Having a solid and thorough understanding of sports betting odds and how they work is essential if you want to stand a chance of winning over the long term. Landing a winning bet or two is easy enough in the short term, but if you aren’t considering the betting odds, it’s possible to have a high strike rate of winners and still lose money. Fortunately, the opposite is also true: When you know about betting odds, they can help you to make money over the long term, even if you win less often than a casual punter.
This article gives you a crash course in betting odds so that you know what they are, how they work, how to read them and how you can use your new-found knowledge to help improve your chances of long-term success at Aussie bookies.
Betting Odds Defined
Betting odds are figures that tell you how much a bookie is willing to pay you for making a winning bet on a particular outcome. That outcome could be anything from which team will win a local football match to which player will lift the trophy in an international tennis tournament.
If you make a bet and it wins, the bookie will pay you out by multiplying your stake by the odds offered. Because you’ve won, he’ll also return your stake. Of course, if you make a bet and it loses, the bookie will keep your cash, and you’ll just have to hope for better luck next time.
Bookies, like the ones we recommend at BetSquare, set the odds for an outcome by forming their own opinion about how likely they think it is to happen. They also take into consideration the view of the general betting population. The bookie aims to try and make sure that they make a profit no matter what happens, and they do this by offering low betting odds on outcomes that are most likely to happen and higher betting odds on outcomes that are least likely to happen.
And how does the bookie know which outcomes are more likely than others? That’s a good question, and the answer involves something called probability.
Probability Made Simple
Probability is the likelihood of something happening, expressed as a number. In practical terms, probability is expressed in percentages, with all possible outcomes adding up to a total of 100%.
For example, if you toss a coin on the floor and look at the side facing up, it will show either Heads or Tails. That means there are only two possible outcomes, both of which are equally likely. The probability of the coin showing Heads would, therefore, be 100% divided by 2 = 50%, and the likelihood of the coin showing Tails would also be 50%.
To give a slightly more complex example, imagine tossing two coins at once. In this case, there are three possible outcomes, all of which are equally likely. We can, therefore, say that:
- The probability of both coins showing Heads is 33.33%.
- The probability of both coins showing Tails is 33.33%.
- The probability of one coin showing Heads and the other Tails is 33.33%.
This principle of dividing 100% by the number of possible outcomes can be applied to any event where all outcomes have an equal chance of occurring. Unfortunately, in sports betting, events are rarely so simple, so the best aussie bookies must set their betting odds according to estimated probabilities.
How Bookies Set Their Odds
Bookies employ math wizards to assess the form of all the competitors involved in an event and create probability figures for every possible outcome based on past performance, current fitness and other variables.
For example, consider two tennis players about to play against each other. If both were equally matched, each would have a 50% chance of winning. But if the upcoming game is on a hard surface and Player 1 is a hard-court specialist while Player 2 never wins on a hard surface, the odds makers would no doubt give Player 1 a higher chance of winning. They might, therefore, give Player 1 a 65% chance of success and Player 2 a 35% chance of success.
As we said earlier, bookies like to try and make a profit no matter what happens, so instead of giving punters “true odds” based on their probability expectations, they tend to offer slightly lower odds than their expectations would suggest.
So, going back to our original coin toss example, instead of offering entirely true odds of 1/1 for Heads and 1/1 for Tails, the bookie might offer only 10/11 for both of those outcomes. This would guarantee that they always take in a little more than they pay out (for every $1 wagered, they’d pay out only $0.91 in winnings). The small profit percentage the bookie builds into their book is known as the “overround”.
Betting Odds Calculator
How do betting odds work, we hear you ask? In the sections below, we will discuss how to read betting odds, the various odds formats that are commonly used by betting apps, and how to calculate potential winnings, as well as something called implied probabilities.
If all of that sounds too much for right now, you can use a Betting Odds Calculator to do the hard work for you. Simply enter your stake and the odds as you see them on your chosen sportsbook, and the calculator will tell you how much you stand to win and what your implied chances of success are.
How to Read Odds for Sports Betting
With betting odds explained from a theoretical point of view, it’s time to start discussing how to use them from a practical sports betting perspective. The first step to doing that is to learn to read betting odds as they are presented by the bookies.
What Are American, Decimal, & Fractional Odds?
Most online bookmakers will let you view sports betting odds in American, Decimal or Fractional formats. These are simply three different ways of presenting the same information, and we will discuss each in depth in a moment. For now, here’s an example of all three:
- American odds show a number preceded by a + or – sign, such as +150.
- Fractional odds show two numbers divided by a slash, such as 6/4.
- Decimal odds show a number written in decimal form, such as 2.50.
All of these examples represent the exact same betting odds, and if you were to make a winning $10 bet on the selection, you would get a total return of $25, giving you a profit of $15. If you’re wondering how we arrived at that conclusion, the following sections explain everything you need to know.
American Odds Explained
We’ve said American odds are presented with a + or – sign. That sign is very important because it determines how you should read the number that follows.
What Do the + and – Mean in Sports Betting?
A + sign means that if your bet wins, the odds will pay you more in profit than the sum you stake. Conversely, a – sign indicates that if your bet wins, the odds will pay you less in profit than the sum you stake. Of course, in both cases, you would also get your stake back.
Calculating Winnings with American Odds
When you see a + sign, it tells you how much profit you will win if you make a successful bet of $100. Odds of +150, therefore, mean that you will win $150 for every $100 that you bet. You’d also get your stake back.
