You Need to Know How Sports Betting Odds Are Calculated — Here’s How
A gamble is often filled with uncertainty as well as different probabilities. Winning is never guaranteed. I for one, learned this the hard way when I got into sports betting without having any clue about how odds work.
To become a successful sports bettor, you need to know which bets offer the most value for your money. Even better, try to have a solid grasp of odds and how they are calculated. Before we get to the challenging parts, you need to know exactly what odds are and what role they play in every sporting event.
What are odds?
Odds in sports refer to the likelihood of a particular outcome happening or not. For example, the odds that you will have a better understanding of calculating sports odds after reading this piece is high — or least I hope so! Typically, most odds are expressed in numerical values such as numbers, decimals, or fractions.
What are odds used for?
Generally, odds come down to two purposes. The first plausible cause is to gauge the probability of the occurrence of an event. The higher the probability, the lower the odds, and vice versa. For example, a team like Liverpool currently at the top of the league would have a higher chance of winning when playing against a relegated team like Norwich City. Therefore, a wager on Liverpool winning would have very low odds as compared to those set by Norwich winning.
On the other hand, odds can also be used to determine the payouts of winning wagers. The higher your odds of winning, the more likely that your profits will be higher. The more money you put up means bigger payouts. But nothing is a sure thing. Things can go sideways, and you could lose instead of win.
- No matter your skill level, never bet more than you can afford to lose.
To find out how odds are calculated, you must first understand the different odd formats that are used.
Common odds formats
The expressions used in odd formats require very basic mathematical knowledge and a little bit of statistics in their operations. They are basically three types:
1. American odds
These are also referred to as Moneyline odds and are the most common in the United States. American odds describe how much money you will need to wager in order to make a certain profit. The format is mostly used by bookmakers in sports with low scores such as baseball, hockey, boxing, and so much more. These odds also focus on the winner irrespective of the spread.
The most commonly used amount when thinking about odds is $100. However, I would personally not stake that much money if I’m not confident of my chances of winning. Go read some of our betting guides before you start wagering higher amounts.
So how do I read money line odds? The odds are either expressed in positive numbers or negatives.
For example, in a match between Los Angeles Dodgers (+130) and Green Bay Packers (-145), if I were to stake $145 on the Green Bay Packers, I would win $100. The negative sign mostly describes the team with the more likely chance of winning.
On the other hand, if I stake $100 on the Los Angeles Dodgers to win, I would earn $130. Suppose I staked only $10 on the same team, I would get a return of $23 minus the original $10 stake – which would amount to $13 as profit.
2. Decimal odds
Decimal Odds are more prevalent in countries like Europe, Canada, Australia, as well as part of their colonies in different countries. These are the easiest to understand, especially when dealing with a combination of multiple bets. The standard form of expressing decimal odds is usually a single positive number written up to two decimal places.
For example, in a match between Manchester United (1.5) versus Arsenal (2.3) indicates that the underdog here is Arsenal. Therefore, the likelihood of Arsenal winning the match is pretty slim – hence the high odds.
If I were to stake $100 on Manchester United, I would get back my stake of $100 plus $50 as profit. On the other hand, if I was to place my cards on Arsenal winning the match with the same stake of $100, I would get back my stake plus a profit of $130.
In simple terms, the wager output is derived from multiplying the stake amount by the decimal odds. If there are multiple matches playing at the same time, the total odds would be a cross product of the individual odds.
3. Fractional odds
Fractional odds were most common with countries in the United Kingdom but slowly became phased out with the introduction of decimal odds. Unlike decimal odds, this format mostly focuses on the profits you can make and are displayed in fraction form. To calculate the total wager output, you would have to add your original stake amount.
From your basic math knowledge, you should know there are three types of fractions: proper, improper, and mixed fractions. However, fractional odds only deal with the first two i.e., 4/11, 5/7, 9/3, 14/5, and so on. So, how do you read fractional odds?
4/11 can be read as “four to eleven,” while 9/3 can be read as “nine to three.” These simply mean that you can win 4 units for every 11 units takes in the case of 4/11. Moreover, 9/3 also means that you can win 9 units for every 3 units staked. Note that this could also be simplified to 3/1 hence the possibility of winning thrice for every unit staked.
Proper fractions (when the first number is smaller than the second) are the equivalent to negative Moneyline odds. These are usually teams with the more likely chance of winning and are described as “odds on” odds.
On the other hand, improper fractions such as 3/1 are the equivalent of positive money line odds. They are usually described as “odds against” odds, usually for the underdog team. While it is possible to convert odd formats into the other types, it’s a tedious process with a lot of calculations that I wouldn’t recommend.
Odds versus point spreads
So far, we have been dealing with known teams with a reputation of either winning or losing. However, there are some games where the outcomes are unprecedented. These are usually found mostly in casino betting or dice games.
In a way, point spreads the probabilities of either team winning will have bettors betting equal amounts of money on each team. Normal odds such as money lines, decimals, and fractions are tailored to separate the underdogs from the superior teams.
The bookmaker infringes on the odds on the inferior team so as to cover any potential losses. On the other hand, if the underdog team wins, he knows to collect his profit from the many wagers placed on the favorite team.
Other types of odds are the pari-mutuel odds that are mostly dependent on the market. Different bettors place their bets, which in turn tilts the odds. Sports such as horse racing, dog racing, and harness racing are a few examples of where these odds are mostly used.
The House always wins
Bettors are not the only ones set on making a profit as the bookmakers always get some small percentage regardless of which team wins – after all, it is a business. So how do bookmakers calculate their profit margins?
No matter which platform you are using, odds don’t usually reflect the true outcome. In any case, even if you win, the money you should have gotten if the booker hadn’t cut his profits should have been higher.
They do this by increasing the implied probability of an outcome. This, in turn, decreases the odds displayed to you. I normally use the Pinnacle margin calculator to figure out the bookmaker’s profits.
Now that you’re an expert on reading and calculating your potential payout from sports odds, it’s time to find some favorable matches. Do your research and be informed, or leave the work to the experts and check our guides and recommended sportsbook reviews.
Betting Odds FAQ
What is a push?In the likelihood of two evenly matched teams going head to head, the possibility of a tie/draw is very high. This is what constitutes a push. You are less likely to meet with a push when using the Moneyline format. It is most common with decimal odds, and it's something you can bet on. In the event that a tie occurs, you will get your stake back.
What information is used to calculate odds?Bookmakers look at two main things when putting out their odds. These are 1) the probability of the outcome and 2) how many people are betting on each bet. Bookmakers have to adjust their odds according to how many people bet on each bet in order to balance their books.
Why do different platforms have different odds?
With the countless online betting platforms in the market, you will often hear some bettors preferring one platform over the other. The reason they give is usually along the lines of “This site has better odds.” That said, how do bookies arrive at odds such as +130, 1.5, or 3/7?
The simple answer is most platforms have their own team of expert risk analysts, odd compilers, and traders who come up with the figures. They mostly assess the different variables for all sporting events such as the player’s form, injuries, influence by fans, and many more.