Sports Betting Odds Explained
To properly understand sports betting, you need to understand odds. They are an integral part of any sports wager, and they are used to determine whether a wager is worth making or not. The potential payout of any wager you place is calculated using a combination of the relevant odds and your stake.
On this page, we explain about odds in some detail. We define exactly what they are and the role they play. We also look at the three different formats in which they can be expressed, and explain why odds on the same outcome can vary with different bookmakers.
What are Odds?
In sports betting terms, odds basically serve two purposes. First, they are used to calculate the payouts of winning wagers. Every time you place a bet with a bookmaker, you'll be offered odds at the time, which impact how much you can win. The higher they are, the more you stand to win relative to your stake.
Second, odds also reflect the likelihood of any particular outcome happening. The more likely an outcome, the lower they will be. This makes perfect sense, as you would expect to win less when betting on an outcome that's likely than when betting on an outcome that is unlikely.
Imagine a tennis match where the player ranked number one in the world is pitted against the player ranked 137th. It stands to reason that the best player in the world is going to be considered more likely to win than his opponent. Therefore, a wager on his winning would have very low odds; a wager on his opponent winning would have much higher odds.
This is a somewhat simplified explanation, but it gives a general idea of the role of odds in sports betting.
Different Odds Formats
As you can see, the fundamental principle behind odds is really quite straightforward. Things are slightly complicated by the fact that there are three different formats of odds as follows:
- Moneyline/American Odds
- Decimal Odds
- Fractional Odds
Chances are, at some point, you'll encounter each of these formats. For this reason, it pays to be familiar with each one. They all work in essentially the same way--basically just different ways of expressing the actual odds for any particular wager.
Moneyline or American Odds
Moneyline odds are also known as American odds, and this is the format most commonly used in the United States. They can be displayed as either a positive or a negative number. A positive number expresses how much a correct wager of $100 would win, while a negative number expresses how much you would need to stake in order to win $100.
If you saw odds of +150, you would know that a $100 bet could return $150 in winnings, plus the initial stake of $100. If you saw -150, you would know you need to stake $150 to return $100 in winnings, plus the initial stake of $150. An even money wager (where you stand to win an amount equal to your stake) is expressed as +100.
Decimal odds used to be associated mostly with mainland Europe, Canada, and Australia. However, they have now largely become the standard at most online bookmakers with the exception of some US betting sites. This is because they are the most straightforward of the three formats and are expressed simply as a single positive number, typically to two decimal places.
The number shows how much the total payout will be, including the original stake per unit staked. For example, a winning bet at 1.5 would return a total of $1.50 for every $1 staked. A winning bet at 2.25 would return a total of $2.25 for every $1 staked. An even money bet is expressed as 2.00.
Fractional odds are the traditional format used in the United Kingdom, although decimal odds are slowly taking over. Calculating potential profits and payouts with this format can be a little tricky, certainly to start with, but the basic principle isn't as complicated as it might seem. As with moneyline odds, fractional odds show how much potential profit you can make. To calculate the total potential payout, you have to add your original stake.
As the name suggests, these odds are displayed as a fraction. A simple example is 3/1, which is said as "three to one". 5/1 is said as "five to one", and so on. With 3/1, you can win three units for every one unit staked, and with 5/1 you can win five units for every one unit staked. 1/1 is even money, so you can win one unit for every unit staked. As you can see, this is quite straightforward so far.
Things get slightly more complicated, because this format also includes examples such as 6/4, 11/10, and 5/2. The math involved is thus not always so simple. With 6/4, you can win six units for every four units staked, which is equal to 1.5 units per unit staked. With 11/10, you can win eleven units for every ten units staked, or 1.1 units per unit staked.
Whenever the first number is larger than the second, this is said to be "odds against." These are basically the equivalent of positive moneyline odds in that the potential profit is greater than the amount staked. Things get even more complicated as there are also "odds on" odds. These are the equivalent of negative moneyline odds in that the potential profit is less than the amount staked.
An example of odds on is 1/4 is said as "four to one on". 4/7 is "seven to four on", and so on. With 1/4, you can win one unit for every four units staked, and with 4/7 you can win four units for every seven units staked.
Converting Odds Formats
If you ever want to convert odds from one format to another, there are some reasonably straightforward calculations you can do. We can save you the bother, however, as we offer a useful tool which will automatically convert any odds from one format to another. You can find this tool on the following page.
Why Odds Vary on the Same Outcome
For a lot of wagers on sporting events, you'll see that different bookmakers offer different odds. For example, one might have a football team at +130 to win a match, while another might have the same team to win the same match at +120. To explain this, we expand on a statement made earlier.
When we said that odds reflect the likelihood of a particular outcome happening, it would have been more accurate to say that they reflect how likely a particular outcome will happen in the view of the bookmaker. Predicting how likely any outcome is in a sporting event isn't an exact science, and it essentially comes down to a matter of opinion.
This is why the odds in sports betting are variable, because not all bookmakers will have exactly the same view on how likely a particular outcome is. Odds can also be affected by other factors, such as the amount of money a bookmaker has taken on a particular market. What this means is that the odds that a bookmaker sets for a wager aren't always an accurate reflection of the true likelihood of the relevant outcome happening.
Therefore, it's possible to put the odds in your favor when betting on sports. If you're able to correctly predict the outcome of sporting events often enough, you can consistently turn a profit. It's not easy, but if you can combine your sports knowledge with an understanding of certain key aspects of betting, it can definitely be done.
Odds are one of those key aspects, and you hopefully now understand how they work and why they vary. You should also understand why the use of odds is the main reason why bookmakers make money, which we explain in the next article.
Author: Brad Johnson
Updated: March 2015
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