ODDS
UNDERSTANDING ODDS
Odds are the reflection of the probability or chance of a particular outcome in an event. Bookmakers establish prices or odds that will reflect the chances of an outcome taking place.
PROBABILITY
To understand betting odds, we have to first understand probability.
Probability is the likelihood of an event happening and is often expressed in percentages.
Take rolling a dice for instance. Rolling a dice gives a probability of 1 out of 6 for each outcome. The probability of the dice landing on any of the six sides is equal. In percentages this means 16,67% chance for any of the six sides to come up.
BETTING ODDS
The three main types of betting odds are Decimal (European) odds, Fractional (British) odds and American (moneyline) odds. These are simply different ways of presenting the same thing, the return you will receive on a given amount of money placed on a bet.
DECIMAL ODDS
Decimal odds are most widely used by sports bettors in Europe, Australia and Canada. They are quite simple to understand, which is also the reason why they are a favourite way of representing odds across the world.
It’s quite easy to calculate your potential profit with decimal odds. Just multiply your stake with the odds.
Potential Payout = Stake x Decimal Odds
Let's look at an example:
Let’s say a bookmaker is offering odds of 1.82 for an athlete to win an event. If you place a €100 bet, then the potential return on your bet will be €182. Keep in mind that this calculation includes your original stake of €100, so your actual net profit on this winning bet would be €82. Simply put the calculation will be:
Potential Payout (€182) = Stake (€100) x Decimal Odds (1.82)
Always keep in mind that when you use decimal odds, your original stake is included in the calculation of your potential winnings. Hence, when you calculate your potential winnings, always remember to account for your original stake to determine your potential net profit.
2.0 is the breakeven odds for decimal odds, since these will simply double your stake. If the decimal odds are lower than 2.0, then your potential profit will be lower than your stake. On the other hand, if odds are higher than 2.0, then your potential payout will be higher than your stake.
FRACTIONAL ODDS
Fractional odds is one the oldest types of odds, and are more widely used in the United Kingdom and Ireland.
Like decimal odds, fractional odds are quite easy to calculate simply because they are in fraction form. The second number to the right, or the denominator, is the bet amount while the first number on the left, or the numerator, is the amount that your bet will yield.
Potential Payout = Stake x Fractional Odds
Let's look at an example:
Let’s say you bet on a team with 10/15 fractional odds. This means that for every €150 bet, you can potentially make a €100 net profit. If your bet wins, you get €250 (€150 original stake + €100 profit). Simply put the calculation says:
10/15 Fractional Odds: €150 to win €100 = €250
Fractional odds can also be written with a colon e.g. 4:1
AMERICAN ODDS
American odds also known as moneyline odds are probably the easiest to understand since the odds are represented by the amount that the bettor will have to bet to win €100.
Moneyline odds can be displayed as either a positive (+) number or a negative number (-). A positive number expresses how much a correct bet of $100 would win, while a negative number expresses how much you would need to stake in order to win $100.
(-) Potential Payout = Stake/(Odds/100)
(+) Potential Payout = Stake x (Odds/100)
*Please note that the (-) sign is ignored in this calculation
Let’s look at a couple of examples:
Let's say a bookmaker is offering odds of -130 for an athlete to win an event. This means that to win $100, you have to bet $130. In other words, if you place $130 on that outcome, your potential profit is $100.
Let's say a bookmaker has offered odds of +180 for a team to win a game. This simply means that if you bet $100, you will win $180.
CONVERT ODDS
Knowing how to convert betting odds into their respective implied probabilities is very helpful when assessing the potential value in a bet. If the implied probability of the odds offered for an event is less than your own assessed probability of a particular outcome in the same event, that outcome represents a value betting opportunity.
CONVERTING DECIMAL ODDS
Decimal Odds are a simple reflection of the return you will receive for each single unit placed.
Let’s say a bookmaker is offering odds of 1.65 for Mark McMorris to win X Games. This means that for every 1.00 unit you bet on that particular outcome, you will receive a profit of 0.65 units should Mark McMorris win.
To convert these odds to their respective implied probability simply use the formula below.
Implied probability = (1 / Decimal Odds)
Example:
(1 / 1.65) = 0.606 = 60.6%
60.6% implied probability for Mark McMorris to win
CONVERTING FRACTIONAL ODDS
Fractional odds are generally the most traditional form of expressing betting odds. They are a simple reflection of the return you will receive for a particular amount bet.
Let’s say a bookmaker is offering odds of 5/2 for Kelvin Hoefler to win an upcoming Street League event. The odds of 5/2 (expressed as 5 to 2) means that for every 2 units that you bet, you will receive 5 back as profit should Kelvin win.
To convert Fractional odds to their respective implied probability use the formula below.
Implied probability = Denominator / (Denominator + Numerator)
Example:
2 / (2+5) = 2/7 = 0.2857 = 28.57%
28.57% implied probability for Kelvin Hoefler to win.
CONVERTING AMERICAN ODDS
There are two instances of American odds: Minus Moneylines and Plus Moneylines.
Let’s start with the positive odds because they are the easiest to work with.
Let’s say a bookmaker has Kelly Slater as a +350 underdog to win an event. This means that if you bet $100, your potential profit is $350 should Kelly Slater win.
To convert Plus Moneyline odds to their respective implied probability use the formula below.
Implied probability = 100 / (plus moneyline + 100)
Exempel:
100 / (350 + 100) = 100 / 450 = 0.2222 = 22.22%
22.22% implied probability for Kelly Slater to win.
The Minus Moneyline conversion is a bit different.
Let’s say a bookmaker has John John Florence as a -135 favourite to win the same event. This means that you have to bet $135 in order to win $100 should John John Florence win.
To convert Minus Moneyline odds into their implied probability use the formula below.
Implied probability = (-1 x minus moneyline) / ((-1 x minus moneyline) + 100)
Exempel:
(-1 x -135) / ((-1 x -135) + 100) = 135 / 235 = 0.5744 = 57.44%
57.44% implied probability for John John Florence to win.
FINAL WORD
While there are many tools on the web that will help you convert odds to their implied probabilities and convert odds to other formats, it is still important to understand the calculations behind these conversions. This will only help you better understand what the odds represent in terms of value as well as exercising your betting brain to think instinctively in terms of implied probabilities when odds are presented to you.
