How Betting Odds Are Calculated
Betting odds show the event’s probability of happening and enable players to work out the amount of money they will win if their bet wins. For instance, if the odds are 4/1 for every one euro/dollar bet, the player will win $4. So, there is a 20% chance that the event will occur.
In addition, let’s say the odds for an Indian Cricket Team to win are 2/1. It means that for every $1 bet, you will win $2. So, the total payout will be $3, including your original $1 bet and $2 you have won. You can calculate the probability as follows:
Probability (P) = 1/ (odds + 1)
So, in this mathematical example, P = 1 (2+1) = 1/3 = 0.33. Therefore, the chance is 33% for the Indian team to win according to the betting odds.
Understanding and Calculating Sports Betting Odds
Bookmakers calculate betting odds to represent the likelihood of a sports event. Common representation forms of sports betting odds are:
- Fraction
- Decimal
- Moneyline
Fractional Odds
Fractional odds are also called traditional or British odds. You can write these odds as fractions, such as 4/1. You can also express them as a ratio, which is 4-to-one. Fractional odds are very popular in horse racing and other sports betting, particularly in the UK and Ireland. A fraction provides you with an intuitive understanding. Let’s consider the example 4/1. The denominator “1” represents the bet amount, and the numerator “4” is the potential profit. You multiply your stake by the fractional odds to calculate your potential winnings. For example, if you bet 15 euros at odds of 4/1, you could win 60 euros.
Decimal Odds
Decimal odds show how much you could win if you place a bet on a sports event. For example, if the odds are 3.0 and you bet 1 euro, you could win 3 euros if your bet is successful. So, your profit is 2 euros/pounds because you get 1 euro bet back and 2 euros in winnings. You could win 300 euros if you bet 100 euros. Basically, it is multiplying your bet by the decimal odds to determine your winnings. You can calculate winnings from decimal odds using the following formula:
Winnings = (Bet Amount x odds) – Bet Amount
For example:
Winnings OR Profit = (1 euros x 3.0) – 1 euro
So, when you calculate the profit, it will be 2 euros.
Moneyline Odds
Moneyline odds are popular in the United States. That’s why they are called American odds. When you place a moneyline bet, you bet on who will win the game. A team or player is the favorite and has a higher chance of winning if the odds are negative. On the other hand, the team or player is less likely to win if the odds are positive. Some bookmakers called teams or players with positive odds “the underdog.”
Favorite Odds
Favorite Odds = the team most likely to win
Do you like basketball? If yes, let’s consider an example of this thrilling sport. Imagine a match between the New York Knicks and Los Angeles Lakers. The Lakers are the favorites to win, so that they may have moneyline odds of -200. So, you need to bet $200 on the Lakers to win $100. The formula for calculating favorite moneyline odds is: Profit = Stake * (100/|Odds|)
Why are Favorite Odds Negative Numbers
The negative sign shows that a team or player has a higher chance of winning. So, you must risk more money to get a small reward. Bookmakers use this tactic to balance the bets on both sides. If the favorite always paid out the same as the underdog, everyone would bet on the favorite. That’s why bookmakers ensure the potential payout is less attractive: it encourages bettors to bet on the underdog. And this is how bookmakers manage risks.
Underdog Odds
Underdog odds = The team is less likely to win.
When the odds are positive, the formula to calculate them is: Profit = Stake * (Odds/100)
The positive + sign tells you how much you can win if you bet $100. If the odds are +200, you can win $200 on your $100 bet.
