How to Understand Betting Odds and How They Work

Patrick Lynch
By Patrick Lynch
Sports & Casino Expert
calendar
Updated Dec 19, 2022
time
Read time 15 min

Once you learn how to understand betting odds, you’re more likely to succeed in the medium and long term. If you fail to grasp this concept, you are bound to take poor value prices continually. Ultimately, if you regularly take bad odds, there’s practically no chance of making a profit beyond the occasional lucky win.

Increasing your knowledge of betting odds helps you better appreciate the risks you take when gambling. Instead of blindly wagering $50 on an outcome and hoping to win, you’ll have a fair idea of the likelihood of success. Analyzing the odds you bet at may prove revealing if you are one of the many people who often lose.

Betting Odds Explained: What Are the Main Formats?

Bookmakers usually use one of the following three pricing formats:

  • Fractional
  • Decimal
  • American

You can understand betting odds by selecting the option that’s suitable for you. Most crypto betting sites allow you to switch formats at your leisure. Keep reading to see which one seems easiest for you to use.

Fractional Odds

Fractional odds are generally the territory of the “old school” bettor and are the main format used in the United Kingdom.

They include a hyphen, so six-to-one is represented as 6/1. A simple way to calculate returns is to remember that you must bet the amount on the right to receive the profit on the left. Therefore, a 6/1 bet means you receive $6 in profit for every $1 bet if you win, or $7 in total.

Adopting this practice makes it easy to learn how to read betting odds that are a little more complicated. Suppose the San Francisco 49ers are 13/8 to defeat the Kansas City Chiefs on the money line. You will earn a profit of $13 for every $8 you wager.

What if you want to bet $100? In that case, you multiply your stake by the figure on the left and divide by the number on the right to get your possible profit:

100 x 13 = 1300

1300/8 = 162.5

Therefore, if the Niners win, your profit is $162.5, and your total returns are $262.50.

Decimal Odds

Decimal odds are popular in Europe and are a little easier to understand than fractional ones. The odds represent how much you’ll win for every $1 wagered.

For instance, if you back a team to win at odds of 1.77, you get $1.77 for every $1 you wager, $0.77 of which is profit.

As you can see, decimal odds are unsophisticated. However, remember that when you multiply your stake by the odds, you get the total return. You must subtract your original stake from that figure to calculate your profit.

Suppose you pick Liverpool to defeat Manchester United in the English Premier League. Liverpool’s price is 2.45, and you want to risk $60 on the wager. Here is how much you’ll win if the Anfield team succeeds.

2.45 x 60 = 147

147 – 60 = 87

Your total return is $147, with a profit of $87.

American Odds

This is the preferred option for North American sportsbooks. Initially, you may wonder, “what do these betting odds mean?” However, once you get the hang of it, you’ll find that American odds are easy to calculate.

If the price is odds-on (shorter than even money), it is designated by a minus sign. This indicates how much you need to risk to win $100.

For example, imagine if the Los Angeles Lakers are heavy favorites to defeat the Golden State Warriors at -200 on the money line. It means you must wager $200 to make a $100 profit. It is the equivalent of 1/2 in fractional or 1.50 in decimal odds.

Prices longer than evens have a plus sign before the figure.

Let’s say the Brooklyn Nets are underdogs against the Boston Celtics at odds of +400. You earn a profit of $400 for every $100 you risk if you win. It is the equivalent of 4/1 in fractional and 5.00 in decimal odds.

How Do Betting Odds Work?

The most important thing to remember is that betting odds represent the chances of an outcome occurring. The longer the odds, the less likely the event will happen and the more money you win if you make a correct prediction.

When you learn how to understand betting odds, you must know the answers to the following two questions:

  • What Is Implied Probability?
  • What Are True Odds?

What Is Implied Probability?

The implied probability of an event is a conversion of the bookmaker’s odds into a percentage chance of winning.

The easiest way to determine the implied odds of an outcome involves dividing 100 by the decimal odds. For example, odds of 2.00 mean a 50% chance of the event happening (100 / 2 = 50).

