They tell us two things:
- How much money you could win;
- The probability of an event actually happening.
If you’re new to the world of sports betting, it’s completely understandable to be confused by all these numbers that bookies display.
That’s why we’re going to discuss how to read and calculate odds in detail.
The first thing you need to take into account is that odds come in three formats:
- American (plus/minus odds)
If you’re interested in mastering odds before placing your first bet, please read this comprehensive guide carefully.
What are odds and probability in betting?
We use the term odds as a synonym for probability in everyday language, but that’s not really the case in sports betting.
When a punter refers to odds, they mainly mean that number that’s always placed next to betting options. They imply probability as well, but their primary purpose is to determine your payout if you win the bet.
You can use odds to calculate the probability of an event happening, and we’ll discuss that in this article as well.
First of all, let’s see how decimal odds work.
How decimal odds work
Decimal odds are represented by a decimal number. A higher number means that you’ll receive more money for a bet, but it also means the probability of winning the bet is lower.
They are used in Europe (except for the UK and Ireland), Australia, New Zealand, Singapore, and Canada.
We’ll use a real-life example to explain how decimal odds work.
At the moment of writing this article, there are several UEFA Champions League matches featured in many online sportsbooks.
Inter Milan will welcome Real Madrid to San Siro, and that’s expected to be an exciting match.
If you go looking for this match on a betting site, you’ll see that the odds of Inter winning are set at 2.15. Real Madrid’s victory comes with the odds of 3.20. What does that mean?
Simply put, bookies think that Inter is a slight favourite in this case. If you bet £100 on Inter, you’ll win £215. Betting on Real, on the other hand, will bring you a payout of £320.
To calculate your winnings, you just need to multiply the odds with the betting amount.
Here’s another example.
Atletico Madrid is a heavy favourite against Lokomotiv Moscow, and betting on the Spanish club comes with the odds of 1.18.
£100 * 1.18 = £118
Therefore, you’ll get your initial wager back and receive £18 on top of that. That’s a low-risk bet.
However, a high-risk bet would be putting your money on Lokomotiv Moscow, which has been given the odds of 15.00. In that case, betting £100 would result in a payout of £1,500. The chances are pretty slim for the Russian team to win, so you have to be extremely lucky to get that one right.
By the time this article is online, the matches will be completed, and you’ll be able to compare the odds presented in this article with an actual outcome.
How fractional odds work
In math, decimals can also be represented by fractions. This can be applied to odds as well. Instead of using decimal numbers, bookmakers in the UK and Ireland prefer fractional odds.
They are also referred to as British odds, UK odds, or traditional odds (used in the UK).
They are also pretty simple to read once you get the hang of them.
The tricky bit is the fact that fractional odds represent your profit (not including the stake), whereas decimal odds represent the total payout.
For example, odds of 4/1, are the same as 5.00 in decimals, meaning you’ll receive 5x your stake if you win the bet, but that’s only 4x your stake if you only count your profit. This means betting £100 would result in £500 payout or £400 profit.
Also, if the odds are ¼, you’ll get 25% on top of your original bet. Therefore, betting £100 will result in a £125 payout (£25 profit).
If fractional odds seem a bit confusing to you, there’s a better way to read them. If the odds are 7/4, you’ll get £7 for every £4 wagered if you win.
However, bookies don’t always use the lowest common denominator for their odds. For example, using 6/4 is sometimes more practical than using 3/2.
Let’s get back to the Inter vs Real match. In fractional odds, Inter is given 23/20 and Real 11/5. Therefore, if you bet £20 on Inter, you’ll receive a total of £43 (your original £20 + £23 profit). If you bet £100, you’ll get £215.
How plus and minus odds work
Plus and minus odds are often called moneyline odds or American odds. You’ll see a whole number with a + or - sign next to them when you use the moneyline format.
If there’s a plus (+) sign, it shows how much profit you’ll win if you wager £100. For example, if the odds are set to +300, and you invest £100, you’ll get a total of £400 (£300 profit). All odds with a plus are called positive odds.
The plus is almost always used for underdogs when there’s a clear distinction between them and the favourite. Favourites will come with a minus (-) sign next to their name.
The minus indicates how much money you need to wager to reach £100. For example, if the odds are -300, it means you’ll win around ⅓ on top of your initial wager. In other words, if you invest £100, you’ll receive approximately £33.
To win £100, you’ll have to wager £300, and that’s why -300 is used. All moneyline odds with a minus are simply referred to as negative odds.
It’s simple — moneyline odds revolve around the number 100.
Let’s use the Inter vs Real example once again. Since there are no clear favourites in this match, there are no negative odds. Both teams are given positive odds, but Inter’s are lower.
Therefore, Inter has +115 and Real +220. Betting £100 on Inter will result in £215 payout (£115 profit). Betting that amount on Real comes with £320 payout (£220 profit). You’ll notice that the moneyline odds are pretty easy to read once you make a couple of wagers.
How American odds work
American odds are the same thing as minus and plus odds. It’s just another name for them, so if you stumble upon the format labeled as American, you’ll know what it is.
How to use odds to calculate probability and winnings
As stated above, the odds have a two-fold role: to show the potential winnings and to calculate probability.
We’ve already explained how to calculate winnings for every type of odds format. However, there’s one more thing we’d like to discuss — implied probability.
Simply put, it’s just another way to display odds that will tell you what probability you have to pass your bet.
There are different formulas for calculating it, depending on the odds format you use.
For decimals, one is divided by the odds and multiplied by a 100. Let’s use Inter’s odds of 2.15 once again.
(1 / 2.15) * 100 = 46.5%
Therefore, bookies suggest that Inter has a 46.5% probability of winning. Using the same formula, we calculated that Real has an even lower chance — 31.25%. The odds for a draw are 26.31%.
For fractional odds, you need to divide one by the fractional odds, add one and multiply by a 100.
(1 / (23/20 + 1)) * 100 = 46.5%
As you can see, we’ve reached the same implied probability that we had when using decimals for betting on Inter.
To convert positive odds into probability, you need to divide a 100 by the given odds plus 100. Finally, you need to multiply the given result by a 100. American odds for Inter winning the game were +115.
(100 / (115 + 100)) * 100 = 46.5%
Things are a bit more complicated with negative odds. First, you need to multiply the negative odds by -1 and then use that value in this formula: odds divided by the odds plus a 100 and multiplied by a 100.
The odds for Atletico Madrid to win against Lokomotiv Moscow are -550. So, here’s the formula:
(550 / (550 + 100)) * 100 = 84.6%
If you’re into math, calculating probabilities wouldn’t be too much of a challenge. If you hate math, you’ll have to get used to the fact that it’s the essence of sports betting.
To sum up, odds are a vital part of sports betting, and it’s essential that you can read them properly and determine probabilities based on them.
The first step towards becoming a successful sports bettor is choosing the preferred odds format and knowing how to use it. Therefore, make sure to select the format that seems most comfortable to you and open an account in an online sportsbook.
After that, find the option to change the odds format and set it to the one you favour.
Once you make a couple of bets, calculating probabilities and payouts will become a piece of cake, as you’ll train your mind to convert odds. After that, you’ll be able to explore various sports, and sports betting markets and apply complex betting strategies.