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. 



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