How Odds Work: Understanding how betting odds work

 The betting odds are probably one of the most popular parts of gambling, so much so, that "odds" have become a household term. Have you ever wanted to truly understand how odds work, though? That's right, despite the fact that the term "odds" is being used vastly in our daily lives, the majority of people really don't know how the betting odds work. As part of our Betting Guide series, here we will explain in great detail how the odds work, how one can take advantage and what's the difference between "betting odds" and "betting lines".

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 In the simples form of speaking, betting odds are the probability of an event correlated to a wager (also called a "bet"). Right away one must realize the difference between simple probability of an event to happen (or not), which is usually expressed as "percentage", i.e. "50% chance of the event occurring" vs. the betting odds, which are always correlated to a wager, i.e. 2/1 or "will pay two for every 1 wagered if the event happens".

 Why is this part so important? Because one must adjust their way of thinking if they plan on engaging into sports betting. If we take a simple example, a flip of a coin will yield tails 50% of the time, that's simple math, but there is no math when two football teams meet on the field and the odds are set. Every sportsbook will most often post different betting odds, based on many factors which influence the decision of the odds maker, i.e. a guy working for the sportsbook setting the odds for the event. So 2/1 odds for one team and 4/1 for the other doesn't mean that the first team has 50% chance to win the game, but that the sportbook believes that the team is more likely to win the game and will pay out $2 for every $1 wagered on that team. Bottom line in understanding how odds work here is that: odds are not simple probabilities, but a payout on a wager.

 Now that we've understood the most basic part about sports betting odds, time to move on to the most important part - reading the odds, i.e. what the odds numbers mean. There are three types of betting odds: American odds (lines), fractional odds and decimal odds ( also called "European odds" or"coefficient"). The American and fractional odds are the two types of betting odds one is most likely to encounter in the USA, especially when betting online, although most online sportsbooks will give you the option to set the odds to be expressed in any way you want. Let's take a closer look at each type and how the odds work:

 American Odds: Called this way because this form of betting odds is used exclusively in the United States. Another term for American odds is "line" or "betting line", which has been misused a lot, but we will get to this a bit later into our article. The form American odds (or lines) take is a plus "+" sign or a minus "-" sign in front of a number. For example, the line on the New York Giants to win the game against the Green Bay Packers is "-150", while the odds on the Packers to win are "+230". Here is the simplest way to read the betting odds from this example, which also covers the American odds in general: If there is a minus sign in front of the number, the number indicates how much you have to wager to win $100, while if there is a plus in front of the number, the number itself indicates how much you will win if you bet $100. As you can see there is a clear difference in reading odds with minus sign (favorite) and plus sign (underdog).

 As an exercise, let's take the odds from the above example and read them. The -150 on the Giants means that the bettor will have to bet $150 to win $100, i.e. if you have $150 in your bookmaker's account and you bet them all on the Giants, after winning you will have the total of $250 in your account ($150 wager + $100 winnings). The +230 odds on the Packers on the other side show that if a bettor wagers $100 on Green Bay, the winnings will be $230. If your sportsbook account had only $100 and you bet them on the Packers and they won, your bankroll will be total of $330 ($100 wager + $230 winnings). What if you bet $150 on the Packers odds? Then you will win $345 for a total in your player's account of $445.

 Fractional Odds: These are the most popular form of odds and unless you've lived under a rock you've heard someone mention fractional odds. Naturally they are expressed as a fraction of two numbers, for example 2/1, which should be read as "two to one" and means that the sportsbook will pay "two" to every "one" bet by the customer. Clearly these are the easiest odds to read and understand how odds work - the "first number" (in our case "2") shows how much the sportsbook will pay for every "second number" (in our case "1") wagered. So, if the sportsbook says that Boxer 1 has 3/1 odds to win against Boxer 2, it means that for every $1 bet by the customer the bookmaker will pay $3. Keep in mind, however, that the $3 will be the total payout, i.e. you would actually make only $2 profit. Let's have a real money example to better understand the correlation. Imagine you have $10 in your sportsbook account and you bet them all on Boxer 1 to win the match at 3/1 odds. If this happens, your account will be credited back with only $30 ($10 wager and $20 winnings) and NOT with $40 ($10 wager + $30 winnings). Luckily, this is the only iffy aspect of the fractional odds.

 Decimal Odds: Also called European odds or referred to simply as a coefficient in some parts of the world, the decimal odds are the easiest to work with. These odds take the form of a simple decimal number, for example 1.25, which is simply multiplied by the wager to give you the total for the bet (winnings + wager). Often used in Europe and Asia, an example would be a 2.45 odds on a soccer team to win the game. If you bet $100 you simply multiply it by the odds, i.e. 2.45x100=$245 or in other words, $100 wager + $145 winnings.

 And there we have it about how odds work. After reading this you should not only understand how odds work, but be able to perform simple winnings calculations with the betting odds at the sportsbooks. As always, we welcome feedback and if you have an idea how we could improve our guide to how the betting odds work, you are more than welcome to contact us below. And don't forget to bookmark this page for a quick reference when you need it.