Sports Betting Odds Explained

Odds are one of the most important things you should pay attention to when betting on sports – they usually help you determine which team or which player is more profitable to bet on. However, when you first start engaging in sports betting, understanding how betting odds work and why you should consider them when betting on a particular outcome can be pretty challenging.

We understand that which is why we decided to gather all our knowledge about betting odds and put them into this article. So, if you always wanted to have betting odds explained, you’re in the right place. Let’s dive into it.

What Are Betting Odds?

The simplest definition of odds is the probability of a certain event happening. In sports betting, odds serve two purposes. First, they are used to calculate how much money one will win if the outcome they bet on actually happens. Secondly, they reflect the likelihood of a specific outcome happening. The higher the odds, the lower chance of that outcome happening.

Let us give you an example. Let’s say that there’s a football match happening. One of the teams is very successful, won the last 10 matches, as well as the World Cup. They are playing against a team that hasn’t won a match in years. It is pretty obvious that most people would bet on the first team, as they consider them to be more likely to win. Because of this, the odds of the first team winning will be low – the same goes for payout.

There are a few different odds formats present in the sports betting world – moneyline odds (also known as American odds), decimal odds and fractional odds. Let’s get into more detail about each of them.

American Odds (Moneyline Odds)

As their alternative name suggests, moneyline odds are most commonly used in the United States. American odds have two components – a positive or negative sign, and a number following it.

The signs indicate whether the bet you place will pay you more or less money than you have bet. A negative sign (-) means that the team or player is a favourite, which means that they are more likely to win – the outcome would pay out less money than you have bet. A positive sign (+), on the other hand, shows a less likely outcome.

Here are some examples to make it easier to understand:

• if the odds are -200, it means that you need to bet $200 in order to win $100 – the team or player is the favourite
• if the odds are +150, it means that if you bet $100, you will receive $150 in profits if the outcome turns out to be true; the team or player is the underdog

Sometimes, you might encounter a situation in which both teams or players have negative odds. It happens when the two teams or players going against each other are very evenly matched. In such a situation, you might have to risk more than your potential profit.

Decimal Odds

Decimal odds are usually used in Europe, which is why some people refer to them as European odds. They are a bit easier than American odds – it is very easy to understand who’s the favourite and who’s the underdog. You just need to look at the numbers.

Decimal odds show how much one would win when betting $1. Keep in mind however that decimal odds already include the amount you wagered, so the number shows the total payout rather than just profit.

Here’s how decimal odds look:

Team X: 1.56

Team Y: 4.20

Looking at these numbers, you can already tell that according to the bookmaker who set those prices, the probability of Team X winning is a lot higher than Team Y. Team X is the favourite here, and Team Y is the underdog.

Based on them, we can calculate that if you bet $1 on Team X, and it turns out to be a successful bet, you will get back $1.56. This includes the amount you wagered, so your profit would be $0.56. Now, if you bet on Team Y, then your total payout would be $4.20, which means that you profit $3.20.

When it comes to decimal odds, the higher the total payout, the less likely to happen is the outcome.

Fractional Odds

Fractional odds, also known as UK odds, British odds or traditional odds, are the most preferred odds format in the world, as many online betting sites and big UK bookmakers use them.

They are usually written with a slash or a hyphen (5/1 or 5-1) and are read as five-to-one, eight-to-one, and so on. Fractional odds do not contain the amount you wagered – they only talk about profit.

Let us give you an example. Let’s say that there’s a match between the New England Patriots and Miami Dolphins. The odds for the Miami Dolphins are 5/1 (five-to-one). You bet $100 that they will win. The team ends up winning. This means that you will receive $500 in profits plus your initial stake, which was $100. So, your total payout is $600.

The same method can be used to calculate your winnings if you bet on the New England Patriots and they end up winning. Let’s say the odds for them were 2/1. If you bet $50, you will profit $100 plus the original stake, which means that your total payout will amount to $150.

Implied Probability

This is nothing more than a conversion of sports betting odds (or any odds actually) into a percentage. Depending on the format of odds the bet uses, the calculations will be different. We will go through all of them, and give you some examples so that it will be easier to understand how it works.

Let’s start with positive moneyline odds. Here’s a formula to calculate the probability:

Let’s say that there’s a player whose odds of winning are +120. First, we will add 120 and 100, which gives us 220. Next, we will divide 100 by 220. This gives us approximately 0.454 or 45.4% if you prefer. This means that the player has a 45% chance of winning the match, according to the bookmaker.

Unfortunately, the same formula cannot be used to calculate the negative moneyline odds. Here’s what needs to be used instead:

Now for the example. Let’s say that the odds of winning for a team are -150. According to this formula, the calculation we need to make is (-[150]) / (-[-150] + 100). As you probably know, two negatives make a positive, which leads us to 150 / 150 + 100. 150/ 250 equals 0.6, which means that the team has a 60% chance of winning.

Since we have American odds covered, let’s move on to decimal odds. These are probably the easiest when it comes to calculating the implied probability of an event. Here’s the formula:

Because it is so simple and does not require much math, we decided to give you a few examples:

 

Team Y – odds: 2.59

so

1 / 2.59 = 0.38 = 38%

 

Player Z – odds: 1.10

so

1 / 1.10 = 0.90 = 90%

 

Team F – odds 3.40

so

1 / 3.40 = 0.29 = 29%

 

Simple, right?

Last but not least, we have fractional odds. As always, here’s the formula for that:

Let’s say that there’s a boxing match. One of the boxers has 6/14 odds. This suggests that if the same match was to happen 20, the boxer would lose 6 and win 14. To calculate the probability in this case, we need to take the number of times the boxer is expected to win (14) and divide it by the total number of trails (20).

So we have 14 / 20 = 0.7, which means that that boxer has a 70% chance of winning.

The Bottom Line

As you can see, the science behind betting odds is not that difficult to understand. You might just need a little practice when it comes to calculating probability, but who doesn’t when learning something new? There is also a nicely put-together summary on Investopedia in their The Math Behind Betting Odds and Gambling article.

Remember, there are three odds formats, all of which are popular in different parts of the world – American odds, fractional odds and decimal odds. While most online betting sites have a default odds format, most sports betting sites will give you the option to choose which sports odds format you want to be displayed.

And if you still are a little bit confused about how odds work, don’t worry. It will most likely take some time before you’ll be able to calculate winnings using them, and there’s nothing wrong with that. What’s more, there are some tools that can help you with it, such as a betting odds calculator. Good luck!