One of the first things you should do if you’re new to betting is learn about betting odds. Having a clear understanding of how probable an event is to occur and how much money you may win is vital to your success. Initially, it may not look easy.
Wherever you might be in the world, sports betting odds work the same way. The format may change, but the underlying structure remains the same.
Through this guide on how betting odds work, our editorial team will take you through all the different types of betting odds that most online betting sites use.
Defining Betting Odds and Implied Probabilities First
There are three types of betting odds: decimal style odds, fractional odds, and American odds (or Moneyline).
Each type of odds can be converted into the other and expressed as a percentage of an implied probability.
Sports betting sites use these types of sports odds to present probabilities for sports betting.
Once a probability for an outcome is announced by an online sportsbook, you can decide whether or not to place a bet or wager.
How Do Bookmakers Calculate Odds and Set Prices
Let’s assume we are looking at a football match between Team A and Team B, and the chances of the match happening is 100%. Individual odds are linked to each outcome’s probability. Bookmakers earn money by putting these odds together and adding on a margin for themselves.
If we look at our football match example, we could notice there are three possible outcomes. Team A wins, Team B wins, or The Draw.
Let’s say Team A are favourites with a 50% chance to win. Team B are the underdogs with a 30% chance, and The Draw is most unlikely to happen with a 20% chance. If you change one value, consequently the other ones change too. Together, they all total 100%. In betting terms, this 100% figure is called an overround.
Bookmakers and online Sportsbooks subtract a chunk of value from each outcome’s price, which changes the overall/overround figure from 100% typically up to 125%. Occasionally they can be as high as 140% on bigger events because bookmakers know many people will be betting on the occasion.
How Do Betting Odds Work in Gambling
Betting odds work by reflecting the implied chance of an outcome in monetary terms, including the bookmakers’ margin.
There are three types of betting odds that you can make a successful bet on.
Decimal style odds, also known as European odds, represent the amount of money won for every CA$1 that is being wagered.
The smaller number in value is assigned to the favourite, and the bigger number is assigned to the underdog.
You need to multiply the amount you want to wager with the decimal number assigned to the team or player you bet on.
For example, If the odds are 5.00 for a soccer team to win a match, the payout is CA$500 for a wager of CA$100.
Fractional odds are written either in a fraction format, such as 3/1 or a ratio, like three-to-one. Fractional odds are sometimes referred to as traditional odds, UK odds, or British odds. In this case, it means you would win CA$3 for every CA$1 that you wager, in addition to receiving your CA$1 that you wagered.
For example, the fractional odds for the tennis match between Zverev and Medvedev are 8/25 in favour of Zverev and 31/10 in favour of Medvedev.
The outcome of the fraction is multiplied by a factor of 100, and then that number is added to the sum of your wager.
If you wager a CA$100 on Zverev to win, you will win CA$132, or CA$410 if you bet on Medvedev.
Moneyline odds, also known as American odds, are expressed with a positive number (+) or a negative number (-) in front of the odd.
The plus is assigned to the player (or event) with a lower probability to win, and the number indicates how much you will win from a 100 unit wager.
The minus sign is assigned to the player (or event) with a higher probability to win, and the number indicates how much you need to wager find order to win 100 units.
For example, the NFL match between The Packers and The Bears, with +145 in favour of The Packers and -165 in favour of The Bears.
If you wager CA$100 on The Packers and they win, you would get CA$145 on top of your CA$100 bet (total CA$245).
If you would wager CA$100 on The Bears and they win, you would win CA$60.61. Or, the number -165 tells you how much you have to bet to win a CA$100.
Odds Explained in Different Sports Betting Markets
There are three major bets available in sports markets: the moneyline bet, the point spread, and totals.
- Moneyline bets
A moneyline bet is a sports betting wager on which competitor will win the contest. It doesn’t matter how they win, by how many goals, or how long it takes them to win. The only thing that matters for a moneyline bet is that they win.
There are two main reasons why both professionals and casual betters love to make moneyline bets.
