How the odds work in sports betting
- Updated: 2nd October 2019
In order for us to invest money into sports betting, it is necessary to understand the probabilities of each event and then see if the odds are fair. But what are the odds? Down below we explain a little bit the term, and how to understand the odds of each event.
What are the odds?
The odds are the values set by the bookmakers, to determine how much a team or athlete is worth on a certain event.
Which means, the odds are the values that serve for you to calculate how much you will profit in case your bet is a winner.
On this case, we have a Champions League match, that has odds to determine the favourites, or how much is betting on each team in this match worth.
On this example, each euro invested will offer you a different return, depending on the selection you choose. If you bet 100 euros on Paris Saint-Germain’s victory, you might have a return of 215 euros (100 you’ve invested + 115 of profit).
The odds are available in every market on the bookmakers. Be it on money line, Over/Under goals, corners, handicaps, handicaps, half-time results, etc.
Can you calculate the odds?
In practice, you just need to want to invest your money on those that you think are favourites, and the bookmaker does the rest. But it is extremely dangerous to invest your money without analysing if there’s real favouritism in the match.
To calculate the probabilities of a certain event, we utilize a very simple formula to quantify the likelihood of our selected outcome happening.
The formula: 1/odd = result x 100 = probability in terms of %
With the example of PSG’s victory, we would have the following result:
1/ 2.15 = 0,46 x 100 = 46%
On this case, the probability of PSG winning this match would be 46%, taking into consideration that besides Real Madrid’s victory, there is also the possibility of the draw, which really decreases the chances of each scenario.
Quantifying the probabilities within a sport that involves human beings and deal with the randomness during every moment is very complicated.
Therefore, we should take into consideration more than only the cold hard number, but also understand that there are other aspects: absences, home advantage, atmosphere of the match, latest results, ambition of each team for the match, etc.
And if you do the math of the 3 possible outcomes for this event?
I believe that you have made the calculation not only with PSG, but also with the options of the draw and Real Madrid’s victory.
Draw: 1/3.60 = 0,27 x 100 = 27%
Real Madrid’s victory: 1/3.25 = 0,30 x 100 = 30%
If we add the 3 probabilities, it doesn’t add up to 100%, because 46 + 27 + 30 = 103.
Why? Well, in fact I rounded up the probabilities, because this margin above the 100% is the juice, which means the commission the bookmakers receive over the money invested on that match.
Types of odds
There are some different types of odds available on the bookmakers:
• Decimal odds (2.15)
This is the simplest format, in my opinion. It requires a simpler calculation to define the probabilities and the final profit. It is basically the formatting I’ve used above.
Example: 10€ x 2.15 = 21.50 (10 being the amount invested and 11.50 representing the profit)
• Fractional odds (3/9)
This kind of system is more commonly used in Europe, or even on websites you read about some international event.
In this case, we should calculate the probabilities in the following way: the value on the left is the profit we can obtain from the value on the right that represents the amount we invested.
Example: For each 9 Euros invested (on the right) we have a profit of 3 Euros (value on the left). We can turn these fractional odds into decimal, as we’ll explain here:
3/9 = (3:9)+1 = 1.33
Here, we would have a return of 33.3 net profit with each 100 Euros invested.
• American odds (+200)
This case is a bit more complicated to understand. It’s basically utilized by bookmakers on American sports, such as basketball, baseball, hockey, American football, etc.
Here, the odds have a “+” or a “- “added to them, and the standard amount is a stake of 100 Euros.
+200 = In this case, we would have a return of 200 Euros with a stake of 100 Euros.
-200 = Here, we would have to bet 200 Euros to have a return of 100 Euros.
That means that positive values show the return you will have in case you win the bet with a stake of 100€ while negative values are how much you would have to invest to have a return of 100€.
Transforming it into decimal odds:
If it is positive, add the value to 100 and divide by 100: (200+100)/100 = 3.00
If it is negative, add a 100 in front and divide by the value of the odds, then add 1: (100/200) +1 = 1.50.