How Betting Odds Work: Formats, Probability, Movement & Conversions Explained
Learn how sports betting odds work, how to calculate payout, bookie margins, convert odds and understand why they change…
In theory, odds tell the probability of an outcome occurring. Bookies calculate how likely it is for Kylian Mbappe to score a goal, and then they price the chance that the event will take place. Thus, betting odds represent the estimated probabilities of that particular event happening.
We’ve used this simple example to make sure you understand betting odds, but then again, there’s more to it than that…
So we’ve devised a betting guide for those of you asking questions like ‘How do odds work in football?’ & ‘What do odds of +200 mean?’. Although it is essentially a beginners guide to betting odds, explaining the fractions & decimals and the potential causes of dropping odds, we’ve prepared a few formulas that are useful even for the more experienced punters.
By the way, we’ve got another useful guide regarding bet types if you want to find out how accumulator bets work and how their total return is calculated.
Quickly navigate to your desired topic:
- Odds Meaning & Examples: Decimal, Fractional & American
- Why Odds Change: Pay Attention To Dropping Odds!
- How To Convert Fractional Odds To Decimal And Vice Versa (+Odds Chart)
- How To Convert Probability To Odds And Vice Versa
- How To Calculate Payout & Bookmaker Margins
Odds Meaning & Examples: Decimal, Fractional & American
Sports Betting Odds Explained: The odds provided for an outcome, in theory, are simply a representation of the probability of that result to materialise. There are three main types of odds formats: Decimal, Fractional & American. We’ll explain how to read odds ratio in the simplest possible way. Betting odds explained:
Decimal Odds or Continental Odds (1.50, 2.79, 15.00, etc.) are stating how much you will win when staking one unit. To find out what the potential winnings are you have to multiply the amount you want to bet by the odds offered, like £1 * 2.79 = £2.79. Note that the winnings also include the original stake.
Fractional Odds or British Odds (1/2, 179/100, 14/1, etc.) allow you to figure out the profit you will make in relation to the units invested. If you place a bet of £10 on 10/1 or 10-1 odds and the outcome is a winner, you will receive £10 for every £1 staked, so in our bet example, you would make a profit of £100, without taking into account the original stake (£10). By adding the £10 wagered, your total earnings will be £110 pounds if the bet wins.
American Odds, Moneyline Odds or (-200, +179, +1400, etc.) are only being used in the United States. How to read Vegas Odds? If the number is negative, the odds will tell you how much you need to stake to claim a profit of 100 units: -200 says that you have to wager 200 units to earn a profit of 100 units. If the number is positive, the odds are indicating the profit you will make when staking 100 units: +179 would represent a profit of 179 units when you bet 100 units. This one is probably the most confusing of the three formats, but don’t worry, you only really need to understand one of them.
Why Odds Change: Pay Attention To Dropping Odds!
Have you ever wondered why odds change? There can be more than one reason why prices are moving up and down on the market. The initial odds will be a pure representation of the calculated probabilities, and the last price will be the reflection of the money flow in most cases.
For example, a high backed favourite will have shorter odds just before kick-off, and that happens because the odds are being automatically adjusted when people wager significantly more on one outcome than the other. This way, the bookmaker can balance the wagers to generate a more or less equal amount of profit regardless of the result of the sporting event. Mostly, that’s how bookmakers make money.
Odds changes can also be determined by new information regarding the sporting event, e.g., if there is a sudden weather forecast change, a Formula 1 race is very likely to have a different outcome than it was initially predicted: fewer drivers are expected to finish the race when the track is wet and is it well known that individual drivers and cars perform better or worse under different conditions. Bookmakers will immediately react to that sort of information and adjust the odds accordingly.
Dropping odds could be an indication of a fixed match, especially if there’s no justification for a substantial price movement. But things can get very tricky when it comes to odds movement: spreading false fixed match tips is a pretty standard technique scam artists use to drive the market in the wrong direction, only to increase the odds on the actual fixed result and balance the books.
