Introduction to betting odds
In the sports betting world odds are of critical importance for both bookmakers and punters. After all they indicate the payout rate of your winning bets and show the anticipated outcome probability for every event. It’s not an exact science, but once you start understanding the concept of odds, you are more likely to claim bigger winnings. The purpose of this topic is to make you familiar with betting odds at all levels. Here we will explain you the meaning of Vigorish and some other betting related terms, guide you through all popular odds formats (Decimal, Fractional, American, etc.) and give you tips on how to make the best of using them.
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What is Chance and how does it relate to betting odds?
If you look in the dictionary, you will see that chance is described as ‘A possibility of something happening’. In other words, chance measures the probability of a certain event to occur. The simplest example is a coin toss, where the chances for ‘heads’ and ‘tails’ are equal at 50%. When you roll a dice the possibilities again are identical, 16.66% (calculated by dividing 100% by the 6 probable outcomes). In contrast, a whole host of side factors apply for different sporting events. However, the same principle is applied for calculating the chances of each outcome, which are presented in the form of betting odds.
Understanding Fractional odds
Unlike our European cousins who tend to use decimal odds, us Brits have been brought up with bookmakers using fractions to show the chance or probability of an event happening. As most of us will be very familiar with fractional odds this section will just be a recap. Simply put, “the first number in the fraction shows how much you will win if you place the amount shown in the second number” – for example:
If you have odds of 4/1 and stake £1, you’ll receive £4 in winnings. The odds quoted do not include the return of your stake money so if you did place £1 at 4/1 you would receive £5 in total back.
Or in simple maths,
You may see odds were the number on the left is lower than the number on the right, for example 2/7. When this happens it is called ‘odds on’. In this example if you placed £7 at odds of 2/7, you would receive £2 winnings plus your stake back of £7 so in total you would receive £9.
In the following tables you will see a figure for implied probability. This is an indication of how probable a result is and you can read more on that topic later in our article.
A few more examples:
|Amount Bet||Odds||Amount won||Implied probability|
This may initially seem very confusing and even a bit daunting at first, the great thing is that usually when you place a bet, the bookmakers betting slip online will automatically populate to show you potential winnings. This is a godsend when you are placing several bets for an accumulator where winnings are carried forward to the next bet.
Different odds formats, used around the world
Apart form fractional, there are several more ways to view the odds that are present on the best betting sites. Switching between them is easy, just few clicks and you will see the prices in your desired format. The payout rate for all of them is, of course, the same. We know that choice can be important, as long as you are able to understand what the data is telling you. This topic will show you the essence of European and American odds and give you examples on how they work.
Decimal (a.k.a digital and European) odds format is fairly popular in continental Europe, Australia and Canada. Calculating their potential profits using this type of odds, punters get the total amount of money they will get in return, including the stake. They are often used for trading, therefore you will regularly find them on Bet Exchanges.
The following example shows perfectly how decimals work.
Manchester United entertain West Ham and the decimal odds for Home Win / The Draw / Away Win are as follows: 1.33 / 5.25 / 8.5. The formula we use is simple and we will use £10 for each outcome. The simple calculation is: (Odds x stake) – stake = Profits
Profits from Manchester United win: (1.33 x £10) – £10 = £2.30; Profits from The Draw: (5.25 x £10) – £10 = £42.5; Profits from West Ham win (8.5 x £10) – £10 = £75.
Have a look at some more examples:
|Amount Bet||Odds||Amount won||Total return||Implied probability|
American odds American odds, as the name suggests, enjoy highest popularity and are commonly used across the Atlantic Ocean. They are also known as lines or money line odds and what you will notice about them is that they consist either a ‘plus’ or a ‘minus’ sign. If the odds are indicated with a plus, the number indicates how much you will win with a £100 bet (excluding stake). The ‘so called’ Negative odds show how much you need to stake in order to get £100.
For instance, if Miami Heat’s chances of winning the Eastern Conference are valued at 10/1 fractional, the US odds will be +1000.
In a similar fashion, Detroit Tigers’ 5/16 chances of winning their MLB game against Minnesota Twins translate into -320 US odds.
|Amount Bet||Odds||Amount won||Total return||Implied probability|
How to calculate the implied probability of odds?
We all know that bookmakers are a clever bunch, they hire lot’s of people who study every aspect of sports. Especially in this modern age of the internet, every stat you could ever dream of is only a mouse click away.
How many times have Bristol City won at home this season? Was Red Rum faster over the competition in the final furlong? How many years is it since Liverpool last won the title? – it’s all there, you just need an internet connection and your football knowledge will rival Gary Lineker’s.
When I see odds displayed, they are just that, odds. To me they just tell me I can win x amount of money if I stake x amount of cash. However, odds are quite a clever indication of how likely something is to happen.