Things get more challenging when you use fractional or American odds. With fractional odds, you can divide the number on the left by the number on the right and add one. For example, if the odds are 8/13:

8 / 13 = 0.6153

0.6153 + 1 = 1.6153

In general, you may round the number down to two decimal points. This means the above becomes 1.62. Next, 100 is divided by 1.62:

100 / 1.62 = 61.73

Therefore, fractional odds of 8/13 equate to 1.62 in decimal odds and a 61.73% chance of the event occurring.

With American odds, you must first calculate the ultimate payout. Suppose the odds are -170. You must risk $170 to win $100 for a total payout of $270. Next, you divide the money risked into the final possible payout:

170 / 270 = 0.63

Therefore, there is a 63% chance of the event occurring.

Of course, you also have to consider the bookmaker’s edge, which is how they profit. In reality, you’re typically giving up several percent per bet. However, the bookmaker isn’t always right, and if you learn how to calculate the true odds of an event, crypto betting success could be yours.

Understanding True Odds – Getting an Edge

The trickiest part of sports betting is finding an edge over the bookmaker. The only way this is possible is through understanding the odds. If you believe a bet has a 60% chance of winning (true odds of 1.67), but the bookie thinks the likelihood is only 50% (implied odds of 2.00), you have a value bet.

Here’s another example. Let’s say you believe the Argentina football team has a 40% chance of beating Brazil in the Copa America. In your eyes, the true odds should be 2.50 (100 / 40). However, a crypto bookie offers odds of 3.00, suggesting that the Argentines have a 33.33% chance of victory (100 / 3). Therefore, it is clear that backing them at the available odds is a worthwhile exercise.

You can probably see the problem here. How can you possibly know the true probability of a sports outcome? It is easy to do in casino games where the house edge is known. For instance, the house edge in European (one zero) roulette is 2.7%. Already, you know that you’re at a disadvantage.

You can’t say the same when betting on individual or team sports. Professional bettors tend to create something called an “odds tissue.” The process includes analyzing a host of factors to decide the real odds of an event. It is a common practice in horse racing, but you can use it in every other sport.

The process is time-consuming but worthwhile when it uncovers a steady stream of value bets. Other bettors pay services that use artificial intelligence to determine when an event moves into ‘value bet’ territory.

If You Don’t Understand Betting Odds, Crypto Bookmakers Will Win

Casual bettors who aren’t concerned about making a long-term profit perhaps don’t care about the minutiae of odds calculation. However, it’s a good idea to learn how betting odds work to get the best bang for your buck. As for serious bettors, understanding betting odds is crucial to keep your bankroll intact for as long as possible.

If you don’t know how to read betting odds, you hand the advantage to crypto bookmakers. At that point, you’ll only win through sheer luck.

Here is a table outlining selected odds across the three formats. We have also included the implied probability of winning in each case. Check out this handy calculator, which lets you find the implied probability of any odds in the three formats.

American OddsFractional OddsDecimal OddsImplied Probability of Winning 
-5001/51.283.33%
-4251/41.2480.95%
-3502/71.2977.76%
-2502/51.471.43%
-2001/21.566.67%
-1754/71.5763.65%
-1254/51.855.56%
1001/12.050%
+1255/42.2544.44%
+2002/1333.33%
+27511/43.7526.67%
+3507/24.522.22%
+6006/1714.29%

Take particular note of the implied probability of winning. Doing so lets you quickly understand the likelihood of your bet succeeding. If you focus on longer odds bets, lengthy losing streaks are certain. Therefore, you need to create a bankroll large enough to cope with downturns and psychologically prepare yourself for them. 

FAQ

Are There Only Three Betting Odds Formats?

No. There are many other formats used around the world. Three of the most notable are Hong Kong, Malaysian, and Indonesian odds. They are generally easy to understand and convert into decimal odds.

Which Betting Odds Format is the Best?

There is no single ‘best’ format. It all depends on your preferences. Decimal odds are the simplest solution for individuals looking to calculate their overall returns easily. American odds are also straightforward once you get the hang of using them. Fractional odds take more getting used to but remain the preferred option amongst many professional gamblers.

Can I Calculate the True Probability of an Event Occurring?

Arguably, you can’t calculate true probability and odds with a degree of certainty. However, a growing number of bettors are using artificial intelligence in the hope that machine learning can bring them closer to knowing the true odds of an event. Doing so lets them know they have an edge on any particular bet.

Is There Anything I Can Do to Improve the Likelihood of Discovering True Odds?

