Before going headfirst into betting, it is important for you to know first how betting odds work. With knowledge on this, you will be able to understand the chances for an event to happen and calculate your possible winnings. However, it might initially seem a bit daunting, and reading about it might make you want to back out. Do not fret — this guide will help you understand everything about betting odds.
At the simplest sense, probability is the chance of something happening. In a more mathematical sense, probability could be a number anywhere between 0 and 1, where 0 pertains to impossibility and 1 for certainty that the event will happen. Higher probability means higher likelihood of the event occurring.
Consider the example of a die. Since it has six sides, you will have 1 in 6 chances of rolling any of the sides. Therefore, if you want to roll a 2, you will have a probability of 1/6 or 16.67% for this to actually happen. If there are two fair (or unbiased) dice, however, the chances would not just increase to 12; you will have to take note of all possible combinations (e.g. 1 and 1, 1 and 2, 1 and 3, and so on). So, if you want to roll a sum of 8 (the values of the dice added together), there will be five possible combinations, giving you a probability of 5/36 or 13.89% of it occurring. On the other hand, if you want to roll two 6s, there will only be a 1 in 36 (2.78%) of it happening.
In the world of betting, probability is integrated in what’s called as betting odds. They tell you the likelihood of something happening and the amount of money you most probably will win if you bet on it then it happens.
This could all seem really confusing but trust us — it will work out and be clearer in the end.
What are Fractional Odds, and How Do They Work?
In the field of betting odds, three main types can be taken from it. The first one we will discuss here is what’s called as fractional odds.
Fractional odds are also known as British odds, traditional odds, or UK odds. This is mainly because they are widely used by British and Irish bookies (slang term for bookmaker, the person who oversees the facets of gambling, usually on sporting events). However, fractional odds are the most preferred odds internationally, for a good number of big-name bookmakers make use of it. As the term suggests, this type deals with fractions, so you would expect them to appear with a forward slash (/); sometimes a hyphen (-) is used.
You can use fractional odds to calculate the probability of a given event to happen through this formula: B / (A + B), where A is the number on the ‘left’ of the slash and B is the number on the ‘right’ of the slash.
Let’s have a sample of a fractional odd: 5/1 (announced as five-to-one). We’ll have 5 as our A and 1 as B. Replacing them in the formula, we’ll end up with 1 / (5 + 1), then it will become 1 / 6. Finishing the maths up will give us around 0.1667, which, in percentage, is 16.67%. That means there is a 16.67% chance that the event is likely to occur.
When it comes to computing your possible earnings, you need to put in mind that for every B you wager, you will win A. Taking back our example from earlier, 5/1, you’ll get $5 against every $1 you bet on, resulting in a total return of $6.
However, there’s a slightly different formula for you to use when computing your total potential winnings: [C * (A / B)] + C, where A and B are still the numerator and denominator respectively, and C is the stake.
(By this point, we understand if you want to go on a walk or just take a break; this might have been turning your brain into mush. We get it — it’s math, after all.)
Anyway, let’s take a different fractional odd as an example: 8/3. With this one, you’ll win $8 for every $3 you wager. Then say you wagered $100. Going back to our second formula, we’ll replace the letters with the numbers we have now (while forgoing the dollar signs), so it will become [100 * (8 / 3)] + 100. You could make a profit of $266.67, plus your initial stake of $100, so your total potential earnings would be $366.67.
What are Decimal Odds, and How Do They Work?
Great, more numbers, you might be thinking. But really, just trust us here and this will all work out in the end.
Popular in most of Europe, as well as in Canada, New Zealand, and Australia, decimal odds deal with — you guessed it — decimals. They are relatively easier to deal with, compared to fractional odds. Decimal odds are simply presented as something like 1.25, 5.00, and so on.
You could calculate your total potential winnings with this formula: (C * A) – C, where C is the value of your stake and A is the decimal odd number.
So, if you’ve bet $100 on someone who has 5.00 as their odds of winning, you just have to multiply them, then you’ll get a total amount of $500. Your net profit would be $400, after deducting your initial stake of $100.
You have to take note, though, that the higher something’s decimal odd is, the less likely it is to happen. Betting on something that could potentially give you a higher pay-out would mean that it is also the option that has the highest risk.
What are Moneyline Odds, and How Do They Work?
The third type of betting odds is what’s usually referred to as moneyline odds, American odds, or US odds. As you could conclude, this method is more well-known in the United States and are commonly used in sporting events.
The odds are divided into two, one for the favourites and one for the underdogs. The former is represented by a number preceded by a minus (-) sign. The latter’s value comes with a plus (+) sign instead. Here’s where it gets more interesting — for favourites, the value refers to how much you need to bet on them for you to be able to win $100. On the contrary, the number for the underdogs stands for how much you would be able to win if you stake $100 on them.
Confusing? Quite probably. But let’s use an example.
Let’s say Team A has been listed as the favourite and Team B, the underdog. The bookmaker placed odds amounting to +490 for Team B, which gives us a low probability of them winning. You would need to risk $100 on them for you to potentially win that $490. If ever Team B does win, you would get that $490, as well as your initial stake of $100, bringing your total winnings to $590.
On the other hand, the bookie listed Team A with the odds of -855, implying higher chances of them winning. For you to be possibly to win $100, you will need to let go of $855. If ever Team A wins the game, you will win that $100 and you will get back your initial stake of $855. Your total earnings by then would be $955.
However, given the massive difference between the odds of Team A and those of Team B, it is most likely that Team A is highly implied to be walking out of the game as the winners.
Main Points to Take Away
Betting odds represent the likelihood of an occurrence; you could also infer your potential earnings from this information. There are three kinds of betting odds that you would come across, namely, fractional odds, decimal odds, and moneyline odds.
Fractional betting odds present the probabilities in the form of a fraction, where two numbers are separated by a slash, i.e. 9/1. The numbers represent how much you will earn ($9) for every bet you place ($1). This is the method widely used by British and Irish bookies.
Deemed as the relatively easiest method to understand, decimal betting odds signify the amount you are likely to win for every $1 you wager. These are shown in the form of decimals, which you multiply by how much you raised as your stake. The final amount you will get is the product subtracted by your initial stake. This method is common in Europe, Australia, Canada, and New Zealand.
Moneyline betting odds, the type commonly used in the United States, depend on the sign that precedes the number. A negative sign (-) would refer to how much you need to put as your initial bet for you to win $100; this is given to the ones who are the ‘favourites’. A positive sign (+) would indicate how much you will get for every $100 you raise; odds with the plus sign refer to odds imposed on the underdogs.
To conclude, it is best for you to be armed with every possible knowledge about how betting odds work before diving headfirst into the world of betting and/or gambling. Being able to interpret all types of odds properly will help you be more aware of how likely things would happen, as well as how much you will win and lose as you raise your stakes. However, you should always remember to engage only in responsible betting or gambling. You should know whether you should gamble or not, and if your gambling will not end up with you sacrificing all of your time and money.