I say likely because that’s all it is, the likelihood of something taking place after the boffins have analysed hundreds if not thousands of variables. They are not always correct but the vast majority of time they are a good indication of how likely something is to happen. Understanding probabilities can give you an edge in your battle with the bookmakers.
In the Uk we are used to seeing odds displayed as fractions. 2/1, 5/1, 2/5 etc.. Even if you don’t gamble much you are bound to have seen posters in your local Ladbrokes offering Rooney at 5/1 to score the first goal against Chelsea. 5/1 we probably all understand, I put £10 on and if he scores the first goal I then receive £50 winnings plus I get my stake back of £10 making a total of £60 but how likely is that?
For fractions such as 5/1 we need to divide the denominator number (in this case 1) by the denominator & the numerator (5+1) then multiply by 100 to give us a percentage of how probable the bookmakers feel this situation is likely to happen.
So for our example, 5/1
1 (the denominator number on the right of the 5/1) divided by the sum of the denominator and the numerator (5+1) then multiply by 100.
so this in our example = 1 divided by (5+1) = 0.1666 multiply by 100 = 16.66
This gives us the probability according to the bookmakers that Wayne Rooney will score the first goal as 16.66%.
Let’s try another example, picking a random horse race I see Betway are offering 7/2 on a horse called ‘Prettyamazinggrace’ running the12.25 at Fairview. So using the same calculations the denominator is 2 and I would divide that by the denominator + numerator (7+2) =9 which gives me 0.2222. I then multiply by 100 to give me 22.22% bookmakers implied probability of winning.
Denominator = 2 divided by denominator (2) + numerator (7) = 9 = 0.2222 multiplied by 100 = 22.22
If you are a fan of the decimal odds system rather than fractions then it is a lot easier to work out the implied probability you will be pleased to know!
The formula is 1 divided by the decimal odds given.
So let us imagine Arsenal are being offered at 1.60 to beat Chelsea in the FA Cup, in simple terms for every £1 you stake you will get 60p back so all we need to do is divide 1 by 1.60 (0.6250) and then multiply by 100 to give us the implied probability. In this case the result = 62.50.
If we take the Rooney example earlier 5/1 in fractions = 6 in the decimal format, 1 divided by 6 = 0.1666 we then multiply by 100 to give us the same result of 16.66%
For many people the heart will always rule the head but of course upsets can and do happen every single week but having a rough idea of probabilities can be really useful especially when it comes to accumulator selections.
FAQs about Betting odds
Q: What does ‘Evens’ odds mean? A: Usually the 1/1 fraction is present at the best betting sites as Evens. By betting on this wagering proposition, the punter can win the same amount of money he / she staked. The decimal equivalent of Evens is 2.00 and the implied probability is 50%, causing the odds sometimes to be referred to as fifty-fifty.
Q: How bookmakers fluctuate odds and what is Vigorish ? A: In an ideal world, a bookmaker will have an equal amount of bets both for and against a result, this is what is called a “greenbook”. For example; If 2 people are going to bet on the outcome of tossing a coin and are willing to bet £100 on the result. The bookmaker will likely offer odds equivalent to 45% for heads or tails. As you know the true odds are 50% for the outcome of the coin flip to be heads or tails. The difference in the odds is called the vigorish (or Vig or Juice among other names), this enables the bookmaker to make a profit. If the 2 people choose different outcomes, 1 heads and the other tails then this creates a win/ win situation for the bookmaker as they will make 10% profit whatever the outcome. However if both people choose tails then the bookmakers liability is a possible loss of £200 if tails is indeed flipped. There is of course the possibility of a £200 profit if heads is flipped. To reduce their liability, bookmakers will fluctuate the odds they offer. They may decide to offer reduced odds of 42% on tails and an increased figure of 48% on heads to encourage a balancing of their liabilities.
Q: How do bookmakers determine their odds? A: There is a wide spectrum of facts that is taken into account by all bookies when deciding what the odds for a certain event should be. First comes the house edge, when you sum the implied probability for all outcomes for any fixture, it will never add up to 100%. They think about the likes of ‘how many people will bet on a home win’ and ‘how to optimise the profits without giving too low odds’? As it is with any other business, the competitors’ performance is very important for each of the best betting sites. There are a lot of odds comparison websites, where you can see that the prices amplitude for the top UK bookmakers is not that big at all. Apart from that, a lot of side factors also influence the size of odds offered. Chelsea’s current away form, Raheem Sterling’s latest injury scare and even Arsene Wenger’s latest press conference may have different impact.
Q: What bookmaker offers the best odds for betting on football? A: Over the last couple of seasons, BetVictor were pronounced as the bookmaker with best odds for Premier League matches. The operator proudly parades with the title on its website, stating that they’ve offered top deals 71% of the time and that the research has spanned over 17 different operators.