To first understand what betting odds are, we have to first understand the concept of chance.
A chance is the likelihood of a certain event happening. It is often expressed in percentages, also referred to as the probability.
Let's roll a dice.
Rolling a dice yields a probability of 1 out of 6 for each outcome.
The chance of the dice landing on any of the 6 numbers is equal. In percentages this means a 16.66% chance (or probability) of any of the six numbers to coming up.
How is this calculated?
Simply by dividing 100% by the 6 possible outcomes.
Odds are simply another way to express probabilities. Decimal odds for example are simply inverted probabilities, which is why it is so easy to calculate with them. Hence their popularity.
Instead of saying an outcome has a probability of X%, X is now translated into a number.
This is how it is done:
100% divided by Chance = The Odds.
For instance, If you expect the probability of Manchester United winning a football match to be 40% it would look like this is in decimal odds:
|100% / 40%||=||2.50.|
Odds expressed in this way are known as decimal odds or European odds. For every unit you bet on the outcome you receive a return of 2.50 should you win. Once you subtract the unit you invested, it leaves you with a profit of 1.50.
If you have a calculator, you might find a 1/x key somewhere, which is also the mathematical formula used here
- Type in some decimal odds of your choosing.
- Press the 1/x key and you will get the implied probability.
- Press the 1/x key again and the probability will be transformed back to decimal odds
Fractional odds are another way of expressing odds, mainly used in the UK.
To use the previous example of decimal odds 2.50, fractional odds would express the probability as 6/4 (or 3/2 or 1.5/1):
You have to bet 1 to win 1.50 profit.
A common error is to assume that 2.50 decimal odds should be 2.5/1, but this is wrong. Fractional odds calculate your net profit rather than your total return of a bet, which is why the stake itself (which equals 1) is being factored in below the fractional line. Odds of 3/2 reads as 3 to 2, which means you have to wager 2 units to win 3 units.
Generally this way of representing odds is on the decline even in the UK, as it is easier to calculate with decimal odds, especially when calculating the underlying probabilities.
You can convert fractional odds to decimal odds simply by working out the fraction (for 6/4 you simply divide 6 by 4) and then adding one.
|(6 divided by 4) + 1||=||2.50.|
Or if you like, add the numerator and the denominator together then divide by the denominator.
|6 + 4 divided by 4||=||10 divided by 4||=||2.50.|
American odds can be even more confusing than fractional odds.
Firstly, they are either positive or negative. For example - 150 or + 150. Essentially, they show you how much you will have to stake in order to achieve a profit of $100 or how much profit you will have if you stake $100.
Negative odds will show you how much you will have to stake in order to achieve a profit of $100. If a team is represented with odds of – 150, it means you will have to stake $150 to get a $100 profit.
Here's an example of how to convert negative American odds into their decimal equivalent.
Let's say we have odds of -150. We simply divide 100 by 150 and add 1.
|(100/150) + 1||=||1.67.|
Positive odds will show you how much profit you will have if you stake $100.
If a team is presented with odds + 150 you will have $150 profit for a stake of $100. Namely, + 150 is equal to decimal odds 2.50.
You just need to divide by a hundred and add one for positive American odds to get the decimal odds equivalent.
|(+150/100) + 1||=||2.50.|
As we have seen, betting odds express a probability or chance of an outcome occurring. Something that is very helpful to understand, is what is referred to as the 'implied probability'.
This is the probability that the odds express.
So how do we calculate the implied probability given the odds?
|It is 100% divided by the decimal odds.|
|e.g 100% divided by 2.50||=||40%|
Understanding how to calculate the implied probability of a set of odds is important in the task of identifying betting value, a subject which we will turn to in our next tutorial.
Decimal odds are easily the most popular form of expressing betting odds.
But whatever format makes the most sense to you, is what you should choose to work with.
An understanding of betting odds will lay the foundation for all of your betting. Remember that the odds reflect the chance or probability of an outcome occurring.
Once you grasp this concept, you're well on your way to more successful betting.