This way not only they will make better profits, but increase the chances of the match staying in the bookies offer and not being removed. This is the reason why price movement can be deceiving and should not represent a decisive factor in your decision-making process unless you are incredibly experienced and know what you are doing.
Also note that bookmaker profit margins will differ from one betting market to another, as well as from one competition to another. Usually, the best odds for football betting can be found in the Moneyline & Under/Over markets for Premier League, Champions League, World Cup, European Championship & Copa America fixtures. When it comes to tennis betting, you’ll find that Grand Slams and Masters tournaments commonly have the best odds offered, whereas with horse racing and greyhound betting it’s a different story: the leading betting sites offer best odds guaranteed.
How To Convert Fractional Odds To Decimal And Vice Versa (+Odds Chart)
Even though most fixed odds betting sites use fractional odds by default, betting exchanges use decimal odds because they are much more accurate and easy to use by punters. Every online bookmaker allows the user to see odds in their preferred format, so that’s not such a big deal. However, if you come across a promotion or a betting strategy and you’ve got no idea how to convert odds from one format to another, you should find the following formulas useful.
X/Y + 1
Example: 13/2 + 1 = 7.50
To convert decimal odds to fractional odds, you will have to subtract 1 from the decimal odds and then reduce it to its simplest form. It’s much easier to understand it if you see how the operation is performed, so let’s use betting odds of 1.50 in this example:
- Step 1 – 1.50 – 1 = 0.5
- Step 2 – Turn the number into a fraction: 0.5/1
- Step 3 – Multiply by 100 to get full numbers: 50/100
- Step 4 – Simplify the fraction to lowest terms: ½
We’ve simplified the fraction by dividing each number by 50, but there are some cases where things aren’t as easy to perform. If you need further assistance, we recommend you study this external maths resource on converting decimals to fractions.
Although fractional odds were used on race tracks in the UK, decimal odds are easier to understand and calculate, hence they have become widely popular these days. Anyway, you don’t have to worry about this at all, as bookies will allow you to choose either format you prefer.
How To Convert Probability To Odds And Vice Versa
Knowing how to convert probabilities to odds can be very helpful, especially if you are keen on becoming a value bet seeker. In fact, odds and probability of an event occurring represent the exact same thing, the only difference being the packaging.
(1 / Decimal odds) * 100
Example: 1 / 2.00 * 100 = 50%
100 / Implied Probability
Example: 100 / 50 = 2.00
How To Calculate Payout & Bookmaker Margins
You’ve probably heard about the house edge. If you would like to calculate the money you would make if you bet on every possible result you would find out that you would be losing money – due to the bookmaker’s margin.
If we would transform odds into probabilities and add them up, we would see that the outcome always exceeds 100%. If we divide 1 by the decimal probability of that total percentage and then multiply the result by 10.000, we’ll reveal the payout, and the difference from that number to 100% is the house edge.
There’s no better way to explain this other than showing you an example. We’ve selected the UEFA Super Cup 2019 match between Liverpool & Chelsea. These are the 1X2 odds on offer at the minute:
- Home Win @ 1.80 = 55.6%
- Draw @ 3.50 = 28.6%
- Away Win @ 4.50 = 22.2%
1 / (Probability1 + Probability2 + Probability3) * 10.000
Payout = 1 / (55.6 + 28.6 + 22.2) * 10.000 = 93.98%
You can use the same pattern to calculate the payout for all kinds of bets, as long as you sum the probabilities for every possible outcome offered on the respective betting market.
100 – Payout
Bookie’s Margin: 100 – 93.98% = 6.02%
Now that you know how to read odds and how to calculate payout, you can start comparing margins to find out which bookmakers have the lowest margins, thus offering the most valuable odds on the market. I recommend you check out a few top bookmakers such as bet365.com, williamhill.com, paddypower.com, betfred.com & the betfair.com betting exchange.
The bottom line is that if you’re using your knowledge on odds to calculate probabilities and compare them to your expected value, then you are on your way to successful betting and profitable results.