Understanding the different odds
If you are new to betting you might get confused with how the odds formats sometimes vary from site to site. It’s crucial to understand what the odds mean before entering into any form of gambling. Mastering how to convert odds into probability plays an important part in your success.
Let’s start by looking at the three common odds formats that are used in the world of betting.
- Decimal odds
- Fractional odds
- American odds
How Decimal odds work
Decimal Odds which are also referred to as European odds and/or continental odds are the most common outside the UK and the US. These odds are fairly easy to understand and convert to outcome probability.
Let’s take a look at a 1 X 2 (three-way) decimal odds example from English Premier League football.
The higher the number be higher payback and the lower the number the lower payback. With decimal odds it is very easy to spot the favorite and the underdog. In the example above Man Utd are clear favorites to win, a draw is the second most likely scenario and an Everton away wain the least likely outcome.
Total return = Staked amount x Decimal Odd number
The decimal odds indicate how much money a potential winning bet would pay-out including the staked amount. From a ₹100 bet the outcome would be the following:
How to convert decimal odds to probability
Understanding how odds convert into probability is a good way to get a better understanding how likely something is to happen. Decimal odds are fairly easy to convert into probability, take the number 100 and divide by the odds and you will get the probability. Below we have given you an overview of odds ranging from 1 (which you will never see as the return would just be the money back which would not make any sense for you or the bookmaker) up to 10.
|Decimal Odds||Probability||Decimal Odds||Probability|
How fractional odds work
Fractional odds, also known as British Odds, traditional odds or UK odds) are mostly used in the UK and Ireland. For anyone not used to fractional odds these can be quite tricky to understand. The fractional will at first make it hard to understand who is the favorite or the underdog.
Fractional odds are written with a slash or hyphen which makes them look quite different to the decimal odds.
Let’s start by converting the decimal odds from the Man Utd vs Everton example from before, into fractional odds to get a basic understanding of how it works.
|Odds type||Manchester United||draw||Everton|
Fractional odds only tell you how much you will win and not the returned amount as for decimal odds. The equivalent for decimal odds would be to take the odds – 1.
Total Return = Staked amount x (Numerator/Denominator) + Staked amount
Using the Man Utd vs Everton example for fractional odds would look like the following:
The pay-out and win ratio is obviously the same. Learning fractional odds is just a matter of practice but since most bookmakers let you choose what odds format to display the odds in you can select the format that suits you the best.
How to convert fractional odds to probability
|Fractional Odds||Probability||Fractional Odds||Probability|
How American odds work
American odds or US odds are mostly used in the United States and has a different structure to both decimal and fractional odds. The odds are based on a betting line that starts at 100 and moves up and down depending on the favorite and/or underdog. The favorite will have a number that starts with -100 and above and the underdog will have a number starting with +100 or above.
Let’s continue with our Man Utd and Everton example to examine how this would convert into American Odds.
|Outcome||Odds type||Manchester United||draw||Everton|
|Man Utd ||Decimal Odds||1.3||6.0||8.0|
There are two logical approaches you can take when reading American odds:
Any odds with a negative number should be interpreted as follows:
- To win ₹100 you need to be an amount equal to the odds
- In the example above you need to bet ₹333 on Manchester United to win ₹100
Any odds with a positive/over 100 can be read as follows:
- Bet ₹100 to win the amount equal to the odds
- In the example above that would mean that if you bet ₹100 on a draw you win ₹500 and a ₹100 bet on Everton equals a win of ₹700
How to convert American odds to probability
|American Odds||Probability||American Odds||Probability|
How Bookmakers use odds in their favor
Betting sites want to generate revenue and therefore they need to create a margin on the odds they offer
To visualize how the bookmaker makes money we use the Man Utd vs Everton example.
We want to bet a total of ₹100 and minimize our loss. The bet amount needs to reflect the risk vs reward and in this example it will be according to the below structure:
In every scenario the total pay-out will be ₹94.26 which means that we are losing ₹5.74 on every ₹100 wagered. The bookmakers margin will in this case be 5.74%.
One of the main reasons why you see odds moving up and down is the betting sites attempt to create a balance between how much money is being wagered on the 1 X 2 and find a margin to make as much money as possible. These line movements can be used to your advantage, keep reading to find out how.
How you can play the books
As described in the previous section bookmakers creates a margin on their odds and adjust odds to maximize their margin. This is where using accounts on multiple betting sites comes into play.
There was a time when finding sure bets was possible but is very hard nowadays as bookmakers have become better at adapting to the market and make swifter changes. But your aim should always be to minimize the bookmaker margin and maximize your probability of making money long term.
This time we use odds from several betting sites to demonstrate how you can cut the margins and make more money.
The scenario above is not uncommon at all where the odds on the 1, X or 2 have a slight variation. By using the odds from Bet365 we know there is a 5.74% margin in the bookies favor.
By using multiple betting sites you can decrease this margin and increase your probability of winning.
By using odds from three different bookmakers the margin has now dropped to 3,76%. Close to 40% (from 5.74% down to 3.76%) of the margin is now yours to keep.
Our advise is to never settle with only one betting site. Use at least 3-4 to make sure you get the best odds and minimize your losses.
The above is just an example and you should never place bets on all three outcomes where there is a negative margin. The example is just to illustrate the importance of you can use multiple betting sites to maximize your results.