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Betting Odds Explained: How Do Sports Betting Odds Work?
Betting on sports always involves knowing how to read the odds. Understanding how betting odds are calculated is essential for both players and operators. Bookmakers can evaluate odds provided by their data suppliers and better cater to their players' needs, while players can clearly interpret the outcome of their bet.
At first glance, the table of events may appear complicated and the odds unclear, but that is a misconception. Our hands-on tutorial will guide you through real examples to understand how sports betting odds work, what types of odds are available and how they differ from each other.
Understanding Betting Odds
Before we talk about odds, it is important to introduce the concept of ‘probability’; it is the probability that which the bookmaker's odds are built. Probability in sports betting is the possibility of one of the outcomes to occur.
In order to calculate the probability, an in-depth analysis of player, team, opponent stats and so on is performed. If the bookmaker does not calculate the probability themselves, choosing a reliable sports data provider is essential.
Now that we have established the definition of probability, let's get back to the odds. Betting odds are the probability of a particular event outcome expressed in monetary terms, including the operator's margin. The term 'event' in this context refers to sporting events such as matches or games. on which bettors place their stakes.
Essentially, odds are a measure of how likely something is to happen. Take the easiest example: a coin toss. There are only two outcomes, heads or tails, so the chance of winning is fifty-fifty. To turn that probability into decimal odds, you divide one hundred per cent by the probability of the outcome. In the case of the coin, that’s one hundred divided by fifty, which equals 2.0.
No matter how the odds are written, the value is always the same and indicates how much the bettor will get if their outcome wins. The different display of odds is only due to the habit of players in certain regions to perceive betting odds in a certain way. We will look at each type of odds in detail below.
The sports disciplines available for betting depend directly on the location. Each country has its own specifics, which are mainly related to its culture and history. The UK favours horse racing, while India is more likely to bet on cricket. Football, hockey, table tennis, volleyball, and the relatively new but up-and-coming eSports are invariably the most popular sports for all regions.
Let’s explore how the odds calculations work and what factors should be considered.
How Do Betting Odds Work
Two main factors determine a bookmaker's betting odds: the probability of the event and the margin. For the first factor, everything is clear: the odds inversely relate to probability. In other words, the greater the chance of an outcome, the lower the odds.
Sporting events usually distinguish between a favourite, referring to a leading, popular team, and an underdog, referring to the less popular opponent. When the favourite meets the underdog, the odds are always higher for the underdog and lower for the favourite.
As the event progresses, the odds change as well. If the likelihood of the event increases, bookmakers will reduce the odds. Anything can be a factor in the odds: bad weather on a game day, an injury to one of the most valuable players, a change of coach, etc. Players can influence bets more than anything else: if, during a game or match, players confidently pick one outcome and ignore another, the bookmaker is likely to lower the odds on a popular outcome and raise the odds on a less popular one.
Here is an example from eSports. Imagine a match between Vitality and Astralis. The odds for Vitality to win are 1.47. The odds for Astralis to win are 2.57.
So, if you place a bet on Vitality and they win, your payout is based on odds of one point four seven. If you bet on Astralis and they win, your payout is based on odds of two point five seven.
In this match, Vitality is considered the favourite. That’s because they recently defeated Astralis at a major
Counter-Strike: Global Offensive tournament.
Bookmakers set the odds based on this kind of performance. Here’s how to find it. Take the odds for each possible outcome. Divide one by each set of odds, and add the numbers together. If the odds were perfectly fair, the total would equal one.
But in reality, the total is always higher. To find the margin, you subtract one from that total, then multiply by one hundred to turn it into a percentage.
The same principle works when there are three outcomes, like in football – home win, draw, or away win. You divide one by each of the three odds, add them up, and once again, the total is above one. The amount above one is the margin, the bookmaker’s built-in edge.
In the case of the eSports example above, the bookmaker's margin would be 6.94%.
Types of Betting Odds
No matter how the odds are written, they do not affect the winnings. However, many countries have their own traditions for defining and displaying odds
British Odds
The undisputed birthplace of the first sportsbooks was the UK, so it makes sense to start there.
British odds, also known as fractional or ratio odds, refer to a system in which the odds are displayed as fractions. The left or top side of the fraction (the numerator) sets winning units, and the right or bottom side (the denominator) specifies betting units that need to be placed to get the winnings.