Yes. Apart from creating an odds tissue, you can use certain metrics to improve your chances of knowing the outcome of an event. Poisson distribution, for instance, is used to measure the probability of independent events happening a specific number of times within a certain period. You can also learn to calculate the expected value of bets to determine whether you’re getting value.

Should I Bet Differently If I Think a Wager Has a Strong Chance of Winning?

This is a difficult question to answer. On the one hand, it makes sense to bet a little more if you’re confident of a higher chance of success. Many tipsters implement this ‘confidence’ model when sending selections to customers.

However, there’s a big difference between using your gut instinct and a well-designed betting system. If your data shows that a bet has a far higher edge than usual, and you trust this information, it is perhaps worth taking the additional risk. In contrast, if you continually wager higher amounts than normal based on nothing more than a feeling, your bank balance will probably plummet sooner rather than later.

What is a Bookmaker’s Overround?

This is another name for the bookmaker’s profit margin. This edge varies from one bookie to another, so it pays to shop around for the best odds. You can calculate the overround by calculating the implied probability for each possible outcome in an event. Next, add these figures together; anything above 100 indicates a bookmaker’s profit.

In a tennis match, player A is 1.50 to win, while player B is 2.50. The implied probability of player A winning is 66.66% (100 / 1.50). The implied probability of player B is 40% (100 / 2.50). Add 66.66 and 40 to get 106.66. Subtract 100 from 106.66, and you’re left with 6.66%, which is the bookmaker’s overround for this particular event.

Related articles

Education
Jan 18, 2023

Many punters swear by in-play betting, and it’s no wonder why. These fast-paced bets require immaculate timing skills if you want to benefit from the..

Education
Jan 19, 2023

Head-to-head betting is a popular betting market in many sports. Two participants in a competition are competing against one another, adding a new la..

Education
Jan 18, 2023

Several modern betting strategies are devised from mathematical formulas developed decades or even centuries ago. One such example is Poisson dis..

Education
Jan 19, 2023

With the beginning of the new year, sports enthusiasts have already started to think about top betting events. The truth is that 2023 brings many spe..

Education
Jan 17, 2023

Asian handicap bets are a good way of getting familiar with handicap betting in general. You can enjoy better odds than regular 1X2 bets, but bigger ..

Education
Jan 18, 2023

The betting industry is rife with supposedly ‘foolproof’ staking plans. However, virtually all have at least one fatal flaw; an inability to pick win..

Education
Jan 17, 2023

Point spread betting is a popular market, especially in basketball, and you can find some very lucrative odds depending on the spread. However, there..

Education
Jan 17, 2023

Parlay bets are a tricky form of betting to master, but these bets can be quite rewarding once you get the hang of it. Read our parlay betting guide ..

Education
Jan 16, 2023

The Super Bowl is the final game in the NFL season and is a culmination of months of grueling action as 32 teams begin the season dreaming of holding..

Education
Jan 10, 2023

Legitimate online casinos and gambling sites must engage in Know Your Customer (KYC) procedures. While they can be a grave inconvenience for players,..

Education
Jan 10, 2023

Have you ever wondered about the most common online casino bonus terms and conditions? Any seasoned gambler will tell you that a fabulous bonus ca..

Education
Jan 6, 2023

The over/under betting line is one of the most popular betting markets, attracting huge interest and sums of money. One of the main reasons why betto..

Education
Jan 9, 2023

Wong Teasers are one of the most popular ways to bet on the NFL. But what exactly are online sports betting Wong Teasers? And how can you use a Wong ..

Education
Jan 8, 2023

Prop betting is the most fun and exciting way to wager on all your favorite sports.  If you’ve ever wondered about prop betting strategy, or ..

Education
Jan 11, 2023

If you’re looking for a wager that gives you genuine value, betting on the futures market is potentially ideal. As the name suggests, futures betting..

Patrick Lynch
Patrick Lynch
Sports & Casino Expert

Patrick has been a professional writer since 2009. He knows the issues players face when trying to find reputable casinos and performs forensic analysis on every site he reviews. Since joining in 2021, Patrick has had his eyes opened by the potential of the cryptocurrency market. With a background in sports betting, he realizes the possibilities afforded to successful bettors when using digital currency.