $20 bet on the Indiana Pacers would profit $44, meaning your total return would be $64 ($20 stake + $44 profit).
To calculate the probability the bookmakers have given the underdog, use the following equation;
Probability of Winning = 100 / (Underdog Odds + 100)
100 / (220 + 100)
100 / 320
The bookmakers think that the Indiana Pacers have a 31.25% chance of winning this game.
The Difference in the odds – Juice/Vig
When betting on different sporting events, you might notice that the odds don’t add up when comparing the favourite and the underdog. For example;
|New England Patriots||+330|
|Kansas City Chiefs||-400|
When betting on New England, you profit $330 from a $100 bet, whereas when betting on Kansas City, you profit $100 from a $400 bet. So where is the $70 difference in the equation? How do betting odds work given this inequality?
When you make a bet with a friend or family member, it is a simple exchange of money, but when you are betting with a bookmaker, there is a hidden fee calculated into the odds – the juice/vig. This is present on all types of bets and is the way the bookmaker can stay in business and provide you with the service of being able to place bets.
You may remember from when we calculated the probability of a team winning given by the bookmakers, that all of the three situations added to over 100%, but how is that possible?
Calculating the probability by using the odds above;
New England – 100 / (330 + 100) -> 100 / 430 -> 23.26%
Kansas City – 400 / (400 + 100) -> 400 / 500 -> 80%
The total adds to 103.26%. That extra 3.26% is where the bookmakers make their profit for providing you with the service.
Now you should have a better understanding of how to read betting odds and how odds work in sports. If you are ready to take on the bookmakers and become a winner, check out our picks and predictions for NBA, NFL, MLB, NHL, College Football, College Basketball, UFC, Soccer, Tennis, Golf, Horse Racing and eSports!