What Are Sports Betting Odds?

If you’re new to sports betting and you want to make money; one of the first things you should understand is the odds. First of all, you should know that, depending on what part of the world you are living in, the format of which the odds are displayed will vary. If you are using a bookmaker you can usually change this in the profile settings. Fortunately, Oddshero is here to help you. In this article, we will explain the different odds types you should know when betting on sports and everything there is to know about them.

3 Key Takeaways about Sports Betting Odds

1. Odds are a vital part of betting. If you want to know how much profit you will make if you win your bet, you have to know the odds, no matter what the format is.
2. We recommend using Decimal odds as it is the most intuitive odds type to understand and it is easy to convert to probability. Also the bookmakers will typically give you a worse price than what you could have got if you used decimal odds because of the way they round the numbers for fractional and American odds.
3. You should also always look to find the best possible odds you can get in the betting market. When it comes to odds and betting, a 0.01 difference in decimal odds might not seem like much, but the percentages really matter!

What are odds in betting?

According to Wikipedia says: “Odds are a numerical expression, usually expressed as a pair of numbers, used in both, in gambling and statistics. In statistics, the odds for or odds of some event reflect the likelihood that the event will take place, while odds against reflect the likelihood that it will not. In gambling, the odds are the ratio of payoff to stake, and do not necessarily reflect exactly the probabilities”.

As Oddshero is focused on sports betting, we have to talk about betting odds. These numerical expressions are determined by the bookmakers, in order to provide a ratio of profit you can get if you place a bet of let’s say €10.

Betting odds represent the amount that bookmakers will pay you if you win the bet. You can bet on pretty much anything happening in a game of sport. But the most common bet type is to bet on who is going to win the game.

How to understand the sports betting odds?

Let’s use an example, if in a football between two teams, Manchester United and West Ham, the odds of Manchester United to win is 2. This implies that the bookmaker expects Manchester United to win 1 out of every 2 times that these two teams meet. It also expect that they expect the game to end with West Ham winning or a draw 1 out of every 2 times. If the odds were 3 on West Ham to win, it would mean that West Ham would win in 1 of every 3 clashes with Manchester United. We can explain the odds in the following way: If in a game the odds are 3 to 1, this means if you bet one euro (the "1" in the expression), and you win, you get paid three euros (the "3" in the expression).

The Formula for Converting between Odds and Probability

Decimal Odds = 1 / Probability

Probability = 1 / Decimal Odds

For example: A team has a 50% chance of winning a football game. This is the same as 2.00 in decimal odds. 1 / 0.5 = 2.00. And the other way around 1 / 2.00 = 0.5. As probabilities are described between 0 to 1, 0.5 means 50% probability. 0.3 = 30% probability and so forth.

As you can see the odds is the inverse of the probability and vice versa. In simple words, odds is just a different way of writing probability and we can easily change between them.

How Do Bookmakers Establish the Betting Odds?

Although odds is just a different way of writing probability, the odds shown on a bookmakers website does not necessarily reflect the real probabilities of who is going to win the game. This is because the bookmakers also take a margin on the game, which is how they make their money.

If one is strictly looking at the probabilities of Manchester United winning a Premier League against Chelsea, then there are 3 possible outcomes of the game, Home (1), Draw (X) and Away (2). This bet type is called the 1 X 2. Summing up the probabilities of the 3 outcomes would be equal to 100%. But because the bookmakers add a margin to the event, if you calculate the probabilities from the odds you see at their website, you will get to more than 100%. If they take a 5% margin, the sum of the probabilities will be 100%.

In practice this means that the odds you can see at the bookmakers pages are lower than the true odds. If all of this was confusing to you, just remember this simple sentence: “Bookmakers always show odds which is lower than the true odds”.

The Bookmaker Margin and Probabilities of Teams Winning Sports Games

Spain and Italy will play a friendly game of football in Madrid. Before setting the odds, the bookmakers will determine the real probabilities for all the possible outcomes in the match, this means, a victory for Spain, Italy or a draw.

To determine the margin of any betting market, we only have to add the implicit probabilities of each result.

Real probabilities

Spain: 60.6%

Draw: 22.2%

Italy: 17.2%

Sum of Probabilities : 100%

However, taking into account that the base customer could mainly bet on a Spain victory and that due to the good run of the local team, many football fans trust the Spaniards, the bookmakers apply a margin of 7%, to the odds. After this the sum of the probabilities are 107%. This results in the following odds being offered:

Odds offered and Implicit Probabilities

Spain win with odds of 1.54

Implicit probability of 64.8%.