For example, let’s take a football match between Bayern Munich and Stuttgart.
The bookmaker offers three possible outcomes. Bayern wins, Stuttgart wins, or the match ends in a draw.
Here are the odds: Bayern to win is nine over thirty-one. Stuttgart to win is sixty-two over seven. And the draw is twenty-six over five.
The betting odds can tell us who is the favourite and who is the underdog in this encounter: the odds of Stuttgart winning are much higher, which means they have a lower chance of winning, according to the analysts. Bayern has lower odds, which means they have a higher chance of winning the match.
Let’s read these odds and break down what they mean:
First, nine over thirty-one. This tells us that for every thirty-one pounds bet, the player wins nine pounds in profit.
Next, sixty-two over seven. For every seven pounds placed, the player receives sixty-two pounds as net winnings.
Finally, twenty-six over five. Here, for every five pound bet, the player gets twenty-six pounds in profit.
If a player bets one hundred pounds on the draw, the calculation is simple: one hundred multiplied by twenty-six over five. That gives a net win of five hundred and twenty pounds. On top of that, the player also gets their original stake of one hundred pounds back. So in total, the payout would be six hundred and twenty pounds.
British odds, also called fractional or ratio odds, show winnings as a fraction of the stake. To calculate the total payout, you take the stake, multiply it by the odds, and then add the original stake back.
American Odds
American odds, also called moneyline odds, are very common in the United States. Like any other odds, they show both the probability of an outcome and the potential winnings.
With a glance at the moneyline, bettors can quickly see who is the favourite and who is the underdog. The leader’s odds are written with a minus, those of the underdog with a plus.
Positive odds tell you how much profit you’d make from a one-hundred-dollar bet. Negative odds work the other way around — they show how much you need to bet in order to win one hundred dollars.
Let’s take a hockey example. In a match between the Vegas Golden Knights and the Boston Bruins, the bookmaker sets the odds like this: Vegas at plus one-fifteen, and Boston at minus one-forty.
That means Vegas is the underdog, and Boston is the favourite.
There are two ways this hockey bet could play out.
First, if a player puts one hundred dollars on Vegas and they win, the payout is two hundred and fifteen dollars in total. That’s one hundred and fifteen dollars in profit, plus the original one hundred-dollar stake.
Second, if a player backs Boston, the favourite, they need to bet one hundred and forty dollars. If Boston wins, the profit is one hundred dollars, and with the stake returned, the total payout comes to two hundred and forty dollars.
If the favourite is marked with a minus sign, the number shows how much a player has to risk in order to win one hundred. So if the bet succeeds, the payout is that one hundred in profit, plus the original stake.
If the underdog is marked with a plus sign, the number shows how much profit a player makes from a one-hundred-dollar bet. If that outcome wins, the payout is the profit shown by the odds, plus the stake returned.
European Odds
European odds, also called decimal odds, emerged when the betting industry spread from the UK to neighbouring France, spreading across Western Europe at a breakneck pace. Even though British sportsbooks remained very popular, the new gambling establishments were good competition.
Many people found the British odds system too complex. As a result, the European, or decimal, odds system emerged. Traditionally, European odds are written in decimal form: 6.1; 4.7, etc.
Let’s look at an example from darts – Ricky Evans against Nitin Kumar.
The bookmaker offers two possible outcomes. Evans to win is priced at one point zero six. Kumar to win is set at eight point six.
If a player bets one hundred euro on the clear favourite, Evans, the odds are one point zero six. Multiply one hundred by one point zero six, and the total payout is one hundred and six euros. Since the original stake is included, the net profit is only six euros.
Now take the underdog, Kumar, at odds of eight point six. A one-hundred-euro bet here would return eight hundred and sixty euros in total. That’s the original one hundred plus a net profit of seven hundred and sixty euros.
That’s how decimal odds clearly show the total return: stake multiplied by odds.
Hong Kong Odds
As the name suggests, this type of betting odds is most popular in Hong Kong. However, many bookmakers provide it in other countries since players easily read this type of odds.
How does Hong Kong odds work? It is similar to the previous European format because it is shown in decimal form. A crucial difference: Hong Kong odds show net winnings, rather than the total amount, the player can expect if the bet wins.
Let’s look at a tennis match between Elsa Jacquemot and Caroline Garcia.