First, as already noted, they are easy to place. The chances of making a mistake with the moneyline bet are a lot lower, and there is often a lot of value found from plays that may go unnoticed. Anyone can pick a winner from a sporting event; all that remains is deciding whether the risk is worth the reward.
Secondly, it’s a lot easier to find value from the markets. You don’t have multiple layers of complexity to sift through to see if your prediction will make you money over the long run. With some simple mathematical calculations, you can figure whether or not there is value in the bet.
- The Point Spread
The point spread is the second most popular way to bet on sports. The point spread is the bookmakers’ margin of victory between two competitors. They determine the favourite team and by how many points they can win before releasing the lines. More specifically, a point spread bet is a wager in which you bet which team will outperform their expected performance.
The sportsbook will set a line based on how well each team will do during the game. You then choose which team will perform better than that set line.
Betting on the point spread is usually reserved for sports and leagues with high-scoring games like the NBA or the NFL.
Here is an example from an NBA game between the Denver Nuggets -110 (+3.5) and the Boston Celtics -110 (-3.5). The negative sign next to the Celtics margin shows that the bookmakers consider them the favourites and expect them to win by three or four points. So they set the betting line at three and a half points.
On the other hand, the positive sign next to the Nuggets margin shows that the bookmakers consider them the underdogs. If you bet on the Celtics to beat the Nuggets, and they win by four points or more, you win the bet. This is what’s known as covering the spread.
However, if they lose or they win by three points or fewer, you lose the bet. On the other hand, if you bet on the Nuggets and they lose by fewer than four points, you win the bet. You also win the bet if they beat the Celtics. However, if the Nuggets lose by four points or more, you lose the bet.
Online sportsbooks use half-point lines to avoid a tie scenario. If the line is not set to half a point, and the match finishes with the margin of victory equal to the betting line, you do not win the bet, but your original stake is refunded.
- Totals betting
Also known as over/under betting, a totals bet is a wager on the total number of points, goals, or runs scored in a game. This bet is not related to the actual result of the game, meaning that it does not matter who wins or loses. It’s what makes it different from betting on the moneyline and the spread. It also doesn’t matter if one team scores all the points. All that matters is the total number scored.
For example, a bookmaker has given bettors a chance to place a bet of 216.5 total points on the NBA match between OKC and the Grizzlies.
As you can see, the bet itself doesn’t contain the two competing teams, only the number of points. In this example, the sportsbook thinks that there will be 217 points scored. As such, they drop this total down by half a point. They give you the opportunity to bet on more than 217 points being scored – the over, or 216 points or fewer – the under.
As with spread betting, sportsbooks use half-point lines in total to avoid a tie scenario. If the line is not set to half a point and the match finishes with the total number of points scored equal to the betting line, you do not win the bet, but your original wager will be refunded.
How to Read Betting Odds
In the Moneyline betting odds, you can determine the favourite by the minus (-) sign assigned to the player and the underdog by the plus (+) sign.
If the numerator is smaller than the denominator, that competitor is considered the favourite in fractional odds. Likewise, if the numerator is bigger than the denominator, then that competitor is regarded as the underdog.
In Decimal odds, the decimal number lower in value is assigned to the favourite, and the number bigger in value is given to the underdog.
FAQs on How Betting Odds Work
Are decimal odds better than fractional betting odds?
Various odds portray the same item differently, and there is no change in the rewards. Decimal odds show the amount won for every $1 invested, and fractional odds represent the amount gained to the stake as a percentage.
How do I calculate probability using betting odds?
To convert odds to probability, divide the player’s chance of winning by the total number of possibilities, including winning and losing. To put it another way, if the chances are 4/1, the probability is 1/5 or 20%.
How do I calculate winnings using betting odds?
The easiest way to calculate your potential winnings is by using an online betting odds calculator, which you can find for free.
What are Vegas Odds, and how do they work?
A negative (-) symbol appears next to the odds for favourites, showing the minimum bet required to win CA$100. Underdogs, on the other hand, have a positive (+) symbol next to their odds, showing the amount gained for every CA$100 invested. You receive your original stake refunded in addition to the amount earned in both circumstances.