To calculate your winnings for bets of sums other than $100, simply divide the +odds figure by 100 and then multiply by the amount you intend to bet. For example, if you wanted to bet $5 at odds of +300, your calculation would be:
300 divided by 100 = 3
3 multiplied by $5 = $15 profit for a $5 stake
When you see a – sign, it tells you how much you need to bet to make a profit of $100. Odds of -150 would, therefore, mean that you’d need to bet $150 to make a profit of $100.
To calculate how much you would need to stake to win a different sum, simply divide the odds figure by 100 and multiply by the sum that you want to win. For example, if you wanted to win $30 from a -$150 bet, your calculation would be:
150 divided by 100 = 1.50
1.50 multiplied by 30 = $45 stake for a $30 profit
Calculating Implied Probability with American Odds
You’ll recall from our earlier discussion that bookies set their odds based on their estimated probability of every outcome taking place according to their own analysis and form study.
A quick calculation is all you need to convert American odds back to corresponding implied probability figures so that you can see how the bookies estimate the chances of each outcome taking place.
Two calculations are required for American odds. One is for negative odds, and the other is for positive.
For negative odds, the calculation is:
Odds / (Odds +100) x 100 = Implied Probability
So, if you wanted to find the implied probability for negative odds of -300, the calculation would be:
300 / (300 + 100) x 100 = 75%
For positive odds, the calculation is:
100 / (Odds + 100) x 100 = Implied Probability
If you wanted to find the implied probability for positive odds of 300, the calculation would be:
100 / (300 + 100) x 100 = 25%
Decimal Odds Explained
Decimal odds are simple decimal numbers that tell you exactly how much you can expect to get back from the bookie for every $1 you bet. It’s important to note that the decimal figure shown always includes your returned stake.
Calculating Winnings with Decimal Odds
This is the easiest form of odds of all, so calculating your winnings is as straightforward as it gets. Simply multiply the odds by your stake, then deduct your stake to show how much profit you would make.
For example, if you made a winning $25 bet at odds of 2.50, you would calculate:
25 x 2.50 = $62.50 returned
62.50 – 25 stake = $37.50 profit
Calculating Implied Probability with Decimal Odds
To calculate the implied probability of decimal odds, the formula is:
(1 / Odds) x 100 = Implied Probability
So, if you have decimal odds of 4.50 and you want to find the implied probability, you would calculate:
(1 / 4.50) x 100 = 22.22%
Fractional Odds Explained
Fractional odds aren’t as common as American or decimal sports betting odds, but they are still very popular in certain countries, with the UK being their biggest fan. They can look quite complicated at first glance, but when you get used to them, they’re as easy to use as decimal odds. As you already know, fractional odds are presented as two numbers separated by a slash. The number on the left of the slash is called the Numerator, and the number on the right-hand side is called the Denominator. Bear that in mind when reading through the next couple of sections, and you won’t get confused.
Calculating Winnings with Fractional Odds
To calculate your potential winnings using fractional odds, the formula is:
(Numerator x Stake) / Denominator
For example, if you wanted to bet $50 on a footy match and your chosen outcome has odds of 8/13, your calculation would be:
(8 x $50) / 13 = $30.76
Calculating Implied Probability with Fractional Odds
The formula for calculating the implied probability from fractional odds is:
Denominator / (Denominator + Numerator) x 100 = Implied Probability
Taking the example odds of 8/13 used a moment ago, we’d calculate the implied probability as follows:
13 / (13 + 8) x 100 = 61.90%
Using Implied Probabilities
While it’s never essential to calculate implied probabilities, this information can be very useful to the serious sports betting fan. That’s because it can help you to spot value betting opportunities where the bookie is offering better odds than would be suggested by your own estimation of the event. For example, let’s say that there’s an upcoming tennis match, and you think that Player 1 has a 75% chance of winning. Your favourite bookie offers odds of 1/2 (or 1.5 and -200 in decimal and American formats).
In this scenario, you could calculate the implied probability and discover that the result is 66.70%. This would mean that the bookie gives Player 1 less of a chance than your own estimation of 75%, which means that the odds available would offer good value. Of course, if you think that Player 1 only has a 60% chance of winning and the implied probability is 75%, the bookie is a lot more confident than you are, and so his odds would represent poor value.
If you want to maximise your chances of success in sports betting over the long term, it’s an excellent idea only to bet when the implied probability of the available odds is lower than your own expectation. While this isn’t a guaranteed key to success, it’s a valuable rule of thumb that most serious bettors follow.
Betting Odds FAQ
Fixed odds don’t fluctuate nearly as much as regular odds. They tend to be offered about sporting events where most known variables are unlikely to change very much between the time of the odds being set and the event taking place. Most bookies offer fixed odds for many popular sports, including football, horse racing, boxing, tennis, golf and rugby.
If you bet on negative odds and your bet succeeds, you will make a profit overall, but your profit will be worth less than the value of your stake. For example, if you bet $10 at odds of -200 and your bet wins, your profit will be $5. Of course, you will also get your stake returned, so your $10 bet would give you a total return of $15.
The odds bookies offer largely reflect their estimation of how likely an event is to happen. Higher odds are offered for outcomes the bookie thinks are less likely to occur, but they will give you a bigger return if you succeed. Lower odds will provide you with a lower return for success, but that reflects the fact that the sportsbook believes the outcome is more likely to take place. Whether you would prefer to win less often at higher odds or more often at lower odds is something that only you can decide.