Understanding betting odds is key for anyone stepping into the gambling arena. What do these numbers mean, how do they work, and what will your payout be if fortune smiles upon your bet?
Betting Odds = Stake vs. Net Return
At its core, betting odds establish a connection between:
- The size of your chosen stake, and
- The potential cash return you'll receive (including your initial investment) should your bet triumph.
Betting Odds = The Believed Chances of Winning
Odds embed some other crucial information as well:
- The suggested likelihood of the outcome at hand (essentially, the estimated percentage for it to happen).
But remember, nobody has a crystal ball. The odds are constantly on the move as perspectives and situations change, right from the opening of the market to the event's conclusion.
These dynamic factors underscore the necessity to remember that odds only reflect suggested probabilities. They act as a rough guide (based on public sentiment) to an event's likelihood – not an exact science by any means.
What Are The Chances?
- Evens (exactly 50% chance)
- Below Evens (below 50% chance)
- Above Evens (above 50% chance)
Evens (50%)
A classic coin toss : This scenario ensures just two outcomes, both having an equal, 50%, chance – heads or tails.
For bets at even odds, the net gain matches the bet placed.
In U.S. lingo, a bet set directly on the ‘Moneyline’ is precisely a 50% proposition.
Below Evens
Rolling a die : Predicting a specific number showcases a 16.67% chance given it's a one-in-six possibility.
With bets below even odds, the potential gain surpasses the initial betting sum.
Notably, this is considered a positive ‘Moneyline’ bet – it has a less than 50% chance of winning.
Above Evens
Football Avoiding a team's loss : Two of the three likely match results (a win or a draw – known as the ‘double chance’ market) stand at 66.67%.
Bets above even odds consistently offer returns smaller than the stake.
This counts as a negative ‘Moneyline’ bet – it possesses a more than 50% winning probability.
PROBABILITIES RULE OF THUMB:
As likelihood rises, expected payoffs shrink, and the reverse holds true.
Odds Formats
By region, you're likely to encounter three primary odds formats:
- Fractional odds (the traditional English style)
- “Moneyline” odds (North American)
- Decimal odds (European)
Decimal odds are the go-to online favorite, but many bookmakers let you choose based on location or personal preference.
Fractional Odds
Fractional odds are still in use by bookmakers in the UK and Ireland , though decimal odds are rapidly gaining traction.
Fractional odds provide a clear ratio of the potential reward you may get back relative to your wager, contingent on a win.
- The term for a bet with a 50% probability, also known as ‘evens’ or ‘even money’, is depicted as 1/1 or one-for-one.
- In our lower than evens scenario (16.67% chance), fractional odds appear as 5/1 , translating to a fivefold return on one stake.
- For an above evens scenario (66.67% likely), fractional odds adjust to 1/2 , giving one back for every two wagered.
The transformation from implied probabilities to fractional odds follows a formula:
(100/implied probability) – 1
E.g. (100/16.67) – 1 = 5 (-to-one)
To convert fractional odds back to implied chances:
1 / (odds + 1)
E.g. 1 divided by (5 + 1) = 16.67%
Moneyline Odds
North American betting predominantly relies on Moneyline odds, which dictate what stake brings back 100 units, or how much a 100-unit bet earns.
- The Moneyline tag for an even-money wager with 50% likelihood is +100 , signifying a complete return on a matched bet.
- For our lower chance scenario (16.67% likelihood), Moneyline odds read +500 , reflecting a fivefold gain for every hundred bet.
- For above evens odds (66.67% probability), fractional odds turn into -200 , requiring a twofold minimum bet for a hundred-unit win.
Translating implied probabilities into Moneyline is slightly trickier:
a) below evens
(100 – implied probability/implied probability) x 100
E.g. (100 – 16.67/16.67) x 100 = +500
b) above evens
(implied probability / (100 – implied probability)) x 100
E.g. (66.67 / (100-66.67)) x 100 = -200
Solving Moneyline odds back into their implied likelihoods:
a) below evens
100 / (‘plus’ moneyline odds + 100)
E.g. 100 / 500 + 100 = 16.67%
b) above evens
(-minus Moneyline odds) / (–minus Moneyline odds + 100)
E.g. ( – (-200) / ( – (-200)) + 100 = 66.67% (i.e. 200/300)
Decimal Odds
Rising in favor due to easy mental math, decimal odds allow for quick stake-to-reward calculations, either manually or assisted by Excel.
- A 50% even-money wager in decimal speak is displayed as 2.00
- For the below evens scenario (16.67% probability), it sits at 6.00
- Representing above evens odds (66.67% probability), it’s 1.50
Transmuting probabilities to decimal odds is a breeze:
1 / implied probability
E.g. 1 / 16.67% = 6.00
Turning decimal odds back to their implied probabilities:
1 / odds (expressed as a percentage)
E.g. 1 divided by 6 = 0.1667 = 16.67%
Decimal Odds = Easy Scalability
Decimal odds identify a direct link between your stake and potential gains, always representing one stake unit in total (preceding the decimal).
Their simplicity is unmatched; you can directly gauge returns from any unit wagered making overall scalability more direct.
Illustratively, with odds set at 2.25, the whole number '2' adds ‘1’ as a stake.
Potential winnings can be deduced by subtracting the stake, hence we take the ‘1.00’ from ‘2.25’.
The leftover ‘1.25’ states that a single-unit stake yields a win of 1.25 units at 2.25 odds.
Scale this—if you opt for 10 units, winnings simply alter to 10 times 1.25, equaling 12.50.
Odds above 2.00 Examples:
- Odds of 6.50 (suggesting a 15.38% chance): every unit earns you 5.50 (or envision 55 gained per 10 staked).
- Odds of 19.00 (5.26% probability): stake one unit to possibly win 18.00 (180 earned for 10 placed).
Odds below 2.00 Examples:
- Odds of 1.25 (80.00% likelihood): each unit bet can possibly bring back 0.25 (2.50 returned for a 10-stake).
- Odds of 1.01 (99.01% probability): stake a single unit, earn merely 0.01 (0.10 returned for 10 staked).
Keep in mind, subtract ‘1’ from left-of-decimals each time to find the necessary multiplier for calculating winnings.
Summary
Betting odds continually shift pre and during events. They serve as implied indicators of event outcomes, barely touching absolute foretelling.
Taking a racehorse priced at 6/5 (fractional), 2.20 (decimal), or +120 (Moneyline) some weeks out—a shift to 1/1 or 2.00, or +100 near show time (50% likelihood) indicates changes.
The horse itself isn't altered. Only public perception of its victory chances is reflected.
So, the most reliable use of betting odds aligns with potential rewards for each prospective outcome. bookmaker or exchange Simply put, quantify your winning yield if your prediction strikes true.
At 6/5 odds, each stake unit yields 1.20 at close. Implies a 45.45% win odds interpretation: 1 / (1.20 + 1) = 45.45%.
In pursuing bets, securing the most advantageous odds is imperative to see long-term profitability.