The bookmaker offers two possible outcomes. Jacquemot to win is priced at one point four eight. Garcia to win is priced at one point five three.
If a player bets one hundred Hong Kong dollars on Jacquemot at odds of one point four eight, the profit is one hundred times one point four eight, or one hundred and forty-eight dollars. Add back the original stake, and the total payout is two hundred and forty-eight dollars.
Now let’s look at Garcia at odds of one point five three. A one-hundred-dollar bet here would give a profit of one hundred and fifty-two dollars. Adding the stake brings the total to two hundred and fifty-two dollars.
So the formula is simple: odds times stake for the profit, and odds times stake plus stake for the total return.
Indonesian Odds
Indonesian odds look very similar to European decimal odds, but they borrow the plus and minus format from American odds.
When the odds show a plus sign, they represent the profit from a one-dollar bet. It works just like American odds, but instead of showing the return on one hundred dollars, Indonesian odds show it on just one.
When the odds show a minus sign, they tell you how much you’d need to bet in order to make a profit of one dollar.
Let’s take an example from the UFC. In the fight between Sijara Jihan Eubanks and Melissa Gatto, the odds are set like this: Eubanks at minus one point five, and Gatto at plus one point one.
A bettor risks one hundred Indonesian Rupiah on the first MMA fighter, who is listed at minus one point five. If that fighter wins, the profit is worked out by dividing the stake by the odds. So, one hundred divided by one point five equals sixty-seven. The net profit is sixty-seven Rupiah, and when we add back the original stake of one hundred, the total payout is one hundred and sixty-seven Rupiah.
Now let’s look at the second fighter, listed at plus one point one. Here, the calculation is even simpler. Multiply the stake by the odds: one hundred times one point one equals one hundred and ten. That’s the net profit. Add the stake back, and the total payout is two hundred and ten Rupiah.
So, with Indonesian odds, a minus sign shows how much you must risk to earn one unit of profit, while a plus sign shows how much profit you make from risking just one unit.
Malaysian Odds
Unlike Indonesian odds, the Malaysian system works as a mirror of the American model. Bookmakers still use a plus or minus sign, but they present it as a decimal fraction, for example, minus zero point two nine or plus one point zero.
A negative number tells you how much needs to be staked in order to win one unit of profit. A positive number shows how much profit you’ll make if you stake just one unit.
Let’s take an example from basketball, with the Orlando Magic against the Atlanta Hawks. The bookmaker sets the odds like this: Orlando at minus zero point three five, and Atlanta at plus zero point three six.
If a player bets one hundred Malaysian Ringgit on the Orlando Magic, and the team wins, the calculation is simple. One hundred divided by zero point three five equals about two hundred and eighty-five Ringgit profit.
Now, if the same one-hundred-Ringgit bet is placed on the Atlanta Hawks at odds of plus zero point three six, and they win, the profit is one hundred times zero point three six – that’s thirty-six Ringgit.
For the favourite, shown with a minus sign, the profit is calculated by dividing the stake by the odds and then adding the stake back. So the formula is:
Net profit equals minus stake divided by odds.
Total return equals minus stake divided by odds, plus stake.
Sports Odds: Quick Rules to Remember
Once a solid understanding of how betting odds work is formed, it will be very easy to calculate and decipher any odds that might come along. Let’s polish the details and quickly summarise the main differences.
British odds are written as fractions. The top number shows the potential profit, and the bottom shows the stake required.
American odds use a plus or minus sign. A minus sign shows how much you need to stake to win one hundred units, while a plus sign shows how much profit you’d make from staking one hundred units.
European odds are decimals. To find the total payout, simply multiply your stake by the odds.
Hong Kong odds also use decimals, but here the odds only show the profit. Multiply your stake by the odds, then add the stake back to get the total return.
Indonesian odds use decimals too. With a minus sign, divide your stake by the odds to get the profit. With a plus sign, multiply your stake by the odds.
Malaysian odds are similar. A minus sign means you divide the stake by the odds, while a plus sign means you multiply the stake by the odds.
Choose From a Variety of Odds
Getting the hang of reading the odds is not hard. When you master the classical mathematical models of decimal, ratio, and moneyline, you can see how all the other types simply mirror them with slight differences.
Even though odds types don't directly affect winning, they do affect player experience. A successful sportsbook usually offers an array of betting options to cater to what players prefer and are comfortable with.