Draw with odds of 4.22

Implicit probability of 23.7%.

Italy win with odds of 5.40

Implicit probability of 18.5%.

Sum of the implicit probability of the odds = 107%

Although a Spanish victory is the most feasible result and the one that will attract more punters, the bookmaker has the calmness of knowing that he has put the right price (odds) from his point of view. In the long term, they have an edge against the sports bettors (the margin), which is why “the House always win”. But by using a strategy such as matched betting with Oddshero or value betting with Trademate Sports, it is possible to beat the bookies at their own game.

This is the reason why it’s so important to have in mind the margins that your bookmaker takes. If they take more than a 5% margin (sum of probabilities = 105%) in the most popular leagues, you should look for a bookie which gives you better odds. Bookmakers typically apply higher margins on smaller leagues, because these competitions are more difficult to forecast and thus calculate the odds for. So on smaller leagues you could find margins of 10% (sum of probabilities = 110%) and upwards.

The Three Main Odds Types in Sports Betting

The three main odds types used in the sports betting world are the decimal odds (European odds), fractional (British odds), and Moneyline odds (American odds).

Decimal odds

This the most used odds type in the world of sports betting. It shows the relationship between your initial stake and your profit if you win the bet. Decimal odds is also called European odds. With the exception of the UK, the vast majority of countries in Europe use decimal odds as their standard odds format.

Let’s see how decimal odds work.

In the next round of the English Premier League, Manchester City and Chelsea will face each other in what promises to be an exciting game of football. City lost to Liverpool in the last Premier League round and need a victory at home to stay alive in the title race. While Chelsea will try to open a small gap to City, who are 4th at the moment, one point behind them.

Anyway, City is the favorites to win the game, and the odds you can get for this in the betting market is around 1.4. The odds for a draw are 5. The odds for a Chelsea victory is 7.75.

As City are favorites, if you bet on them, the probability that you will win the bet is 1 / 1.40 = 71,4%, but you won’t get a lot of money. On the other hand, if there is a draw, you’ll get a good profit. If Chelsea pulls of a surprise win, those lucky players who bet on Chelsea will get a nice reward with the high odds offered on them.

Pay attention to the operation to know your possible profit.

If you bet €100, you would win €40 if City win the game ( Profits = (1.40 in odds X €100) - €100 Stake = €40 Profit).

Let’s repeat the calculation with the other possible outcomes of the match.

Draw: Odds at 5, you bet €10, your profit will be €50. Not bad! huh?

Chelsea win: Odds at 7.75, you bet € 10, your profit will be €77.5. Nice one! Nevertheless, you need a shocking victory for the Stamford Bridge side.

If you want to learn more about decimal odds, and how to convert fractional odds to decimal odds and probability check out this article which explains it in more detail.

Fractional odds

Fractional odds are also known as British odds. It was created in the United Kingdom in 1780. Almost a century before football was born, horse racing was the most entertaining sport for British people. This was how sports betting and fractional odds were born.

Fractional odds are expressed as ratios. For example 10/1 or 12/2. But what do the numbers mean? It’s simpler than it looks. The numerators, in this case, 10 and 12, represent “how much you will win”.

While the denominators, 1 and 2, express “how much you stake”. Thus, if you place €1 on a bet with the odds at 10/1, your profit will be €10 plus the value of your initial stake €1.

If you want to learn more about fractional odds, and how to convert decimal odds to fractional odds check out this article which explains it in more detail.

American Odds

American odds is also known as Moneyline odds. It is the most common way to show odds in the US. So how does it work to bet on it?

The amount of $100 is taken as a reference to explain the potential winnings of a $100 bet. For example, when the odds has a “+” sign (+200) it indicates that $ 200 is earned for every $100 invested. In the case of a sign "-" (-200) it is understood that it is required to bet $200 to get $100 of profit.

5 Key Takeaways

It’s useful to understand the difference between the 3 main odds types: decimal, fractional and American odds.

The good thing is that you don’t really have to do it, because most bookmakers and Oddshero enables you to change which odds type is shown in the profile settings.

In general we recommend using decimal odds. Because it makes it easy to convert back and forth between odds and probability.

And even if you don’t have that option at your bookmaker, you can find odds conversion tables and odds calculators online that helps you with converting between the different formats.

Also, if you are using fractional odds or American odds, the bookmakers will typically round the numbers to the nearest whole. This gives you a worse odds price than what you could have gotten if you had just used decimal odds. A sharp sports bettor should never leave money on the table!